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.








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           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 








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          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
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          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."








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           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