BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 1455 (Hill)
As Amended June 14, 2010
Hearing Date: June 29, 2010
Fiscal: Yes
Urgency: No
SK/BCP:jd
SUBJECT
Ephedrine: Retail Sale
DESCRIPTION
This bill, co-sponsored by the Consumer Healthcare Products
Association and the California State Sheriffs' Association,
would repeal existing statutory provisions for over-the-counter
sales of pseudoephedrine and related products and replace them
with new sales limits consistent with federal law. This bill
would impose additional restrictions on the sale of
pseudoephedrine products in accordance with federal law,
including that retail distributors must store those products in
a locked cabinet or behind the counter.
This bill would require the Department of Justice to enter into
a memorandum of understanding with the National Association of
Drug Diversion Investigators to provide pseudoephedrine
retailers with access to an electronic authorization and
monitoring system. That system shall provide retail
distributors with an immediate real-time alert if a person
attempts to purchase pseudoephedrine in violation of the sales
limits. This bill would require the retail distributor to
transmit information regarding the consumer to the database,
including the consumer's name, date of birth, and address and
the product sold, the quantity of packages, and the total gram
amount of pseudoephedrine involved in the sale.
BACKGROUND
Despite limits on purchases of pseudoephedrine, laboratory
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incidents in California rose in 2008 to 346. Many law
enforcement agencies, including the Drug Enforcement
Administration, have concluded that the rise in laboratories in
2008 resulted from an increase in "smurfing" of pseudoephedrine.
Smurfing involves purchases of small amounts of pseudoephedrine
from numerous drug stores. While smurfers may violate federal
law in purchasing more than 9 grams in a month - although each
purchase would not be over the 3.6 gram limit - the lack of
adequate law enforcement personnel and resources to manually
review purchase logs allows smurfing to continue.
In 2006, the federal Combat Methamphetamine Epidemic Act (CMEA)
was enacted to restrict the retail sale of ephedrine,
pseudoephedrine, norpseudoephedrine, or phenylpropanolamine.
States have enacted limits on purchases of pseudoephedrine,
imposed point-of-sale restrictions, or enacted pseudoephedrine
tracking laws. Oregon has required a prescription for
pseudoephedrine purchases since 2006. Mississippi will require
a prescription in July, 2010.
According to the sponsor, the following states have electronic
tracking of pseudoephedrine sales: Alabama, Arkansas, Florida,
Illinois, Iowa, Kansas, Kentucky, Louisiana, Missouri, Oklahoma,
South Carolina, and Washington. Ten of these 12 states use the
National Precursor Log Exchange (NPLEx), funded by the
manufacturers of pseudoephedrine products, to electronically
track pseudoephedrine sales.
This bill would add California to this list of states and would
direct the Department of Justice to enter into a memorandum of
understanding with the National Association of Drug Diversion
Investigators to provide an electronic database used by
retailers and law enforcement to attempt to halt sales of
illegal amounts of pseudoephedrine.
CHANGES TO EXISTING LAW
Existing law , with specified and detailed exceptions, prohibits
disclosure of medical information without the authorization of
the patient. Medical information shall be disclosed pursuant to
a court order or a warrant issued to a law enforcement agency.
Other specific exceptions are enumerated. (Civ. Code Sec.
56.10.)
Existing law provides that medical information can be disclosed
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"when otherwise specifically required by law." (Civ. Code Sec.
56.10, subd. (b)(9).)
Existing law, the California Constitution, provides that all
people have inalienable rights, including the right to pursue
and obtain privacy. (Cal. Const. Art. I, Sec. 1.)
Existing federal law includes the Health Insurance Portability
and Accountability Act of 1996 (HIPAA) which, subject to
specified exceptions and procedures, provides that medical
information shall be confidential. (Pub. Law 104-191; 45 CFR
160, 164.)
Existing law classifies controlled substances in five schedules
according to their dangerousness and potential for abuse.
(Health & Saf. Code Secs. 11054-11058.)
Existing law includes the CURES (Controlled Substance
Utilization Review and Evaluation System) system to provide for
the electronic monitoring of the prescribing and dispensing of
Schedule II, III and IV controlled substances. CURES provides
for the electronic transmission of Schedule II, III and IV
prescription data to the Department of Justice (DOJ) at the time
prescriptions are dispensed. (Health & Saf. Code Sec. 11165.)
Existing law provides that pharmacists, in filling a controlled
substance prescription, shall provide to DOJ the patient's name,
date of birth, the name, form, strength, and quantity of the
drug, and the pharmacy name, pharmacy number, and the
prescribing physician information. (Health & Saf. Code Sec.
11165, subd. (d).)
Existing law provides that the DOJ may initiate the referral of
the history of controlled substances dispensed to an individual,
based on the CURES data, to licensed health care practitioners
and pharmacists, as specified. (Health & Saf. Code Sec.
