BILL ANALYSIS
SB 1307
Page 1
SENATE THIRD READING
SB 1307 (Figueroa)
As Amended August 5, 2004
Majority vote
SENATE VOTE :26-10
HEALTH 15-1 BUSINESS & PROFESSIONS 12-1
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|Ayes:|Cohn, Spitzer, Chan, |Ayes:|Correa, Shirley Horton, |
| |Chavez, Dymally, Frommer, | |Aghazarian, |
| |Koretz, Montanez, Nakano, | |Bermudez, Corbett, |
| |Negrete McLeod, Plescia, | |Koretz, Leno, |
| |Richman, Ridley-Thomas, | |Maldonado, Nation, |
| |Salinas, Wolk | |Negrete McLeod, |
| | | |Vargas, Yee |
|-----+--------------------------+-----+--------------------------|
|Nays:|Dutton |Nays:|Maze |
| | | | |
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APPROPRIATIONS 15-3
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|Ayes:|Chu, Berg, Laird, | | |
| |Daucher, Firebaugh, | | |
| |Goldberg, Leno, Nation, | | |
| |Negrete McLeod, Oropeza, | | |
| |Pavley, | | |
| |Ridley-Thomas, Wesson, | | |
| |Wiggins, | | |
| |Yee | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Runner, Haynes, Keene | | |
| | | | |
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SUMMARY : Increases licensing requirements on pharmaceutical
wholesalers by establishing bonding requirements, requires all
prescription drugs to have a "pedigree," as defined, and gives
the Board of Pharmacy (Board) stronger enforcement tools for
wholesale violations. Specifically, this bill:
1)Prohibits a wholesaler or pharmacy from selling, trading, or
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transferring a prescription drug at wholesale without
providing a pedigree, as of January 1, 2007. Prohibits a
wholesaler or pharmacy from acquiring a dangerous drug without
receiving a pedigree as of January 1, 2007. Requires the
application of the pedigree requirement in pharmacies to be
subject to review during the Board's sunset review.
2)Defines "pedigree" as a record in electronic form containing
information regarding each transaction resulting in a change
of ownership of a given prescription drug, from the sale by a
manufacturer through acquisition and sale by a wholesaler,
until final sale to a pharmacy or other person furnishing,
administering, or dispensing the prescription drug. Excludes
a health plan, hospital organization and one or more physician
organizations having exclusive contractual relationships that
distribute drugs between these entities from being deemed to
have changed ownership.
3)Requires a pedigree to contain specified information, such as
the source of the prescription drug, the quantity, its dosage
form and strength, the date of transaction, including the
name, state license number, including California license
number if available, and the sales invoice number, size, and
number of containers, expiration dates, and lot numbers.
4)Requires, when a Board inspector finds, or has probable cause
to believe, that any prescription drug or device is
adulterated or counterfeit, the Board inspector to tag that
prescription drug or device. Requires the Board inspector to
give notice to the person that the prescription drug or device
bearing the tag has been embargoed.
5)Requires, when a Board inspector has found that an embargoed
prescription drug or device is not adulterated or counterfeit,
the Board inspector to remove the tag.
6)Permits a Board inspector to secure a sample or specimen of a
prescription drug or device. Requires, if the Board inspector
obtains a sample prior to leaving the premises, the Board
inspector leave a receipt describing the sample.
7)Makes it unlawful for any person to remove, sell, or dispose
of an embargoed prescription drug or device without permission
of the Board.
8)Permits a Board inspector, when he/she has reasonable cause to
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believe that the embargo will be violated, to remove the
embargoed prescription drug or device from the premises.
9)Requires the Board, if a prescription drug or device is
alleged to be adulterated or counterfeit, to commence
proceedings in the superior court in whose jurisdiction the
drug or dangerous device is located, for condemnation.
10)Requires, if the court finds that an embargoed prescription
drug or device is adulterated or counterfeit, the drug or
device to be destroyed at the expense of the claimant or
owner, under the supervision of the Board. Requires all court
costs and fees and all reasonable costs incurred by the Board
in investigating and prosecuting the action, including, but
not limited to, the costs of storage and testing, to be paid
by the claimant or owner of the drug or dangerous device.
11)Permits a superior court to condemn any prescription drug or
device. Permits, in the absence of an order, the prescription
drug or device to be destroyed under the supervision of the
Board who has the written consent of the owner, his or her
attorney, or authorized representative. Permits, if the Board
cannot ascertain ownership of the prescription drug or device
within 30 days of establishing an embargo, the Board to
destroy the drug or device.
12)Permits a pharmacy to furnish prescription drugs only to the
following:
a) A wholesaler owned or under common control by the
wholesaler from whom the drug was acquired;
b) The pharmaceutical manufacturer from whom the drug was
acquired;
c) A licensed wholesaler acting as a reverse distributor;
d) Another pharmacy or wholesaler to alleviate a temporary
shortage of a drug that could result in the denial of
health care (a pharmacy furnishing drugs may only furnish a
quantity sufficient to alleviate the temporary shortage);
e) A patient or to another pharmacy pursuant to a
prescription or as otherwise authorized by law;
f) A health care provider that is not a pharmacy but that
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is authorized to purchase drugs; and,
g) To another pharmacy under common control.
