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Drug Companies Back Again to Protect Patents for Biologics and Insulin

SB 147, as heard by the Senate Health Committee, would lift an expiration date on a law that restricts pharmacists’ ability to prescribe biosimilars, or generic alternatives to complex biological drugs. The bill also expands that law to include insulin. California Gov. Jerry Brown vetoed a very similar law, citing increased costs to state-purchased health plans.
March 6, 2015

Like a clump of Scotch broom sprouting each year on Oregon hillsides no matter how many times it gets pulled, the pharmaceutical companies are repeating their efforts from past sessions to restrict the ability of pharmacists to dispense generic or “biosimilar” alternatives to so-called biological drugs, including both insulin and bank-breaking blockbuster wonder drugs like Gleevac, Solvaldi and Copaxone, which is used to treat multiple sclerosis.

The patent for Copaxone expired last year, and pharmaceutical companies have been lobbying state Legislatures to pass laws that will hinder their competitors from getting alternative but interchangeable medications dispensed. These proposed state laws are designed to go beyond the regulations of the U.S. Food and Drug Administration to curtail access to biosimilars.

Billions are at risk for the pharmaceutical companies, since insulin and complex biological drugs, grown in cells rather than created in factories, provide for a quarter of their sales.

Two years ago in Oregon, the specialty pharmaceutical companies, led by Genentech, worked to pass Senate Bill 460, which requires pharmacists to notify a prescriber if they prescribe a biosimilar medication in the place of a brand-name drug, but it expires at the end of the year and has only hypothetical applications -- the FDA has not approved any generic biological drugs or biosimilars; last year, Eli Lilly tried to get insulin classified as a protected biological drug under that law but failed after their backdoor efforts were uncovered.

This year, Senate Bill 147 will combine the policies of those two bills by lifting the expiration date on SB 460 and rolling insulin drugs into the program, according to Bill Cross, the lobbyist for the Oregon State Pharmacy Association.

The pharmaceutical companies have already benefited from a tied-up FDA-approval process that has prevented competition for biological drugs in the United States even as Europeans have enjoyed the lower drug costs that biosimilars have afforded for nearly a decade. The FDA is still deciding how to label interchangeable biosimilars before it will allow them to be marketed for sale in the U.S.

The result of SB 147, say pharmacists and health insurance companies, will be higher costs to consumers, who will be more likely to continuing paying higher copayments if the dispensing of generic equivalents becomes tedious. Insurers would pass some of the added cost onto consumers that would have been saved from the purchase of generic medications for the high-cost biological drugs.

They argue that the cumbersome physician-notification requirements are not about patient safety at all but about protecting drug company patents against the floodgates of biosimilars that should hit the market in the coming decade and save consumers billions.

“It makes me not want to dispense the biosimilar medication,” pharmacist Eric Lintner of Consonus Health told The Lund Report. “And it makes patients not want to trust the product. … They’re trying to throw out this fear that biosimilars are not similar.”

The law wouldn’t stop pharmacists from dispensing generic insulin, but it would tie up the process and increase their administrative costs. Lintner conceded that most pharmacists would not choose to deny their customers the savings from dispensing the lower-cost medications, even if it meant more hassle on their part.

Could Diminish PEBB Savings

California passed a law two years ago requiring pharmacists to notify physicians when they dispensed biosimilars, but Gov. Jerry Brown vetoed the legislation, arguing that it would increase state costs for the CalPERS health plan by casting doubt on the safety and desirability of more cost-effective medications.

SB 147 could similarly derail efforts to bring the costs of the Public Employees Benefit Board and the Oregon Educators Benefit Board under control.

For PEBB to keep its promised 3.4 percent inflation cap without cutting care, it will likely need to count on biosimilar alternatives to the high-priced biological drugs. Double-digit expense increases for these drugs has eaten into savings from more coordinated care and otherwise generally lower healthcare costs.

In PEBB’s Providence-administered health plan, speciality drugs account for only ½ a percent of all claims, but about 25 percent of drug costs. Those cost increases have been partly offset by an increasing number of new generic drugs, particularly psychiatric medications, becoming available.

Providence Health & Services supported SB 460 in 2013 because of the expiration date; but the company opposes SB 147 in its current form, said lobbyist Dale Penn.

Public Hearing Featured Side Arguments

SB 147 received a favorable hearing Wednesday in the Senate Health Committee, chaired by Sen. Laurie Monnes Anderson, D-Gresham. The big drug companies didn’t testify directly on the bill. Instead, a generic manufacturer owned by Novartis and patient advocacy groups led the testimony in support of the pharmaceutical company legislation. Many of these groups, such as the American Cancer Society, are heavily financed by the pharmaceutical companies.

Patients provided emotional testimony about how biological wonder drugs had greatly improved their lives, and warned legislators against messing with their prescriptions. Anna Marie Meyer of Clackamas County testified that it had been critical for her physician to know precisely what biological drugs she was taking when she had an adverse reaction, or she could have died.

Jim McKay from Sandoz, the generic subsidiary of Novartis, noted that unlike previous manifestations of the biosimilar restriction bill, pharmacists may soon be able to interface electronically with a prescribing physician and provide real-time communication about precisely what drugs are prescribed.

Sen. Elizabeth Steiner Hayward, D-Portland, said that she would like to see this real-time communication between physicians and pharmacists keep track of all drugs, not just the costly biological medications affected by SB 147. “Why should this apply to just biologics?”

Lintner told The Lund Report that both of these points raised by proponents were smokescreens. A prescriber can already require a brand-name drug be dispensed by checking the do-not-substitute box on a prescription -- a point Monnes Anderson noted. Patients can also insist on a brand-name drug when they come to a pharmacy.

With or without SB 147, such requests may still be subject to a health insurance company’s prior authorization process, and if approved, a pharmacist will almost certainly be forced to charge the consumer a higher copayment.

He added that pharmacists would love to support a real-time electronic interface that Steiner Hayward mentioned, and because of incentives in the Affordable Care Act, that is the direction that the industry is headed. But he said the technology is not there yet, and pharmacists don’t need a law tying them up with more work informing a prescriber through more delayed or manual processes until the technology comes along by the end of the decade.

CVS Caremark’s rep, Maral Farsi, backed up Lintner in her testimony, but the two major pharmacy benefit managers were divided on the issue, with Express Scripts, CVS’ chief competitor, telling the Health Committee that they were ready to move ahead.

Pharmaceutical Financing

The American Cancer Society has disclosed on its website that it receives nearly $2 million annually from Pfizer and its foundation as well as about $200,000 apiece from Novartis, Bristol-Myers-Squibb and Sanofi-Aventis.

The pharmaceutical companies have tried to exert influence on the Democratic legislators through campaign finance donations, and specifically targeted top legislators like House Majority Leader Val Hoyle, D-Eugene, House Speaker Tina Kotek, D-Portland and Senate President Peter Courtney, D-Salem.

Hoyle, Kotek and Courtney received $26,500; $15,000; and $14,000 from drug companies in the past year, respectively. Hoyle assisted Eli Lilly in its efforts to add insulin to the SB 460 law last year.

Former Gov. John Kitzhaber, notably did not receive much money from the drug companies, with the exception of a $6,500 donation from Genentech, the biological drug manufacturer with facilities in Hillsboro.

Perhaps not expecting to be cast so soon into the limelight of the state’s top office, Gov. Kate Brown has taken very few donations from anyone except individuals in the past two years, although during her 2012 re-election campaign for Secretary of State, she received $1,250 from Eli Lilly.

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