11165.1(b).) Existing law provides that the history of
controlled substances dispensed to a patient based on CURES data
that is received by a practitioner or pharmacist shall be
considered medical information, as specified. (Health & Saf.
Code Sec. 11165.1(c).)
Existing law includes a detailed regulatory scheme for the
production and distribution of specified chemicals that may be
precursors to controlled substances, and provides that producers
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and users of precursor chemicals must obtain a permit from DOJ.
Applications for permits must include documentation of
legitimate uses for regulated chemicals. (Health & Saf. Code
Sec. 11106.)
Existing law requires any person or entity that sells,
transfers, or otherwise furnishes a specified chemical
precursor to another person or entity to submit a report to
the DOJ, generally within 21 days, of each transaction. The
report must include the identification information about the
purchaser. (Health & Saf. Code Sec. 11100(d).)
Existing law provides that it is unlawful for a retailer to sell
in a single transaction more than three packages, or 9 grams, of
a product that he or she knows to contain ephedrine,
pseudoephedrine, norpseudoephedrine, or phenylpropanolamine.
With specified exceptions, the three package-9 grams per
transaction limitation applies to any product lawfully furnished
over the counter without a prescription pursuant to applicable
federal law. This offense is a misdemeanor, punishable by a
county jail term of up to 6 months, a fine of up to $1,000, or
both. (Health & Saf. Code Sec. 11100 (g)(3).)
Existing federal law, the Combat Methamphetamine Epidemic Act
(CMEA), includes detailed restrictions and requirements for the
retail sale of ephedrine, pseudoephedrine, norpseudoephedrine,
or phenylpropanolamine. These restrictions include, in part:
no more than 3.6 grams may be sold in a single
transaction;
no more than 9 grams per customer may be sold in a
one-month period;
if the drug is obtained through postal or similar
delivery, no more than 7.5 grams can be so obtained;
the seller must maintain a written or electronic logbook
of each sale, including the date of the transaction, the
name and address of the purchaser, and the quantity sold;
the purchaser must present valid identification, as
specified, and the seller must verify the identification;
the purchaser must sign a paper or electronic logbook,
as specified;
the seller must maintain these documents, as specified;
and
law enforcement shall have access to the information
pursuant to regulations adopted by the DOJ. (21 U.S.C.
Sec. 830 (e) and 844 (a).)
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Existing federal law includes an exception to the log book
recording of transactions in the case of a transaction that
involves a single package that contains not more than 60
milligrams of pseudoephedrine. (21 U.S.C. Sec. 841
(e)(1)(A)(iii).) Existing federal law requires retailers to
retain purchase information for not less than two years. (21
U.S.C. Sec. 841 (v)(6).)
Existing federal regulations protect the privacy of individuals
who purchase scheduled listed chemical products by restricting
disclosure of information in logbooks as follows:
the information shall be disclosed as appropriate to the
Administration and to State and local law enforcement
agencies;
the logbook information shall not be accessed, used, or
shared for any purpose other than compliance with CMEA or
to facilitate a product recall; and
a regulated seller who in good faith releases
information in a logbook to Federal, State, or local law
enforcement authorities is immune from civil liability for
the release unless the release constitutes gross negligence
or intentional, wanton, or willful misconduct. (21 C.F.R.
Sec. 1314.45.)
This bill would repeal the existing statutory provisions for
over-the-counter sales of pseudoephedrine and related products
and replace them with new sales limits consistent with federal
law. This bill would retain the exception for pseudoephedrine
sold or provided pursuant to a prescription.
This bill would provide that the DOJ shall enter into a
memorandum of understanding (MOU) with the National Association
of Drug Diversion Investigators or comparable organization to
provide pseudoephedrine retailers with access to an electronic
authorization and monitoring system. With regards to that
system, this bill would:
provide that law enforcement access to the database
system shall be recorded by means of a unique access code
for each person using the system, and require access
records to be maintained by DOJ;
provide that the system shall provide retail
distributors with an immediate real-time alert if a person
attempts to purchase pseudoephedrine in violation of the
limits and procedures in this bill; and
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provide that the data system shall conform to the
Federal Bureau of Investigation's Criminal Justice
Information Systems security standards and may be audited
annually.
This bill would provide that neither the DOJ nor any state
agency shall bear any cost for developing, installing, or
maintaining the system, and provide that the state shall impose
no fee on a retail distributor or manufacturer to defray
administrative or other costs for oversight or use of the
system.
