BILL ANALYSIS                                                                                                                                                                                                    






                                 SENATE HEALTH
                               COMMITTEE ANALYSIS
                       Senator Ed Hernandez, O.D., Chair


          BILL NO:       AB 688                                      
          A
          AUTHOR:        Pan                                         
          B
          AMENDED:       June 23, 2011                               
          HEARING DATE:  July 6, 2011                                
          6
          CONSULTANT:                                                
          8
          Trueworthy                                                 
          8
                                                                     
                                        
                                     SUBJECT
                                         
                              Food and drugs: sale

                                         
                                    SUMMARY  

          Prohibits a retailer from selling, or permitting to be 
          sold, infant formula, baby food, and over-the-counter (OTC) 
          drugs, as defined, after the "use by," "use before," or 
          "expiration" date provided on the product's packaging 
          pursuant to federal law.


                             CHANGES TO EXISTING LAW 

          Existing federal law:
          Provides for the regulation of food, drugs, and cosmetics 
          by the U.S. Food and Drug Administration (FDA) under the 
          Food, Drug and Cosmetic Act.

          Requires expiration dates to be placed on drugs, as 
          defined, and requires a "use by" date to be included on the 
          product label of infant formula.

          Existing state law:
          Establishes the Sherman Food, Drug, and Cosmetic Law 
          (Sherman Act), which is administered by the Department of 
                                                         Continued---



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          Public Health (DPH), to regulate the contents, packaging, 
          labeling, and advertising of food, drugs, and cosmetics in 
          California. 
          
          Provides that it is unlawful to manufacture, sell, deliver, 
          hold, or offer for sale any drug or device that is 
          adulterated, as defined.

          Establishes that a drug is adulterated if its quality or 
          purity falls below the standards set forth in the drug 
          compendia.

          Requires infant formulas to bear a "use by," "use before," 
          or "expiration" date on their product labels.

          Requires drug products, including OTC drugs, to have 
          expiration dates on their label.

          Establishes that any person who violates any provision of 
          the Sherman Act is subject to imprisonment for not more 
          than one year in the county jail, or a fine of not more 
          than one thousand dollars ($1,000). 

          Allows DPH, upon the request of a health officer, to 
          authorize the local health department of a city, county, 
          city and county, or local health district to enforce the 
          provisions of the Sherman Act and its regulations that 
          pertain to retail food establishments, as defined, if DPH 
          determines that the local health department has sufficient 
          personnel with adequate training to do so, and requires 
          that the enforcement be limited to the area under the 
          jurisdiction of the local health department.

          This bill:
          Prohibits a retailer from selling or permitting to be sold 
          infant formula or baby food after the "use by," "use 
          before," or "expiration" date on its packaging as required 
          pursuant to federal law.

          Prohibits a retailer from selling or permitting to be sold 
          OTC drugs, as defined, after the expiration date on its 
          packaging as required by federal law.

          Defines infant formula and baby food consistent with the 
          definition under federal regulations.




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          Defines an OTC drug as a nonprescription drug regulated by 
          the FDA that is required to have an expiration date on its 
          packaging pursuant to federal regulations.

          Provides that, in lieu of other penalties, any person who 
          violates these prohibitions is guilty of an infraction, 
          punishable by a maximum fine of $10 per day for each item 
          sold, or permitted to be sold, after the "expiration," "use 
          by," or "use before" date.  

          Requires the date of sale to be established by evidence of 
          the proof of purchase, including, but not limited to, a 
          sales receipt. Further directs any fines collected to be 
          deposited as specified.


                                  FISCAL IMPACT  

          According to the Assembly Appropriations committee 
          analysis, AB 688 would result in potential minor, 
          absorbable costs to DPH to respond to complaints related to 
          the sale of expired food items and OTC drugs.


                            BACKGROUND AND DISCUSSION

           According to the author, this bill will protect consumers 
          and the most vulnerable from the risk of serious illness 
          resulting from the consumption of expired baby food and 
          over-the-counter drugs that may be spoiled or that no 
          longer retain potency.  The author argues that the "use 
          by," "use before," and "expiration" dates on these products 
          indicate the time at which they will lose their potency as 
          intended and could become dangerous to consume yet there is 
          no prohibition on selling these items after their "use by," 
          "use before," or "expiration" dates.

