California bill could switch your biologic drug to save money

By Ana B. Ibarra, CalMatters

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Close to 25,000 Californians could see a change in their medication starting as soon as next year if Gov. Gavin Newsom signs legislation now sitting on his desk.

Senate Bill 1094 by Sen. Akilah Weber Pierson, a San Diego Democrat, would allow health insurers and pharmacists to substitute a patient’s brand name biologic drug with a lower cost alternative known as a biosimilar, unless a patient’s doctor objects. The bill would require health insurance plans to give doctors and patients 60 days’ notice before switching a medication. 

Weber Pierson, who is also an obstetrician, crafted the bill as a cost-cutting measure as prescription drugs become a growing pain point in healthcare costs. State health agencies reported that insurance spending on drug costs increased 72% between 2017 and 2024. Biologics are significant contributors. Six of the 10 costliest drugs are biologics, state prescription data show. 

According to a legislative analysis, this bill could reduce premiums paid by employers, enrollees and government by about $87.7 million a year — a cut of less than 1%. It could also save the average Californian $92 to $310 a year in out-of-pocket costs, the analysis finds, which would vary by insurance.

Over the last several years lawmakers and state health leaders have devised innovative — and at times controversial — ways to control health costs. The state is going after hospitals that overspend, has pulled back on covering weight-loss drugs, and has started to sell insulin at a fraction of the market price. 

These cost-cutting efforts don’t always equate to money in people’s pockets. Instead the idea is that the savings allow premiums and other health costs to grow at a slower pace, potentially benefiting consumers long term.

The insurance lobby, business groups and some unions backed Weber Pierson’s bill, which sailed through the legislative process, despite some pushback. Groups representing rheumatologists along with some patient advocacy groups say they worry that moving patients from one medication to another for no medical reason — but to save money — could disrupt people’s stable treatment.

Why target biologics?

Doctors prescribe biologic drugs to treat complex autoimmune conditions, such as rheumatoid arthritis, lupus and ulcerative colitis. They also include immunotherapies used to treat certain cancers. Biosimilars are their generic form; while not identical to brand name biologics, the U.S. Food and Drug Administration considers them safe and just as effective for most people. 

Weber Pierson compares switching to a biosimilar with swapping a brand-name drug for a generic. “Biosimilars are just as effective with a similar side effect profile as the biologics, but cost significantly less,” she said.

If switching to a biosimilar doesn’t work out for a patient, they would be allowed to go back to the original drug, the senator said.

Unlike synthetic drugs, which manufacturers make by mixing chemicals in a lab, biologic drugs come from living cells through an intricate process that also makes them very expensive. On average, biosimilars cost 15% to 35% less than their brand-name counterparts.

“When you look at high-cost drugs, they’re oftentimes these specialty drugs that really go towards serving a very small percentage of the overall population,” Weber Pierson said about why she decided to target biologics.

In a report last year, the state’s Department of Managed Health Care reported that while specialty drugs, including biologics, accounted for less than 2% of all prescriptions, they accounted for 63% of total annual prescription drug spending.

Concerns and cost savings

Liz Helms, president of the California Chronic Care Coalition, said she understands the need to control health costs — it’s top of mind for many patients. Her concern, however, is that someone who is doing well on a brand biologic could destabilize their treatment in exchange for savings they may not see.

Dr. Robin Dore echoed that concern. A rheumatologist with more than 40 years of experience, she treats patients with rheumatoid arthritis, osteoporosis and lupus, among other autoimmune diseases, many of whom already navigate severe pain and complex insurance pre-approvals. Insurers, she noted, already require patients to try cheaper alternatives before approving coverage for biologics.

Dore, past president of the California Rheumatology Alliance, said while many patients do just fine on biosimilars, some spent years trying different medications before finding one that worked. That’s why her alliance negotiated a provision in the bill requiring health plans to give doctors 60 days’ notice and a list of affected patients, so providers can weigh in and plan with them.

Some of her patients have already been forced to switch to biosimilars when insurers drop brand name biologics from the list of drugs they cover, she said, a preview of what could become routine under SB 1094. But as far as she knows, it hasn’t saved those patients money.

Research has shown that increased use of biosimilars has not consistently translated to lower out of pocket costs for consumers. 

Weber Pierson said her original goal was for patients to see immediate savings, but she believes consumers may still feel the difference over time.

“I would love to be able to put money back into the pockets of patients,” she said. “Unfortunately, our healthcare system is so complicated that it’s hard to do that.”

To ensure that insurance companies don’t just pocket the savings from switching more people to biosimilars, Weber Pierson said her bill, if signed, would also require health insurance plans to report annually on where those savings are going. 

If “premiums would have gone up $50, and instead now they’re going up $5, it’s an increase in healthcare, but it’s not as much,” she said.

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.