This bill would include the following specified procedures for
the sale of pseudoephedrine products:
a retail distributor must store pseudoephedrine products
in a locked cabinet or behind the counter;
a retail distributor may not sell to an individual
consumer more than 3.6 grams of pseudoephedrine within 24
hours and or more than 9 grams in a 30-day period;
as in federal law (CMEA), the data recording
requirements shall not apply to sale of a single package
containing no more than 60 milligrams of a product
containing pseudoephedrine;
the retail distributor must record the following at the
time of making a pseudoephedrine transaction:
o the date of the transaction;
o the type of identification used by the
purchaser, the agency issuing the identification, and
the identification number;
o the name, date of birth, and address of the
purchaser, as verified by a photo identification; and
o the name of the product sold, the quantity of
packages, and the total gram amount of pseudoephedrine
involved in the sale.
the retail distributor shall immediately transmit the
information about the sale and the purchaser to the
electronic monitoring system for the purpose of determining
whether or not the sale would exceed statutory limits;
the purchaser must provide valid identification, as
specified; and
the purchaser must sign a written or electronic log.
The log must reflect the following:
o transaction date;
o the agency issuing the identification used by
the purchaser and the number of the identification;
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o the name and address of the purchaser; and
o the amount and kind of product sold.
This bill would prohibit a retail distributor from maintaining a
separate copy of the transaction information, except as required
by federal data collection law. This bill would require a
retail distributor to maintain sales records in a written log or
in alternative electronic form if the retailer experiences a
mechanical or electronic failure of the data system and is thus
unable to comply with the bill's data collection rules.
This bill would require the retail distributor to give notice to
customers explaining that the identification and purchase data
will be provided to law enforcement pursuant to this bill and
federal law. Notice may be given electronically, in writing, or
through signs.
This bill would provide that the retail distributor need not
keep records of pseudoephedrine transactions in a separate log
or location from those required by federal law. This bill would
provide that its data collection requirements do not apply to
sales of single-use packages containing not more than 60
milligrams of pseudoephedrine.
This bill would state that the Legislature finds that probable
cause is necessary before law enforcement can begin an
investigation based on a single transaction made in violation of
pseudoephedrine purchase limits.
This bill would provide that data collected on over-the-counter
sales of pseudoephedrine shall be maintained for no longer than
two years. This bill would provide that a retail distributor's
use of the system is subject to Civil Code Section 56.101, which
requires health care providers to maintain the confidentiality
of the information in the system.
This bill would provide that transaction information shall not
be accessed, stored, or used by the retail distributor for any
purpose other than to meet the requirements of the bill or to
comply with federal law.
This bill would not become operative unless all of the following
occur:
the DOJ enters into an MOU with the National Association
of Drug Diversion Investigators or a comparable
organization;
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the DOJ determines that a "substantial" number of retail
distributors have access to the system; and
180 days have passed from the date of the DOJ's
certification.
This bill would require that the MOU state that no party to the
MOU nor any entity under contract to provide the electronic
authorization and monitoring system shall be authorized to use
the information contained in the system for any purpose other
than those set forth by the bill's data collection provisions or
federal law.
This bill would authorize the department to enter into any
agreement, contract, or MOU with any law enforcement agency to
provide instant access to information collected through the
pseudoephedrine tracking system.
This bill would provide that it is the intent of the Legislature
that the bill preempt all local ordinances or regulations
concerning the over-the-counter sale of pseudoephedrine
products.
This bill would define the following terms:
"retail distributor" means a grocery store, general
merchandise store, drug store, or related entity that sells
pseudoephedrine products only for personal use to walk-in
customers or in a face-to-face transaction. The parent
company of a retailer is not a retail distributor for
purposes of this bill;
"drug store," "general merchandise store," or "grocery
store" means such an entity as described in a certain
sections of specified classification manual published by
the U.S. Office of Management and Budget in 1987; and
"sale for personal use" means a sale of pseudoephedrine
in a single transaction to an individual customer for
legitimate medical use. Sale for personal use also
includes sales to employers to be dispensed to employees
from first-aid kits or medicine chests.
This bill would contain the following findings and declarations:
NADDI is the only organization prepared to implement,
and capable of implementing, a statewide electronic
tracking system for retail sales of medicines containing
pseudoephedrine as soon as would be mandated by the bill;
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only NADDI is positioned to implement the system as
provided for in the bill because manufacturers of these
medicines have entered into a contractual relationship with
NADDI to provide access to the system, without charge, to
all retailers and to appropriate state and local law
enforcement agencies; and
it is the intent of the Legislature in enacting the bill
to mandate a statewide electronic tracking system for
retail sales of medicines containing pseudoephedrine
without incurring cost to the state to run the system
because manufacturers of pseudoephedrine products will fund
the system.
This bill would sunset on January 1, 2017.
COMMENT
1. Stated need for the bill
According to the author:
AB 1455 implements a statewide electronic tracking in retail
outlets to monitor all over-the-counter (OTC)
pseudoephedrine (PSE) purchases in real-time to prevent
"smurfing" where criminals go from store-to-store attempting
to exceed the legal purchase limits established in federal
law.
