BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                  SB 1307|
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                              UNFINISHED BUSINESS

          Bill No:  SB 1307
          Author:   Ridley-Thomas (D)
          Amended:  8/14/08
          Vote:     21

           SENATE BUS., PROF. & ECON. DEVEL. COMMITTEE  :  6-2, 4/7/08
          AYES:  Ridley-Thomas, Calderon, Corbett, Harman, Simitian,  
          NOES:  Aanestad, Denham
          NO VOTE RECORDED:  Florez

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :  21-14, 5/29/08
          AYES:  Alquist, Calderon, Corbett, Ducheny, Harman, Kehoe,  
            Kuehl, Lowenthal, Machado, Negrete McLeod, Oropeza,  
            Padilla, Perata, Ridley-Thomas, Romero, Scott, Simitian,  
            Steinberg, Torlakson, Vincent, Wiggins
          NOES:  Aanestad, Ackerman, Ashburn, Battin, Cogdill, Cox,  
            Denham, Dutton, Florez, Hollingsworth, Margett,  
            McClintock, Runner, Wyland
          NO VOTE RECORDED:  Cedillo, Correa, Maldonado, Migden, Yee

           ASSEMBLY FLOOR  :  74-3, 8/18/08 - See last page for vote

           SUBJECT  :    Pharmacy:  pedigree

           SOURCE  :     California Board of Pharmacy 

           DIGEST  :    This bill establishes a graduated implementation  


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          schedule for compliance with the electronic drug pedigree  
          law beginning on January 1, 2015, and ending on July 1,  
          2017, as specified.

           Assembly Amendments  made numerous changes which recast and  
          revise the bill with a similar intent as it left the  
          Senate.  Specifically, the amendments revise the graduated  
          implementation schedule for drug manufacturer compliance  
          with drug pedigree requirements, revise the pedigree  
          compliance date by prohibiting, beginning July 1, 2016, any  
          wholesaler or repacker from selling, trading, acquiring, or  
          transferring a prescription drug without providing a  
          pedigree, revise the pedigree compliance date by  
          prohibiting, beginning July 1, 2017, any pharmacy from  
          selling, trading, acquiring, or transferring a prescription  
          drug without providing a pedigree, and make specified  
          exemptions from the pedigree requirement

           ANALYSIS  :    

           Existing Law
          1. Provides for the licensure and regulation of pharmacies,  
             pharmacists and wholesalers of dangerous drugs or  
             devices by the California State Board of Pharmacy  
             (Board) in the Department of Consumer Affairs.

          2. Prohibits, beginning on January 1, 2009, any 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 dangerous drug without receiving a pedigree.

          3. Defines "pedigree" as a record in electronic form  
             containing the history of all transactions that result  
             in a change of ownership of prescription drugs from the  
             manufacturer to the pharmacy.

          4. Requires the pedigree to contain the following:

             A.    The source of the dangerous drug, including the  
                name, federal manufacturer's registration number or  
                a state license number and principal address of the  


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             B.    The trade or generic name of the drug, the  
                quantity of the dangerous drug, its dosage form and  
                strength, the date of the transaction, the sales  
                invoice number, the container size, the number of  
                containers, the expiration dates and the lot  

             C.    The business name, address and the federal  
                manufacturer's registration number or a state  
                license number of each owner of the dangerous drug  
                and the dangerous drug shipping information,  
                including the name and address of each person  
                certifying delivery or receipt of the dangerous  

             D.    A certification under penalty of perjury from a  
                responsible party of the source of the dangerous  
                drug that the information contained in the pedigree  
                is true and accurate.

          5. Permits the Board to extend the effective date of the  
             pedigree requirement until January 1, 2011, if it  
             determines that additional time is required to implement  
             electronic technologies to track the distribution of  
             prescription drugs.  (Note:  the Board voted to extend  
             the implementation date to January 1, 2011, at its March  
             25th hearing.)

          This bill:

           1.Establishes a graduated implementation schedule for drug  
             manufacturers that requires compliance with the  
             e-pedigree requirement for 50 percent of drugs by  
             January 1, 2015, and the remaining 50 percent drugs by  
             January 2016, and requires manufacturers to inform the  
             Board of Pharmacy (Board) of the drugs it designates for  
             each implementation cycle. 

           2.Defines "manufacturer" to mean a person who prepares,  
             derives, manufactures, produces, or repackages a  
             dangerous drug, device, or cosmetic.  "Manufacturer"  
             also means the holder or holders of a New Drug  
             Application (NDA), an Abbreviated New Drug Application  


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             (ANDA), a Biologics License Application (BLA), provided  
             that such application has been approved; a  
             manufacturer's third party logistics provider; a private  
             label distributor for whom the private label  
             distributor's prescription drugs are originally  
             manufactured and labeled for the distributor and have  
             not been repackaged; or the distribution agent for the  
             manufacturer, contract manufacturer or private label  
             distributor whether the establishment is a member of the  
             manufacturer's affiliated group or is a contract  
             distribution site. 

