BILL NUMBER: AB 1957 ENROLLED
BILL TEXT
PASSED THE ASSEMBLY AUGUST 27, 2004
PASSED THE SENATE AUGUST 26, 2004
AMENDED IN SENATE AUGUST 5, 2004
AMENDED IN SENATE JUNE 24, 2004
AMENDED IN SENATE JUNE 9, 2004
AMENDED IN ASSEMBLY MAY 24, 2004
AMENDED IN ASSEMBLY APRIL 15, 2004
AMENDED IN ASSEMBLY APRIL 1, 2004
INTRODUCED BY Assembly Members Frommer, Chu, Pavley, and
Ridley-Thomas
(Principal coauthor: Assembly Member Koretz)
FEBRUARY 12, 2004
An act to add and repeal Sections 14982 and 14983 of the
Government Code, and to add and repeal Article 5 (commencing with
Section 110242) of Chapter 2 of Part 5 of Division 104 of the Health
and Safety Code, relating to prescription drugs.
LEGISLATIVE COUNSEL'S DIGEST
AB 1957, Frommer. Prescription drugs.
Existing law, the Sherman Food, Drug, and Cosmetic Law, provides
for the regulation of the packaging, labeling, and advertising of
food, drugs, devices, and cosmetics, under the administration of the
State Department of Health Services.
Existing law provides that any pharmacy located outside of this
state that delivers, in any manner, controlled substances, dangerous
drugs, or dangerous devices into this state is considered a
nonresident pharmacy and requires a nonresident pharmacy to register
with the California State Board of Pharmacy and comply with all
lawful directions of and requests for information from the state in
which it is a resident.
Existing federal law requires any establishment within any foreign
country engaged in the manufacture, preparation, propagation,
compounding, or processing of a drug that is imported or offered for
import into the United States to register with the federal Secretary
of Health and Human Services, report a list of each drug introduced
for commercial distribution, and provide required information and
statements.
This bill would require the department to establish the California
Rx Prescription Drug Web site on or before July 1, 2005, to provide
information to California residents about options for obtaining
prescription drugs at affordable prices. It would require that the
Web site, at a minimum, provide information about, and establish
electronic links to, specified programs, pharmacies that are located
in Canada and that meet specified requirements, and other Web sites.
The bill would authorize the department to assess a fee from
Canadian pharmacies that the department reviews for possible
inclusion on the Web site to offset the cost of reviewing them. The
bill would require the department's Web site to include price
comparisons of prescription drugs, including prices charged by
licensed pharmacies in the state and Canadian pharmacies that provide
mail order service to the United States and whose Web sites are
linked to the department's. The bill would also require the
department to ensure that the Web site is coordinated with and does
not duplicate other Web sites that provide information about
prescription drug options and costs. In addition, the bill would
require that the department include (1) notice on the Web site that
informs consumers, among other things, about state and federal laws
governing the importation of prescription drugs and (2) a statement
that the state accepts no legal liability with respect to any product
offered or pharmaceutical services provided by a pharmacy linked to
the Web site.
Existing law authorizes the Department of General Services to
administer a coordinated prescription drug bulk purchasing program
under which the department may enter into contracts on a bid or
negotiated basis with manufacturers and suppliers of single-source or
multisource drugs and obtain from them discounts, rebates, and
refunds as permissible under federal law. Existing law requires
certain state agencies to participate in the program and authorizes
any other state, local, and public agency governmental entity to
elect to participate in the program.
This bill would require the department to coordinate a review of
state departments and agencies that purchase prescription drugs to
determine which state programs may save significant state funds by
purchasing from sources other than those from which the state now
purchases, including Canadian sources that meet the requirements to
be listed on the Web site and established by the bill. The bill
would require the department to report to the Legislature and
recommend options to facilitate more cost-effective acquisition of
prescription drugs. The bill would authorize the department to
establish pilot programs under which purchases of prescription drugs
from Canada would be made at reduced prices for purposes of state
departments and agencies.
This bill would repeal all the above provisions on January 1,
2008.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Prescription drugs have become essential for ensuring the
health of millions of Californians.
(b) The United States is the largest trade market for
pharmaceuticals in the world, yet American consumers pay the highest
prices for brand name pharmaceuticals in the world.
(c) Increased spending on prescription drugs is a significant
driver of increases in overall health care costs, with spending
nationwide on prescription drugs rising over 15 percent each year
from 2000 to 2002.