Methamphetamine is a powerful psychostimulant drug that
impacts the central nervous system, is highly addictive, and
can be synthesized with a basic understanding of chemistry
from chemicals that are commonly available to consumers. In
2008, law enforcement in California seized 119
methamphetamine labs, including 15 super labs that have the
capability of producing more than ten pounds. A principal
ingredient in clandestine methamphetamine production is
pseudoephedrine/ephedrine and its isomers and/or salts,
which are also common decongestant ingredients in many OTC
cold and allergy medications.
Federal law regulates the retail sale of PSE products. The
laws prohibit sale of more than 3.6 grams in a single
transaction, and more than 9.0 grams in one-month. A seller
must maintain a written or electronic log of each sale,
including the transaction date, name and address of the
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purchaser, and the quantity sold. A purchaser must present
valid identification, verified by the seller. The purchaser
must sign a paper or electronic logbook that must be
maintained by the seller. California retailers comply with
federal law, but the records are not coordinated. AB 1455
centralizes this information and makes it available in
real-time.
The electronic tracking system will be funded by industry
and administered by the National Association of Drug
Diversion Investigators (NADDI), which will support the
database. The state Department of Justice will enter into a
Memorandum of Understanding with NADDI to ensure appropriate
access to the system for retailers, and access for law
enforcement. Retailers cannot access database information;
they only input information into the system. Law
enforcement is the only entity with access to the
information in the database.
When a consumer seeks to purchase any OTC PSE-containing
product from a retailer, the retailer will be required to
input the federally-mandated consumer information into the
electronic database. Retailers will access the system
through either a web-based interface, where the only
requirement is a computer with internet access, or direct
interface with the database. The system will instantly
electronically alert the retailer if the consumer is about
to purchase amounts in excess of the amounts authorized by
law. If an alert is received by the retailer, the sale
cannot be made. Any retailer making a sale without entering
the information into the central database through this
system, or making a sale notwithstanding an alert, will be
subject to prosecution for a misdemeanor. A second
conviction is punishable by up to one year in county jail
and a $10,000 fine.
Co-sponsor, the Consumer Healthcare Products Association
(CHPA), the trade association representing U.S. manufacturers
of nonprescription medicines, writes:
With NPLEx [See Comment 2] in place, retailers will obtain
pre-approval from the system to make a sale, and over-limit
sales are denied, stopping illegal sales before they happen.
The sales data are maintained in a highly secure
environment and, under federal law and the provisions of AB
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1455, are legally available only to law enforcement.
Manufacturers fully fund NPLEx, so there is no charge to
retailers, states, or law enforcement. In the states with
the most critical meth lab problems, electronic tracking has
been the policy solution of choice for addressing PSE
diversion. Twelve states require retailers and pharmacists
to utilize a state-wide PSE sales tracking system, including
six of the ten states hardest hit by meth labs.
The California State Sheriffs' Association, co-sponsor, writes,
"[t]he proliferation of smurfing and illegal purchasing
operations of pseudoephedrine and ephedrine now warrants a
real-time and proactive approach to combating methamphetamine
production in California. By requiring all retailers to
participate in the mandatory electronic authorization and
monitoring system, it becomes impossible for a person to travel
from store to store as a way to purchase an illegal amount of
PSE. The electronic system contemplated allows law enforcement
to monitor all sales in real-time and on a statewide basis which
will greatly enhance suppression and investigative efforts."
2. Issues regarding using a third-party to provide the database
The intent of this bill to facilitate the creation of a database
that will store information regarding every person who purchases
pseudoephedrine-based products within the state of California,
without a prescription - that tracking system would alert stores
when a particular purchaser has exceeded the specified purchase
limit.
To create the database that would contain the personal
information of any person who purchases pseudoephedrine products
in California, this bill would require the DOJ to enter into a
Memorandum of Understanding (MOU) with the National Association
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of Drug Diversion Investigators (NADDI)<1>. This bill would
outline the contents of the MOU and provide that the system must
provide free access to retailers within the state. According to
the sponsors, NADDI will then enter into a contract with Appriss
(a private company headquartered in Louisville, Kentucky that
provides similar database services to other states), and pay for
the cost of the system by charging the manufacturers of those
products (the bill also contains intent language regarding cost
to this effect). That unusual relationship between the State of
California and the final provider, Appriss, raises not only
questions about how California may enforce the provisions of the
third party contract (NADDI with Appriss), but also the
appropriateness of authorizing a database containing every name,
address, date of birth, identification number, and name and
quantity of pseudoephedrine to be maintained by that third-party
outside of California.
a. NADDI and Appris
Given that NADDI would be responsible for choosing the vendor
and implementing the proposed database, the following
background is provided on both NADDI and Appriss, the company
apparently pre-selected to provide this database. The bill
would not give the DOJ authority to approve or disapprove of
the entity selected by NADDI - essentially, this bill would
delegate the authority to select the vendor that will receive
information about every resident in the state to NADDI.
