BILL ANALYSIS Ó AB 1277 Page 1 Date of Hearing: May 3, 2011 ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER PROTECTION Mary Hayashi, Chair AB 1277 (Hill) - As Amended: April 13, 2011 SUBJECT : Sherman Food, Drug, and Cosmetic Law. SUMMARY : Changes the schedule of licensing inspections by the Department of Public Health (DPH) for drug and medical device manufacturers from once every two years to once every four years, as specified. Specifically, this bill : 1)Clarifies that manufacturers of new biologic products are included in existing law allowing manufacturers of drugs and medical devices to sell, deliver, or give away their products in California if they meet existing licensing and approval requirements prescribed by the federal Food and Drug Administration (FDA). 2)States legislative intent to preclude DPH from requiring drug and medical device manufacturers who meet federal requirements as described in 1), above, to also obtain separate state approval from DPH, except to the extent that DPH requires documentation that the federal requirements are met. 3)Changes the frequency of state licensing inspections for these manufacturers from once every two years to once every four years. 4)Permits DPH to perform follow up inspections, as specified, to protect the health and safety of the public, rather than to determine ownership, adequacy of facilities, personnel qualifications, and compliance with current law. EXISTING LAW 1)Establishes the federal Food, Drug, and Cosmetic Act, granting authority to the FDA to oversee the safety of food, drugs, and cosmetics. 2)Establishes the California Sherman Food, Drug, and Cosmetic Law, administered by DPH, to regulate drug and medical device manufacturers in California. AB 1277 Page 2 FISCAL EFFECT : Unknown COMMENTS : Purpose of this bill . According to the author's office, "Under existing law, biotechnology and medical device companies undergo inspections from the federal Food and Drug Administration every two years and the state Food and Drug Branch every two years. This is in addition to inspections performed by the state Food & Drug Branch prior to clinical trials and potential follow-up inspections the state performs within weeks following federal Food and Drug Administration inspections. "On top of the licensing and inspection fees, these inspections can cost companies thousands of dollars in preparation, manpower and facilitation. A recent survey of biomedical companies demonstrated the widespread perception that oftentimes the California Food and Drug Branch's inspection and licensing process is duplicative of the federal Food and Drug Administration in that there is little differentiation in what is inspected and frequent lack of coordination in the state and federal inspection timelines. For example, two companies reported that they were inspected by the state within six months of essentially identical inspections by the federal government. "Duplicative and occasionally unnecessary inspections place an increased financial burden on companies that must expend substantial financial resources to facilitate these inspections." Background . DPH's Food and Drug Branch (FDB) is responsible for licensing and inspecting all manufacturers of pharmaceutical drug products, including biologics, and medical devices in California unless the manufacturer is specifically exempted. DPH currently licenses and inspects 1,673 drug and medical device manufacturing firms in California. FDB is required to inspect the place of manufacture prior to issuing a new drug or medical device manufacturing license. Firms cannot legally manufacture in California without a valid license. Current law requires FDB to conduct license renewal inspections of these companies once every two years and permits additional follow up inspections to be conducted "for cause" (e.g., to investigate injuries and deaths or to investigate product recalls). DPH reports that its inspections aim to prevent the sale and AB 1277 Page 3 distribution of drugs and medical devices that have been improperly manufactured; are adulterated, misbranded or falsely advertised; have not been shown to be safe or effective; or, in the case of medical devices, fail to meet design verification requirements. The FDA also plays a role in regulating drugs and medical devices in California. According to DPH, the FDA and state FDB have partnered to provide more oversight of these industries. The FDA has taken the lead in regulating imported drug and medical devices at the point of entry and has primary responsibility for approving new drugs and devices. The FDA also inspects approximately 10% of manufacturers in California each year. Since 2004, the FDA has adopted a risk-based approach to selecting which drug and medical device manufacturing facilities to inspect in an effort to more effectively allocate its inspectional resources. Generally, the FDA determines the frequency of a facility's inspections based on such risk factors as the facility's compliance history and the type of products that it manufactures. The FDA reports that this model is designed to assist the agency in predicting where its inspections are most likely to achieve the greatest public health impact. DPH indicates that, through partnership agreements, these inspections are not duplicated by FDB and the results of both FDA and FDB inspections are shared. In addition, DPH notes that the FDA generally does not inspect new manufacturers until two to three years after they have initiated manufacturing. DPH states that, because these products are used to treat life-threatening diseases or are necessary for life support, early regulation by FDB avoids product contamination, misbranding, and a variety of formulation, fabrication, and labeling problems. FDB conducts four types of inspections: new drug, renewal drug, new medical device, and renewal medical device. New license inspections of drug manufacturers require an extensive examination of the facility, quality control, employee qualifications, validation of processes, packaging, labeling, and documentation. These inspections require an average 60 hours to complete because of their complexity. Inspection time for renewals is generally less than a new license inspection because less explanation of requirements and inspection activities are needed since the facility should already be AB 1277 Page 4 familiar with the process. The renewal inspection consists of updating FDB's database and reviewing new elements, such as examining corrective actions from the previous inspection, following up on product problems, auditing newly-established production process and result records, and evaluating changes and new products. On average, drug manufacturing renewal inspections require 40 hours for completion. New license inspections of medical device manufacturers are similar to new license inspections of drug manufacturers because they also require a comprehensive review of their manufacturing facilities, procedures, personnel, product labeling, and advertising before a license is issued. On average, these inspections take approximately 40 hours to complete while renewal inspections take an average of 35 hours to complete. Similar to drug manufacturer renewal inspections, the firm subject to the inspection is already familiar with the requirements; therefore, the inspection focuses on updating FDB files and reviewing new elements since the last inspection. DPH acknowledges that there is a current backlog for conducting new and renewal drug and medical device manufacturer license inspections due to an unanticipated increase in the number of new medical device manufacturer license applications received in 2010. According to DPH, the change in this bill to extend the license renewal inspection frequency from two years to four years will assist in reducing this backlog. Support . BayBio states, "?the life sciences industry is a very tightly regulated industry. Everything from the sterility of our facilities to the quality of final product to the font size used on packaging is scrutinized and approved by the federal Food and Drug Administration (FDA). Although the California Department of Public Health's Food and Drug Branch (FDB) serves a valuable and necessary role in the drug and device safety chain, there is also some unnecessary and duplicative overlap. AB 1277 seeks to address that overlap regarding state inspections which may largely mirror recent federal inspections, while maintaining the integrity of the FDB's core mission." The California Healthcare Institute writes, "Given the significant cost involved in duplicative state inspections and approvals, and the federal oversight and regulation of manufacturers, CHI believes that state and federal drug and medical device laws should be harmonized." AB 1277 Page 5 REGISTERED SUPPORT / OPPOSITION : Support BayBio BIOCOM California Healthcare Institute Opposition None on file. Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916) 319-3301