           3.Permits the percentages required for each implementation  
             stage to be based, at the manufacturer's discretion, on  
             either unit volume, product package type or drug product  

           4.Prohibits, beginning July 1, 2016, any wholesaler or  
             repackager from selling, trading, acquiring or  
             transferring a prescription drug without providing a  

           5.Prohibits, beginning July 1, 2017, any pharmacy from  
             selling, trading, acquiring or transferring a  
             prescription drug without providing a pedigree. 

           6.Defines "repackager" to mean a person or entity that is  
             registered with the federal Food and Drug Agency as a  
             repackager and operates an establishment that packages  
             finished drugs from bulk or that repackages dangerous  
             drugs into different containers, excluding shipping  

           7.Defines "third party logistics provider" or "reverse  
             third party logistic provider" to mean an entity  
             licensed as a wholesaler that contracts with a dangerous  
             drug manufacturer to provide or coordinate warehousing,  
             distribution, or other similar services on behalf of a  
             manufacturer, but for which there is no change of  
             ownership in dangerous drugs. This bill exempts these  
             providers from the requirement that they generate or  
             update pedigree documentation and from recordkeeping  
             requirements if they only accept decommissioned drugs  
             from pharmacies or wholesalers. 


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           8.Makes allowances for non-pedigreed drugs that are in the  
             supply chain on or after the e-pedigree implementation  
             date as follows: 

             A.    Allows manufacturers, wholesalers, and  
                pharmacies that own or possess drugs received prior  
                to the pedigree operative date to prepare a written  
                declaration, under penalty of perjury, designating  
                those drugs as not subject to the pedigree  

             B.    Requires the written declaration to include the  
                National Drug Code directory number and lot number  
                of all designated drugs and be submitted to the  
                Board within 30 days after the e-pedigree operative  
                date. Requires the person or entity submitting the  
                declaration to keep a copy of the declaration for  
                three years and have it available for Board  

             C.    Permits the Board to develop regulations to  
                specify the requirements and procedures for  
                creating and submitting written declarations, and  
                specifies that the declarations are trade secrets  
                and shall be kept in confidence by the Board.

           9.Exempts the following from the e-pedigree requirement: 

             A.    Radioactive drugs, as defined, for two years  
                while the Board evaluates the risk of  
                counterfeiting or diversion of those drugs. If the  
                Board, after two years, determines there is a risk  
                of counterfeiting or diversion of these drugs, this  
                section will become inoperative.

             B.    Drugs that are labeled for "veterinary use  

             C.    Medical gases, as defined.

             D.    Solutions that are either administered  
                intravenously for the replenishment of fluids and  
                electrolytes used to maintain the equilibrium and  


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                minerals in the body or products and sterile water  
                that are used for irrigation, reconstitution, and  

             E.    Intracompany sales or transfers of a dangerous  
                drug between a division, subsidiary, parent, and/or  
                affiliated or related company under the common  
                ownership and control of the same corporate or other  
                legal entity.

             F.    Dangerous drugs received by the state or a local  
                government entity from a department or agency of the  
                federal government, or an agent of the federal  
                government specifically authorized to deliver  
                dangerous drugs to the state or local government  

             G.    Dangerous drugs that are placed in a sealed  
                package with a medical device of medical supplies at  
                the point of first shipment and the package remains  
                sealed until used for surgical purposes.

             H.    A product that meets either of the following: 

                (1)      A product comprised of two or more  
                   regulated components, such as drug/device,  
                   biologic/device, or drug/device/biologic, that  
                   are physically, chemically, or otherwise  
                   combined or mixed and produced as a single  

                (2)      Two or more separate products packaged  
                   together in a single package or as a unit and  
                   comprised of drug and device products or  
                   device and biologic products. 

          10.Specifies that drugs returned to the manufacturer are  
             subject to the 
             e-pedigree requirement only if the drugs will be  
             distributed in California. Drugs manufactured in  
             California for distribution outside of the state are not  
             subject to the e-pedigree requirement at either the  
             initial time of distribution or return to the  


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          11.Deletes the January 1, 2015 sunset date on drug  
             wholesaler bonding requirements.

          12.Makes the pedigree requirements null and void upon the  
             effective date of federal legislation or adoption of a  
             federal regulation addressing pedigree or serialization  
             measures for dangerous drugs, and requires the Board to  
             publish a notice and adopt emergency regulations to  
             reflect the nullification of state law. 