The proposed process appears to be consistent with a
multi-state initiative by industry to implement an electronic
tracking of over-the-counter sales of pseudoephedrine. That
initiative is described as follows by the Consumer Healthcare
Products Association (CHPA), co-sponsor, in their January 11,
2010 letter to the President of the Kansas Board of Pharmacy
that also urged the use of the Appriss service:
--------------------------
<1> NADDI (est. 1989) is a national non-profit organization
that, according to its Web site, "facilitates cooperation
between law enforcement, healthcare professionals, state
regulatory agencies and pharmaceutical manufacturers in the
investigation and prevention of prescription drug abuse and
diversion. NADDI also sponsors and conducts specialized
educational seminars and conferences." NADDI is based in
Maryland. The association has 21 state chapters, including
California.
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On behalf of our member companies that make
nonprescription PSE medicines, CHPA has offered to fully
fund a PSE sales electronic tracking system in Kansas.
CHPA's proposal is the only one that meets the statutory
funding requirement, allowing the Board of Pharmacy to
meet its legislative directive.
CHPA's member companies have entered into exclusive
contracts with the nation's leading vendor of PSE
e-tracking systems, and therefore are able only to
provide funding for the system that has been offered to
the Board. We are offering to provide this system, named
the National Precursor Log Exchange (NPLEx), across
multiple states as an integrated solution. . . .
NADDI is a non-profit association that provides education
and training for law enforcement agents on the diversion
of pharmaceutical products. Its role in the NPLEx
initiative is to enter into a Memorandum of Understanding
(MOU) with the appropriate state agency, act as the
administrator of NPLEx, and to liaise with law
enforcement to ensure that NPLEx is understood and fully
utilized.
CHPA's participating member companies are supporting
NPLEx by paying a transactional fee based on sales of
their PSE products. This funding stream fully supports
NPLEx, meaning that the system can be deployed and
maintained at no charge to retailers or to states. Access
to NPLEx is available free of charge to any law
enforcement agent who is properly authorized by the
state. . . .
Reflecting the priority that our member companies have
put on delivering a single vendor platform for NPLEx,
their contracts with Appriss and NADDI are exclusive, and
therefore prohibit our companies from sponsoring systems
operated by any other vendor.
This bill represents the policy choice of joining a few
other states in selecting a single out-of-state private
company to operate a database that would track purchases of
pseudoephedrine products by requiring retailers to enter the
purchaser's personal information. That database, funded by
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the manufacturers of pseudoephedrine products, would log not
only the individual's personal information, but also the
product they purchased.
b. Lack of a direct contract with Appriss, a non-California
company
Although apparently consistent with the approach used in
several states, this bill would take the unusual approach of
requiring DOJ to enter into an MOU with NADDI, who
themselves would not actually be the one providing for the
contracted database. It is unclear whether that Memorandum
of Understanding would be a binding contract, or whether it
would just represent a mutual agreement between parties
(MOUs can be either, the key issue is whether the agreement
itself meets the requirement of a contract, and in the
absence of any funds changing hands (which would create the
legal requirement of consideration) it is unclear whether
the MOU would be a binding contract). Even if the MOU is a
binding contract, the actual entity providing the service is
another party, Appriss, who would not have a direct
contractual relationship with DOJ.
Given the contractual distance between the DOJ and Appris,
the Committee should consider whether the State of
California has sufficient control and recourse to enforce
the requirements imposed by this bill. In comparison, if
the DOJ had a contract directly with Appriss, and Appriss
breached the contract by violating privacy restrictions or
not actually providing the service promised, DOJ would have
a clear action for breach of contract.
c. Express statutory requirement regarding MOU appears to be
unusual
This bill would required the DOJ to enter into an MOU with
NADDI to provide the database system. This clear statutory
directive appears to be unusual. Staff reviewed a number of
code sections and was unable to find another instance where
a statute provided that the state enter into an MOU with a
specific private, third-party entity.
d. Comparison to CURES
Committee staff notes that there are alternatives to the
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proposed privately held, third-party database.
Specifically, the CURES program provides for real-time
electronic transmission of specified prescription data to
DOJ. Under CURES, pharmacists, in filling a controlled
substance prescription, must provide to DOJ the patient's
name, date of birth, the name, form, strength, and quantity
of the drug, and the pharmacy name, pharmacy number, and the
prescribing physician information. Essentially the data is
analyzed for indications that controlled substances are
being improperly prescribed, or that drug abusers are
obtaining prescriptions for controlled substances from many
different doctors (doctor shopping). Physicians and
pharmacists, in addition to law enforcement, have access to
CURES data through PAR - patient activity reports.
