BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1307| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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, Yee 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 CONTINUED SB 1307 Page 2 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 source. SB 1307 Page 3 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 numbers. 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 drug. 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 SB 1307 Page 4 (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 family. 4.Prohibits, beginning July 1, 2016, any wholesaler or repackager from selling, trading, acquiring or transferring a prescription drug without providing a pedigree. 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 containers. 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. SB 1307 Page 5 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 requirement. 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 inspection. 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 only." 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 SB 1307 Page 6 minerals in the body or products and sterile water that are used for irrigation, reconstitution, and injection. 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 entity. 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 entity. (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 manufacturer. SB 1307 Page 7 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. Background 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 2006. 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 requirements. 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 SB 1307 Page 8 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 Amgen Arena Pharmaceuticals Barr Pharmaceuticals Baxter Healthcare Bayer Healthcare Biocom California Healthcare Institute California Pharmacists Association California Retailers Association California Society of Health-System Pharmacists SB 1307 Page 9 California State Association of Counties Cardinal Health Compressed Gas Association Council on Radionuclides and Radiopharmaceuticals Daiichi-Sankyo Genentech Generic Pharmaceutical Association Gray Panthers Healthcare Distribution Management Association Hospira Johnson and Johnson McKesson Corporation Merck, Inc. Mylan, Inc. National Association of Chain Drug Stores National Coalition of Pharmaceutical Distributors Novartis Pharmaceuticals Pfizer Pharmaceutical Research and Manufacturers of America Rite Aid Sandoz, Inc. Teva Pharmaceuticals, USA Walgreens Wyeth 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 SB 1307 Page 10 SUPPORT/OPPOSITION: SEE ABOVE **** END ****