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SB 1094 changes biosimilar substitution and formulary requirements

SB 1094 distinguishes pharmacist substitution from carrier-directed biosimilar changes. Lower patient cost, prescriber instructions, continuity notices, and exception routes remain conditions alongside formulary, provider-notification, and reporting requirements.

What happened

A pharmacist may select a qualifying biosimilar as well as an interchangeable biological product, subject to a prescriber's no-substitution direction and a patient cost no higher than the prescribed product. The law retains patient notice and prescriber communication, including the specified five-day electronic-record route and alternatives. Separately, qualifying prescription-drug contracts issued, amended, or renewed from January 1, 2027 must list a qualifying alternative when the reference product is on the formulary and the alternative has a lower net cost to the carrier. Dispensing authority and formulary inclusion are therefore different decisions.

A carrier-directed switch must meet net-cost and member-cost-sharing conditions and provide at least sixty days' notice with identified alternatives, affected members, and applicable formulary or step-therapy exception instructions. An existing reference-product authorization does not require a new authorization for the alternative, and the act restricts affiliated-product-only requirements when unaffiliated biosimilars are available. Provider notices about listed reference/alternative products are due January 15, 2027, while reporting starts by October 1. These mechanisms preserve prescriber no-substitution and member exception routes rather than giving the carrier authority to rewrite a prescription.

Scope and timing

Authority status
Final
Applicability
Potentially applicable
Audience
Health systems, Provider networks, Health-tech
Jurisdiction
California
Affected functions
Managed Care, Compliance, Clinical Operations
Responsible owner
Managed Care
Recorded date
2027-01-15
Date type
implementation

Why it matters

Pharmacy and benefit teams need consistent substitution and continuity rules.

Implementation playbook

  1. Confirm affected members, benefits and contracts against the final statutory scope. Managed Care · Due 2026-10-18
  2. Reconcile dispensing authority, prescriber instructions, formulary selection and member continuity exceptions. Compliance · Due 2027-01-01
  3. Validate updated workflows, communicate changes and monitor implementing guidance. Compliance · Due 2027-01-01

Sources

Complete edition and supplemental material

This finding in the complete approved report →

Regulatory horizons, CIA trends and implementation trackers remain in the full report.

Read the entire Medicare & Medicaid report →

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