Currently, a private contractor - Infinite Solutions Inc.
(ISI) - collects CURES data for DOJ.
Unlike the system proposed by this bill, that existing
system serves as an example of the DOJ directly contracting
with a third party for a similar system. That direct
contracting allows DOJ to use a competitive bid process and
select the company that is best suited for providing the
service to the State of California - that process also
provides DOJ with clear recourse should the vendor not work
out.
Because of these concerns, the Committee should consider
whether it would be more appropriate to, in lieu of the
proposed process, instead authorize DOJ to create and run the
proposed database. The Committee may also wish to consider
whether to permit DOJ to charge a fee to help address any cost
issues.
SHOULD THIS BILL BE AMENDED TO INSTEAD AUTHORIZE DOJ TO CREATE
AND RUN THE PROPOSED DATABASE?
3.Confidentiality of Medical Information Act; other existing law
protections already apply
This bill would provide that a retail distributor's use of the
system is subject to Civil Code Section 56.101 of the
Confidentiality of Medical Information Act (CMIA). The sponsors
have acknowledged that this provision of the bill is intended to
subject the retailer's use of the database to CMIA; it does not,
however, subject the database itself to CMIA.
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With respect to retailer's use only, Section 56.101 requires
every provider of health care, health care service plan,
pharmaceutical company, or contractor who creates, maintains,
preserves, stores, abandons, destroys, or disposes of medical
records to do so in a manner that preserves the confidentiality
of the information. Furthermore, any provider of health care,
health care service plan, pharmaceutical company, or contractor
who negligently creates, maintains, preserves, stores, abandons,
destroys, or disposes of medical records is subject to the
remedies and penalties provided by CMIA, as specified. By
providing that a retail distributor's use of the system is
subject to Section 56.101, this bill is intended to provide that
specified penalties under CMIA would apply to a retail
distributor's handling of the information, including a private
right of action.
It is important to note, however, that Section 56.101 already
applies to pharmacies. As a result, the impact of this
provision is to extend it to other "retail distributors" who are
not already subject to its provisions. Those would include a
grocery store, general merchandise store, or related entity that
sells pseudoephedrine products only for personal use to walk-in
customers or in face-to-face transactions. However, these
entities are already required to safeguard their customers'
personal information under provisions of existing law that
require businesses to protect customers' personal information
from unauthorized access, destruction, use, modification, or
disclosure.
Furthermore, existing law requires those same entities to take
all reasonable steps to safely dispose of customer records by
shredding, erasing, or otherwise modifying the personal
information in those records to make it unreadable or
undecipherable. These provisions also contain remedies and
penalties, including a private right of action.
In addition, the author and sponsors have indicated that in
order to connect with the electronic database system, retail
distributors need only an Internet connection. Any breaches of
security in that system must be handled according to Civil Code
Section 1798.82, which requires notification to affected
California residents.
4. Notification to consumers that their information will be
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entered into the database
This bill would require the retail distributor to give notice to
customers explaining that their identification and purchase data
will be provided to law enforcement pursuant to this bill and
federal law for purposes of determining the legality of a
proposed sale. Notice may be given electronically, in writing,
or through signs.
This bill applies only to the sale of pseudoephedrine products
for personal use to walk-in customers or in a face-to-face
transaction. As a result, it is not clear how notice would be
given electronically. For example, would notice on the retail
distributor's Web site meet this requirement? Or, would emailed
notice suffice? In either case, the customer does not receive
this important notification at the time of the transaction,
which arguably lessens its impact. In fact, nothing in the bill
requires that any of the notifications be provided at the time
of the transaction. The Committee may thus wish to amend the
bill to address these concerns.
SHOULD THE BILL BE AMENDED TO REQUIRE THAT NOTIFICATION BE
PROVIDED BY CLEAR SIGNAGE OR IN WRITING AND NOT ELECTRONICALLY?
SHOULD THE BILL BE AMENDED TO REQUIRE THAT ANY NOTIFICATION BE
GIVEN AT THE TIME OF THE TRANSACTION?
Existing law currently exempts prescription sales of
pseudoephedrine from over-the-counter sales limits. This bill
would likewise exempt those sales from being included in the
database. Because it could be argued that customers should know
that they can purchase pseudoephedrine with a prescription and
their personal information will not be included in the database,
the Committee may wish to amend the bill to alert consumers of
this fact.
SHOULD CONSUMERS ALSO BE TOLD THAT THEY CAN AVOID THE COLLECTION
OF THEIR INFORMATION IN A DATABASE BY OBTAINING A PRESCRIPTION
FOR THEIR PSEUDOEPHEDRINE PURCHASE?