          In response to a growing threat to the pharmaceutical  
          supply chain from counterfeit, misbranded, adulterated or  
          diverted drugs, California enacted
          SB 1307 (Figueroa), Chapter 857, Statutes of 2004, which  
          made comprehensive changes to the drug distribution system  
          to protect the integrity of the pharmaceutical supply  
          chain.  That legislation enacted the nation's strongest  
          pharmaceutical consumer protection measure and included  
          provisions pertaining to the licensure and qualifications  
          of wholesalers, restrictions on furnishing and the  
          requirement, beginning January 1, 2007, of an electronic  
          pedigree to accompany and validate drug distributions for  
          the purpose of tracking each prescription drug at the  
          saleable unit (item) level through the distribution system.  
           Portions of the legislation were implemented in 2005 and  

          Subsequent Board sponsored legislation SB1476 (Figueroa),  
          Chapter 658, Statutes of 2006, delayed the implementation  
          date for the electronic pedigree component to January 1,  
          2009, and granted the Board of Pharmacy the authority to  
          extend the deadline an additional two years to allow the  
          industry additional time to implement technologies  
          necessary for electronic pedigrees.  SB 1476 also augmented  
          and clarified portions of the electronic pedigree  

           California Board of Pharmacy Actions  .  Since enactment of  
          the pedigree requirement and other features of the 2004  
          law, the Board has engaged in a substantial public  
          education effort to engage the parties necessary to ensure  


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          compliance with the law by the January 1, 2009, date for  
          the pedigree requirement.  Since December 2005, the Board  
          has held quarterly public meetings of an E-Pedigree  
          Workgroup dedicated entirely to implementation.   
          Additionally, the Board and its staff have participated in  
          numerous industry conferences and meetings with industry  
          members, technology vendors, legislators, regulators and  
          other affected parties.  Since 2004, significant progress  
          has been made towards the timely compliance with the  
          pedigree requirements.

          In those meetings, the Board solicited feedback and heard  
          from a wide majority of the industry about the challenges  
          to complying with the
          January 1, 2009 implementation date.  Even those companies  
          that could themselves be ready by January 1, 2009,  
          acknowledge that their own readiness will to some degree  
          depend on, or be hampered by, others' unreadiness.  In  
          letters submitted to the Board, many members of the  
          industry have asserted that an additional two years would  
          be crucial to development of the necessary technical  
          infrastructure.  Therefore, on March 25th this year, the  
          Board exercised it statutory authority to extend the  
          pedigree implementation requirement to allow additional  
          time for the development and testing of technological  
          innovations and applications used in the pedigree process.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  8/19/08)

          California Board of Pharmacy (source)
          Abbott Laboratories
          Arena Pharmaceuticals
          Barr Pharmaceuticals
          Baxter Healthcare
          Bayer Healthcare
          California Healthcare Institute
          California Pharmacists Association
          California Retailers Association
          California Society of Health-System Pharmacists


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          California State Association of Counties
          Cardinal Health
          Compressed Gas Association
          Council on Radionuclides and Radiopharmaceuticals
          Generic Pharmaceutical Association
          Gray Panthers
          Healthcare Distribution Management Association
          Johnson and Johnson
          McKesson Corporation
          Merck, Inc.
          Mylan, Inc.
          National Association of Chain Drug Stores
          National Coalition of Pharmaceutical Distributors
          Novartis Pharmaceuticals
          Pharmaceutical Research and Manufacturers of America
          Rite Aid
          Sandoz, Inc.
          Teva Pharmaceuticals, USA

           ASSEMBLY FLOOR  : 
          AYES:  Adams, Aghazarian, Anderson, Arambula, Beall,  
            Benoit, Berg, Berryhill, Blakeslee, Brownley, Caballero,  
            Charles Calderon, Carter, Cook, Coto, Davis, De La Torre,  
            De Leon, DeSaulnier, DeVore, Duvall, Dymally, Emmerson,  
            Eng, Evans, Feuer, Fuentes, Fuller, Furutani, Gaines,  
            Galgiani, Garcia, Garrick, Hancock, Hayashi, Hernandez,  
            Horton, Houston, Huff, Huffman, Jeffries, Jones,  
            Karnette, Keene, La Malfa, Laird, Leno, Levine, Lieber,  
            Lieu, Ma, Maze, Mendoza, Mullin, Nakanishi, Nava, Niello,  
            Nunez, Plescia, Portantino, Price, Ruskin, Salas,  
            Saldana, Silva, Smyth, Solorio, Spitzer, Strickland,  
            Swanson, Torrico, Tran, Wolk, Bass
          NOES:  Parra, Villines, Walters
          NO VOTE RECORDED:  Krekorian, Sharon Runner, Soto

          JJA:do  8/20/08   Senate Floor Analyses 


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                         SUPPORT/OPPOSITION:  SEE ABOVE

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