          Product dating in California
          According to the Food and Drug Branch (FDB) of DPH, only a 
          few products require "sell by" dates or "expiration dates" 
          in California.  State law requires dairy products to meet 
          "open dating" requirements, which includes a pack date, 
          expiration date, or quality assurance/freshness date.  
          Infant formula and baby foods are required to bear an 




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          expiration date to ensure full nutritional value.  

          Federal regulations, which California adopts, require 
          infant formula to bear a "use by" date on their product 
          labels.  Baby foods are not required to declare a "use by" 
          date on their product labels although most food processors 
          voluntarily list a "use by" date on their baby food labels 
          to assist with stock rotation.  The "use by" date on the 
          label of infant formula is set by manufacturers based on 
          their tests or other information showing that, until the 
          date and under the normal conditions of handling, storage, 
          preparation, and use, the formula will contain the 
          quantities of each nutrient declared on the label and is 
          otherwise of acceptable quality.  

          The FDA began requiring expiration dates on drugs in 1979 
          in order to set uniform testing and reporting guidelines.  
          Federal regulations require a drug product to bear an 
          appropriate expiration date as determined by stability 
          testing that analyzes the capacity of the drug to maintain 
          its identity, strength, quality, and purity for the period 
          of shelf life that the manufacturer picks.  Expiration 
          dates are also required to be related to any storage 
          conditions specified on the label.  Homeopathic drug 
          products and new drug products for investigational use are 
          exempt from federal regulations governing expiration 
          dating.     

          Attorney General investigation 
          In response to consumer reports about expired products on 
          store shelves in Southern California, the Attorney General 
          (AG) launched an undercover shopping operation in March 
          2008, which found 48 expired products on the shelves of 26 
          CVS pharmacies in Los Angeles, Orange, and San Diego 
          counties.  The investigators found that some of the expired 
          products, which included baby formula, toddler food, and 
          over-the-counter medications, were between four and six 
          months old.  The investigation noted that some of the 
          products' "sell by" dates were hidden with price tags or 
          other store stickers.   As a result of the investigation, 
          the AG stated that CVS'  practice of stocking expired items 
          on its  stores' shelves falsely implied that the products 
          met federal standards, and the AG called on the pharmacy to 
          change its policies to ensure that sales of expired 
          products would not occur in the future.




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          Under the AG settlement agreement between the AG and CVS, 
          CVS is permanently enjoined and restrained from selling or 
          offering to sell expired products to any person at a CVS 
          store in California, among other things.  CVS has agreed to 
          comply with several terms and requirements, including: 
          implementation, review, or revision of written policies 
          regarding appropriate practices to provide that infant 
          formula, baby food, eggs, dairy products, and  
          over-the-counter drugs are not sold past their used by or 
          expiration dates; review and /or revise its expired 
          products policies and training materials, including 
          policies and contracts with third-party providers; 
          dissemination of its expired products policies to 
          designated store employees, as specified; require the 
          completion and repetition of training regarding such 
          policies; require stores to check expiration or best-by 
          dates of various categories of specified  products at least 
          twice a month; implement a consumer coupon program related 
          to finding expired products in a store; and require 
          prominent posting of notices in the aisles where specified 
          products are offered for sale.

          California Retail Food Code
          SB 144 (Runner), Chapter 23, Statutes of 2006, repealed the 
          California Uniform Retail Food Facilities Law and 
          established the California Retail Food Code (CalCode) in 
          order to create uniformity between California's retail food 
          safety laws and those of other states, as well as to 
          enhance food safety laws based on the best available 
          science.  CalCode is modeled on the federal Model Food 
          Code, which was drafted by the United States Food and Drug 
          Administration and is updated every two years.  CalCode is 
          substantially similar to the Model Food Code in terms of 
          its substantive food safety and sanitation content.

          Violations of CalCode are considered misdemeanors, unless 
          otherwise specified, and can be punishable by a fine of not 
          less than $25 or more than $1000, by imprisonment in the 
          count jail for up to 6 months, or by both fine and 
          imprisonment.  Local enforcement agencies can also charge 
          re-inspection fees and impose administrative penalties.  
          Additionally, local enforcement agencies can require that 
          retail food facilities establish a corrective action plan 
          with timelines to correct violations noted during 




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          inspections.

          Prior legislation
          AB 1512 (Lieu and Jones) of 2009 had similar provisions to 
          those contained in AB 688.  AB 1512 was vetoed by Governor 
          Schwarzenegger.  The veto message stated the bill was 
          unnecessary since current law already had strong provisions 
          and accompanying penalties for adulterated food and drug 
          products.
          