(d) Rising out-of-pocket costs for prescription drugs are placing
a growing burden on California consumers, as federal government
statistics show that in 2002 the increase in consumers' out-of-pocket
costs for prescription drugs was greater than the increase in
out-of-pocket costs for all other health care expenditures.
(e) The price of brand name drugs is rising faster than the rate
of inflation, with a recent study showing that the price of 30 drugs
most frequently used by the elderly rose by over four times the rate
of inflation in 2003 and that some drugs increased in price by 10
times the rate of inflation in that period.
(f) The rising cost of prescription drugs also places a
significant burden on state government, with the cost of providing
prescription drugs to Medi-Cal beneficiaries, to inmates of the
California Department of Corrections, and to other participants in
state programs growing in some cases at over 20 percent annually in
recent years.
(g) The rising cost of prescription drugs jeopardizes the health
of seniors, the disabled, and other consumers who cannot afford the
medication they need to stay healthy, as shown by a study by the RAND
Corporation that found that when out-of-pocket payments for
prescription drugs doubled, patients with diabetes and asthmas cut
back on their use of drugs by over 20 percent and subsequently
experienced higher rates of emergency room visits and hospital stays.
(h) The rising cost of prescription drugs places a
disproportionate burden on communities of color, as shown in a report
from the Center for Studying Health System Change that found that
African-Americans are about 75 percent and Latinos about 50 percent
more likely to not have purchased a prescription drug in 2001 because
of cost issues than nonminorities.
(i) A prescription drug is neither safe nor effective to an
individual who cannot afford it.
(j) California residents face a growing need for assistance in
finding information about sources for prescription drugs at
affordable prices.
SEC. 2. Section 14982 is added to the Government Code, to read:
14982. (a) The department shall coordinate a review of state
departments and agencies that purchase prescription drugs to
determine which state programs may save significant state funds by
purchasing from sources other than those from which the state now
purchases, including Canadian sources that meet the requirements of
Section 110242 of the Health and Safety Code. State departments to
be reviewed shall include, but not be limited to, all of the
following:
(1) The State Department of Health Services.
(2) The Managed Risk Medical Insurance Board.
(3) The Department of General Services.
(4) The California Public Employees' Retirement System (CalPERS).
(b) The department shall report its findings based on the review
required under subdivision (a) to the Legislature and shall recommend
options to the Legislature, including conducting pilot programs, to
facilitate more cost-effective acquisition of prescription drugs.
The recommendations shall include a determination of the need to seek
any federal approvals or waivers.
SEC. 3. Section 14983 is added to the Government Code, to read:
14983. (a) The department may establish pilot programs under
which purchases of prescription drugs from Canada are made at reduced
prices for purposes of state departments and agencies.
(b) As a condition of implementing any pilot program under this
section, the department shall seek and obtain all appropriate federal
waivers and approvals necessary for the implementation of that pilot
program.
SEC. 4. Article 5 (commencing with Section 110242) is added to
Chapter 2 of Part 5 of Division 104 of the Health and Safety Code, to
read:
Article 5. California Rx Prescription Drug Web Site
110242. (a) The department shall establish the California Rx
program to provide information to consumers and health care providers
about options for obtaining prescription drugs at affordable prices.
(b) The department shall establish a Web site on or before July 1,
2005, to provide information to California residents about options
for obtaining prescription drugs at affordable prices. The Web site
shall, at a minimum, provide information about, and electronic links
to, all of the following:
(1) Prescription drug benefits available to Medicare
beneficiaries, including the Voluntary Prescription Drug Benefit
Program and the Medicare Prescription Drug Discount and Transitional
Assistance Program.
(2) State programs that provide drugs at discounted prices for
California residents.
(3) Pharmaceutical manufacturer patient assistance programs that
provide free or low-cost prescription drugs to qualifying
individuals.
(4) Canadian pharmacies that provide mail order service to the
United States and who meet the requirements of paragraph (2) of
subdivision (c).
(5) Other Web sites as deemed appropriate by the department that
help California residents to safely obtain prescription drugs at
affordable prices, including links to Web sites of health plans and
health insurers regarding their prescription drug formularies.
(c) (1) The Web site shall include price comparisons of at least
50 commonly prescribed brand name prescription drugs, including
typical prices charged by licensed pharmacies in the state and by
Canadian pharmacies that provide mail order service to the United
States and whose Web sites are linked to the department's Web site
pursuant to paragraph (2).