1)Authorizes the Board to issue a temporary wholesaler's
license, upon conditions and for periods of time as the Board
determines to be in the public interest.
2)Requires wholesalers, effective January 1, 2006 and ending
January 1, 2011, to provide a surety bond of $100,000 or other
equivalent means of security acceptable to the Board to secure
payment of administrative fines imposed by the Board and any
cost recovery ordered. Exempts from the surety bond
requirement a wholesaler who is licensed or who applies for a
license who has an approved new drug application issued from
the Food and Drug Administration (FDA) who engages in the
wholesale distribution of only prescription drugs on the new
drug application.
3)Authorizes the Board to accept a surety bond less than
$100,000 if the annual gross receipts of the previous tax year
for the wholesaler is $10 million or less, in which case the
surety bond is required to be $25,000.
4)Prohibits a person from acquiring prescription drugs or
devices from a person not authorized by law to possess or
furnish those drugs or devices. Requires, when a wholesaler
is acquiring the prescription drugs or devices, the obligation
of the wholesaler to be limited to obtaining confirmation of
licensure of those sources from whom it has not previously
acquired prescription drugs or devices.
5)Prohibits a wholesaler or pharmacy from selling, trading or
transferring a prescription drug at wholesale without
providing a pedigree, and prohibits a wholesaler or pharmacy
from acquiring a prescription drug without receiving a
pedigree.
6)Allows the Board to extend the date for compliance with the
pedigree requirement until January 1, 2008 if it determines
that manufacturers or wholesalers require additional time to
implement electronic technologies to track the distribution of
prescription drugs, and until January 1, 2009 for pharmacies.
7)Permits the Legislature, if it determines that it is not yet
economically and technically feasible for pharmacies to
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implement electronic technologies to track the distribution of
drugs, to extend the date for compliance with the pedigree
requirement for pharmacies.
8)Requires each wholesaler to develop and maintain a system for
tracking individual sales of prescription drugs at
preferential or contract prices to pharmacies that primarily
or solely dispense prescription drugs to patients of long-term
care facilities. Requires the system be capable of
identifying purchases of any prescription drug at preferential
or contract prices by customers that vary significantly from
prior ordering patterns for the same customer, including by
identifying purchases in the preceding 12 calendar months by
that customer or similar customers and identifying current
purchases that exceed prior purchases by either that customer
or similar customers by a factor of 20%. Requires each
wholesaler to have the tracking system in place no later than
January 1, 2006.
9)Requires a wholesaler, upon written, oral, or electronic
request by the Board, to furnish data tracked to the board in
written, hardcopy, or electronic form. Requires the Board to
specify the prescription drugs, the customers, or both the
drugs and customers for which data are to be furnished, and
the wholesaler to have 30 calendar days to comply with the
request.
10)Requires wholesalers to develop and maintain a system for
tracking individual sales of dangerous drugs or dangerous
devices at preferential or contract prices to contracting
pharmacies, as specified. Requires wholesalers to furnish
that data, or any specific portion thereof, as specified, upon
request the request of the Board.
11)Prohibits a local government from issuing a business license
to a wholesaler without a wholesaler license issued by the
Board.
12)Makes the clearly excessive furnishing of prescription drugs
or devices by a wholesaler to a pharmacy that primarily
dispenses drugs to patients of a long-term care facility
unprofessional conduct.
13)Makes this bill operative only if AB 2682 (Negrete McLeod) is
also enacted.
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FISCAL EFFECT : Unknown. This bill was approved by the Senate
Appropriations Committee pursuant to Senate Rule 28.8.
COMMENTS : According to the author, the Board is sponsoring this
bill to substantially decrease the threat of counterfeit drugs
and drug diversion and is designed to address challenges
presented by the existing distribution system for prescription
drugs. Much of the bill draws from recently adopted laws in
Nevada and Florida and from recent draft revisions to model laws
published by the National Association of Boards of Pharmacy
(NABP).
In the United States, three major companies account for 90% of
wholesale market and buy 95% of their drugs directly from the
manufacturer. Secondary wholesalers buy drugs from a range of
different sources and tend to serve smaller markets, such as
physician offices and specialized markets. In the current
system, there are many steps in the distribution chain and drugs
are not tracked. Individual pharmacies buy drugs from a
wholesaler, but are usually unaware of the origin of those
drugs. This can lead to instances of counterfeiting, such as
relabeled or adulterated drugs. Counterfeit cases are few, but
one case could effect thousands of patients. For example, in
May 2003 the Food and Drug Administration issued an alert when
nearly 200,000 counterfeit bottles of Lipitor, used to control
cholesterol, made their way onto the market, representing "a
potentially significant risk to consumers." There have been
several highly publicized cases such as these and the Los
Angeles Times , Washington Post , and Wall Street Journal have
devoted articles to the wholesale market and how current
regulations make it vulnerable to counterfeit drugs.
Analysis Prepared by : Melanie Moreno / HEALTH / (916)
319-2097 FN: 0007685