5. Limitations on retailers' use already restricted under
federal law
AB 1455 (Hill)
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This bill would provide that transaction information shall not
be accessed, stored, or used by the retail distributor for any
purpose other than to meet the requirements of the bill or to
comply with federal law. This provision is consistent with
federal law which already provides that logbook information
shall not be accessed, used, or shared for any purpose other
than compliance with CMEA or to facilitate a product recall.
Because the CMEA would preempt any state law that was less
stringent, if this bill did not contain this limitation on
retailers' use of the logbook information (and state law was
thus less stringent), federal law's limitations on logbook use
would control.
6. Law enforcement access
The goals of this bill are two-fold: (1) stop consumers from
purchasing more than the legal limit of pseudoephedrine; and (2)
facilitate the ability for law enforcement to receive
information about the purchases of pseudoephedrine. Although
law enforcement currently has the ability to review the
individual pseudoephedrine logs maintained by retailers, the
enhanced ability for law enforcement to search a database for
specific information raises additional questions.
a. Probable cause
Generally speaking, probable cause is the standard by which a
police officer has authority to make an arrest, conduct a
search, or obtain a warrant. This bill would provide that the
Legislature finds that it is necessary for probable cause to
be demonstrated to trigger an investigation in connection with
an individual whose requested purchase is denied by the system
a single time.
That provision codifies an important point - just because an
individual is denied a single purchase does not mean that the
single denial, absent probable cause, should be sufficient to
trigger an investigation. If that were the circumstance, many
individuals who accidentally attempt to purchase an amount
over the statutory limit could find themselves the subject of
an investigation.
Despite the importance of ensuring that investigations do not
arise from a single accidental attempted purchase, it should
AB 1455 (Hill)
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be noted that the language of the bill is not binding and has
no substantive effect. In fact, the Senate Public Safety
Committee's analysis of this bill noted the "unusual
construction" of this provision and further stated,
"[o]rdinarily, a probable cause requirement would be stated
directly." As a result, even though the Legislature codified
the above "finding," a single accidental sale could result in
an investigation by law enforcement pursuant to the program
proposed by this bill.
b. Access by a unique code
The bill would further provide that law enforcement access to
the system shall be recorded by means of a unique access code
for each individual accessing the system. Each user's history
shall be maintained and may be audited by the DOJ.
7. Exemption for single package sales already provided for
under federal law
This bill would provide that its data collection requirements do
not apply to sales of single-use packages containing not more
than 60 milligrams (one 60 mg tablet or two 30 mg tablets) of
pseudoephedrine. This provision is consistent with federal law
which already provides that single-package sales containing not
more than 60 milligrams of pseudoephedrine do not require a
customer to sign the logbook or show identification.
8. Security and standards for the database
Although it is unclear how requirements could be enforced
against Appriss, the bill does contain specific provisions that
must be contained in the MOU with NADDI, and would require the
system's security program to comply with the specified security
standards.
a. MOU requirements
This bill would require that the MOU state that no party to
the MOU nor any entity under contract to provide the
electronic authorization and monitoring system shall be
authorized to use the information contained in the system for
any purpose other than those set forth by the bill's data
collection provisions or federal law. This is consistent with
AB 1455 (Hill)
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federal law which provides that logbook information shall not
be accessed, used, or shared for any purpose other than
compliance with CMEA or to facilitate a product recall.
This bill would also provide that the MOU require that any
retail distributor's access to the electronic database be
limited to records of sales transactions made by that retail
distributor, and that access shall be solely for the purposes
of complying with CMEA, this bill, or to respond to a law
enforcement request or court order.
b. Security standards
This bill would provide that the database system shall conform
to the Federal Bureau of Investigation's Criminal Justice
Information Systems security standards and may be audited
annually. While it is not clear what these security standards
are, apparently Appriss already complies with them. The
January 11, 2010 letter noted above in Comment 2a by
co-sponsor Consumer Healthcare Products Association (CHPA) to
the President of the Kansas Board of Pharmacy urging that
Kansas also use the NPLEx-Appriss-NADDI database proposal
stated the following with respect to why Appriss was chosen by
CHPA's member companies as the vendor:
Appriss complies with the U.S. Department of Justice's
Criminal Justice Information Services data security
standards.
9. Funding
This bill would provide that neither the DOJ nor any state
agency shall bear any cost for developing, installing, or
maintaining the system. This bill would also provide that the
state shall impose no fee on a retail distributor or
manufacturer to defray administrative or other costs for
oversight or use of the system. The bill also contains
legislative findings and declarations specifying that it is the
intent of the Legislature in enacting the bill to mandate a
statewide electronic tracking system for retail sales of
medicines containing pseudoephedrine without incurring cost to
the state to run the system because manufacturers of
pseudoephedrine products will fund the system.