(2) The Web site shall provide information about, and establish
electronic links to, pharmacies that are located in Canada that
provide mail order services to the United States and that meet the
following requirements:
(A) Are licensed by the province in which they are located.
(B) Comply with the requirements of a nonresident pharmacy as
specified in Section 4112 of the Business and Professions Code,
except that for purposes of this section all references to "state" in
subdivision (d) of Section 4112 of the Business and Professions Code
shall be deemed to refer to "province in which it is located."
Compliance with this subparagraph shall be determined by the
department in consultation with the California State Board of
Pharmacy.
(C) Require a prescription from a patient's personal physician,
who is licensed to practice in the United States.
(D) Require the completion of a relevant medical history profile.
(E) Require a signed patient agreement.
(F) Ship prescription drugs in tamper proof original manufacturer
containers to individuals in the United States, unless the consumer
requests to receive the drug in a childproof container.
(G) Include a physical address and pharmacy license number on its
company Web site.
(H) Do not furnish any of the following:
(i) A controlled substance.
(ii) A biological product, as defined in Section 351 of the Public
Health Service Act (42 U.S.C. Sec. 262).
(iii) An infused drug, including, a peritoneal dialysis solution.
(iv) An intravenously injected drug.
(v) A drug that is inhaled during surgery.
(vi) A drug that requires refrigeration or cannot be safely
shipped by mail.
(I) Sell only prescription drugs that have been approved for sale
in Canada by the Therapeutic Products Directorate of Health Canada
and for which no exemption is claimed under Section 37 of the
Canadian Food and Drugs Act or any other similar provision of
Canadian law.
(J) Comply with state law regarding the documentation of the
pedigree of prescription drugs.
(K) Does not require a consumer to sign a waiver of liability or a
release of liability for a negligent act by the pharmacy.
(L) Maintain a service department to respond to consumer inquiries
and provide information to consumers about how they may file
complaints with the provincial licensing authority.
(M) Ensure that all physicians, pharmacists, and technicians in
its employ are properly licensed and their licenses are in good
standing.
(N) Comply with all personal health and medical information
privacy laws applicable to pharmacies located in California.
(O) Not provide more than the prescribed amount or a three-month
supply of any drug.
(P) Not furnish a drug if the consumer indicates that he or she
has not previously taken the drug.
(Q) Not furnish drugs for which there is no equivalent drug
approved for sale in the United States by the federal Food and Drug
Administration.
(R) Any other requirement established by the department to ensure
the safety, accessibility, and affordability of prescription drugs.
(3) A pharmacy that seeks to be linked to the department's Web
site pursuant to paragraph (2) shall apply to the department. The
department may enter into a contract with a pharmacy that it
determines meets the requirements of paragraph (2). A contract may
be renewed annually upon payment of the fee specified in paragraph
(5) provided that the pharmacy continues to comply with the
requirements of paragraph (2).
(4) The department may terminate a contract with and delete an
electronic link to, or information about, a pharmacy that the
department determines no longer complies with the requirements of
paragraph (2). The department shall review within 30 business days
any information that it receives regarding a pharmacy's compliance
with the requirements of paragraph (2) and shall determine whether
the information constitutes grounds for removal of the pharmacy from
the Web site.
(5) The department may assess a fee from Canadian pharmacies that
the department reviews pursuant to paragraph (2) to offset the cost
of reviewing them.
(d) The department shall ensure that the Web site it is required
to establish pursuant to this section is coordinated with and does
not duplicate other Web sites that provide information about
prescription drug options and costs.
(e) Any information, including the identity of a Canadian
pharmacy, to be posted on the Web site shall first be approved by
professional staff of the department before it is posted.
(f) The department shall include on the Web site a notice that
informs consumers about state and federal laws governing the
importation of prescription drugs and the federal Food and Drug
Administration's policy governing personal importation. The notice
shall also inform consumers that a pharmacy linked to the Web site is
licensed in the Canadian province in which it is located and that
the department has the right to remove a pharmacy from the Web site
if it violates the requirements of paragraph (2) or the terms of any
agreement between the department and the pharmacy. In addition, the
notice shall include a statement that the state accepts no legal
liability with respect to any product offered or pharmaceutical
services provided by a pharmacy linked to the Web site.
SEC. 5. Sections 1 to 4, inclusive, of this act shall remain in
effect only until January 1, 2008, and as of that date are repealed
unless a later enacted statute, that is enacted before January 1,
2008, deletes or extends that date.