          SB 550 (Florez) of 2009 would require a grocery store that 
          uses a point-of-sale system to ensure that when a recalled 
          product is scanned, the point-of-sale system will notify 
          the employee and customer that the product being purchased 
          is subject to a recall. SB 550 was amended to delete these 
          provisions in the Assembly.
          
          Arguments in support
          The Consumer Federation of California, the sponsor of AB 
          688 write, expired products may be dangerous to consume and 
          could be potentially fatal.  Digesting expired products 
          deprives the consumer of the intended benefit of the 
          product.  For example, infants who do not consume adequate 
          amounts of nutrients such as DHA and ARA may suffer 
          lessened brain development.  Despite this, the sponsor 
          argues, current law allows for the sale of expired infant 
          formula and non-prescription drugs.  

          The Consumer Attorneys of California write that AB 688 
          ensures product safety and effectiveness by making it a 
          crime for retailers to sell drugs, baby food, and baby 
          formula beyond the printed "use by" date.  The California 
          Teamsters Public Affairs Council writes that investigations 
          conducted by the Attorney General of New York and 
          California discovered many retailers covered the "use by" 
          date with stickers.  The California Nurses Association 
          writes, California consumers deserve to purchase safe and 
          effective baby food and OTC drugs.

          Supporters argue AB 688 will bring meaning to the federal 
          government's efforts to protect consumers regarding items 
          that have the most risk of causing potentially dangerous 
          health complications.

          Arguments in opposition




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          The California Retailers Association writes that AB 688 is 
          unnecessary and that mechanisms to police the sale of 
          expired baby food, infant formula, and OTC drugs already 
          exist as retailers are currently subject to a host of 
          federal and state food safety inspection regulations.  
          Standard business practices dictate that when a customer 
          purchases an expired product and brings it to the attention 
          of the store, they will either receive an exchange or a 
          full refund.  The California Retailers Association argues 
          the recent investigations and settlement by the Attorney 
          General's office against retailers who were found to have 
          expired products on their shelves shows that current 
          enforcement policies work.

          The California Grocers Association (CGA) writes that 
          grocers work diligently to ensure that all food products 
          sold to customers are safe and of the highest quality, 
          utilizing written stock rotation policies that often call 
          for products to be removed from shelves a full thirty days 
          prior to expiration.  CGA is unaware of any grocer that 
          currently refuses to exchange items or offer a full refund 
          should a product be found out-of-date.  CGA writes they are 
          concerned AB 688's strict liability approach does not 
          require a consumer to substantiate when or where an 
          "expired" product was purchased nor does it require intent 
          on the part of a grocer. The bill sets up a scenario where 
          individuals with unscrupulous motives could steal or 
          purchase product, wait until the expiration date passes and 
          then pursue remedies against any grocer in California, 
          without ever substantiating when or where the product was 
          purchased or that it was in fact expired upon purchase.  
          CGA further argues that efforts should be spent targeting 
          the bad actors, such as organized retail crime rings who 
          steal quantities of infant formula, drugs, and a variety of 
          other products from grocers and then re-sell them.


                                  PRIOR ACTIONS

           Assembly Health:    12- 5
          Assembly Appropriations:12- 5
          Assembly Floor:     50- 26


                                     COMMENTS




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          1.  Enforcement.  Under current law, retailers, including 
          grocery stores, supermarkets and drug stores, selling any 
          food products are under the jurisdiction of local health 
          departments for these food products.  Because AB 688 amends 
          the Sherman Act, the provisions of this bill would be 
          enforceable by DPH.  Committee staff recommends amending 
          the bill to give enforcement authority to both DPH and the 
          local health departments.
          2.  Suggested clarifying amendment.  AB 688 prohibits a 
          retailer from "selling" or "permitting to be sold" infant 
          formula, baby food, or OTC drugs.  The term "permit to be 
          sold" does not appear to be consistent with the Sherman Act 
          or CalCode.  Committee staff recommends replacing the term 
          "permit to be sold" with "offered for sale" which is 
          consistent with the Sherman Act and CalCode.


                                    POSITIONS  
                                        
          Support:  Consumer Federation of California (sponsor)
                    Abbott Laboratories
                    California Nurses Association
                    California Teamsters Public Affairs Council
                    CALPIRG
                    Consumer Attorneys of California
                    International Formula Council
                    Mead Johnson
                    United Food and Commercial Workers - Western 
                    States Conference

          Oppose:California Grocers Association
                    California Retailers Association
                    CVS Pharmacy


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