10. Additional opposition concerns
AB 1455 (Hill)
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Opponents, American Civil Liberties Union (ACLU) and Electronic
Frontier Foundation (EFF) both argue that this bill should be
amended to include a warrant requirement. The ACLU writes that
the bill "would result in the treatment of all allergy and cold
symptom sufferers as criminal suspects without any probable
cause. AB 1455 raises serious concerns around consumer
expectations of privacy and protections against unlawful search
and seizure, as protected by the Fourth Amendment and Article I,
[Secs.] 1 and 13 of our state constitution."
The Kentucky Narcotics Officers Association (KNOA) writes in
opposition:
This bill follows the electronic tracking program ? in
Kentucky. The vendor [for] ? California under AB 1455 is
the same vendor that provides those services in Kentucky.
We regret to inform you that the electronic tracking method
that your committee is now considering has failed miserably
in Kentucky to reduce meth labs. Our initial hopes for its
success proved groundless. Not only has electronic tracking
not succeeded in reducing meth labs, but we now have more
meth labs than we have ever had. The failure of electronic
tracking in Kentucky has caused [KNOA] to seek legislation ?
that is modeled after the extremely successful Oregon
approach under which pseudoephedrine products can only be
sold [by] prescription.
Some [argue] ? that the increase in Kentucky meth labs was
due to the electronic tracking system helping police find
more meth labs. But out of 741 meth labs in 2009 we have
tracked only 52 of those directly related to [electronic
tracking]. The industry [argues] that the system is free.
It cost Kentucky law enforcement over $1.5 million to clean
up labs in 2009.
The Los Angeles County District Attorney's Office opposes the
measure, writing, "[w]hile the use of a computerized
authorization and monitoring program would appear to be a
sufficiently safe method of keeping products containing
pseudoephedrine out of the hands of methamphetamine producers,
unfortunately experience has shown this system is ineffective at
keeping methamphetamine producers from obtaining the
pseudoephedrine they need to cook meth."
AB 1455 (Hill)
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Support : Shasta County Sheriff; San Bernardino County Sheriff;
Tuolumne County Sheriff; Chief Probation Officers of California;
California Probation, Parole and Correctional Association;
California Law Enforcement Association of Records Supervisors;
Mariposa County Sheriff-Coroner; Butte County Sheriff; Humboldt
County Sheriff; El Dorado County Sheriff-Coroner; Alameda County
Sheriff; Del Norte County Sheriff; Mono County Sheriff; Napa
County Sheriff; Nevada County Sheriff; Bayer Health Care;
California Chamber of Commerce; Amador County Sheriff;
Sacramento County Sheriff; Rite Aid; San Bernardino County
Sheriff; Santa Barbara County Sheriff; Santa Cruz County
Sheriff; California Peace Officers Association (if amended);
Molina Healthcare; California Healthcare Institute; California
Manufacturing & Technology Association; California Society of
Health-System Pharmacists; California Retailers Association;
Pfizer; Johnson & Johnson; California District Attorneys
Association (in concept); sanofi-aventis; Peace Officers
Research Association of California; National Association of
Chain Drug Stores; Florida Department of Law Enforcement;
California Veterinary Medical Association; Los Angeles County
Sheriffs Department; Orange County Sheriff; Kings County
Sheriff; Yolo County Sheriff; California Pharmacists
Association; Reckitt Benskiser; Contra Costa Sheriff
Opposition : American Civil Liberties Union (unless amended);
California Public Defenders Association; California Narcotics
Officers' Association; Electronic Frontier Foundation; Kentucky
Narcotic Officers Association; Los Angeles District Attorneys
Association; National Narcotic Officers Association Coalition;
Oregon State Sheriffs Association; Oregon District Attorneys
Association; Oregon Association of Chiefs of Police; Oregon
Narcotics Enforcement Association; Oregon Alliance for Drug
Endangered Children; Oregon Methamphetamine Task Force; Privacy
Rights Clearinghouse (unless amended)
AB 1455 (Hill)
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HISTORY
Source : California State Sheriffs' Association; Consumer
Healthcare Products Association
Related Pending Legislation : SB 484 (Wright, 2009), which would
have required a prescription for pseudoephedrine products,
failed passage in the Assembly Public Safety Committee.
Prior Legislation :
SB 276 (Vasconcellos, Ch. 276, Stats. 2003) clarified and
simplified the law regarding reporting and tracking requirements
for specified chemicals that may be used in making controlled
substances.
AB 162 (Runner, Ch. 978, Stats. 1999) created the three
package-9 grams per transaction limitation.
Prior Vote :
Senate Public Safety Committee (Ayes 6, Noes 1)
Assembly votes not relevant
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