BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 360
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          Date of Hearing:   August 17, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 360 (DeSaulnier) - As Amended:  July 7, 2011 

          Policy Committee:                             Public 
          SafetyVote:7-0

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              No

           SUMMARY  

          This bill:

          1)Authorizes the Department of Justice (DOJ) to enforce access 
            requirements of its Web-based Prescription Drug Monitoring 
            Program (PDMP) by conducting PDMP audits to protect against 
            unauthorized use, such as sharing patient data with third 
            parties, accessing information of patients not under the 
            physician's care, and selling patient data. DOJ may establish 
            by regulation a citation process, which may contain an 
            abatement order and an administrative fine not to exceed 
            $2,500. Specifically, these provisions:

             a)   Allow, in addition to requesting a hearing, a cited PDMP 
               subscriber to request an informal citation conference with 
               DOJ.   


             b)   Require administrative fines be deposited in a DOJ fund 
               for costs associated with DOJ's controlled substances 
               database, the Controlled Substance Utilization Review and 
               Evaluation System (CURES).


             c)   Provide that a PDMP application by a practitioner or 
               pharmacist may be denied for cause, including, but not 
               limited to:


               i)     Falsifying an application
               ii)    Failure to maintain effective controls for access to 








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                 the patient activity report 
               iii)   Suspension or revocation of a Drug Enforcement 
                 Administration (DEA) registration
               iv)    An arrest or conviction for a controlled substance 
                 offense or violation of this section 
               v)     Accessing PDMP information for any reason not 
                 related to patient care 

          2)Expands and modifies a series of requirements imposed on 
            security printers (persons approved to produce controlled 
            substance prescription forms) by DOJ, including:

             a)   Requiring names and addresses of owners, partners, 
               representatives, or others with access to controlled 
               substance prescription forms; a signed statement regarding 
               any prior criminal convictions for these parties, and 
               fingerprints.   

             b)   Clarifying the fee to process security printer 
               applications shall be sufficient to cover inspections of 
               security printers in addition to the other specified 
               processes.

             c)   Requiring a security printer to obtain the customer's 
               photo identification and ship controlled substance 
               prescription forms only to an address verified by the DEA 
               or Medical Board of California.

             d)   Requires DOJ to impose sanctions on security printers 
               who violate statutes and regulations, including failure to 
               comply with guidelines. Sanctions are a fine of up to 
               $1,000 for a first violation, a fine of up to $2,500 for a 
               subsequent violation; and disciplinary proceedings for 
               suspension or revocation of security printer status for a 
               third or subsequent violations.
              
           FISCAL EFFECT  

          1)Unknown significant annual GF costs, in the range of $150,000, 
            for developing regulations, conducting PDMP audits, and 
            holding citation conferences and hearings, offset to some 
            degree by dedicated citation revenue. 

            DOJ states a willingness and ability to absorb the cost of 
            regulations. Moreover, DOJ does not anticipate a significant 








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            number of audits, citations or hearings, contending the 
            deterrent value of the enforcement mechanism will suffice in 
            most cases.     

          2)Unknown, likely minor and absorbable administrative costs to 
            DOJ for security printer process changes, offset to an unknown 
            degree by increased fines. 
           
          COMMENTS  

           1)Rationale  . The intent of the author and sponsor (DOJ) is to 
            create a process whereby DOJ can protect against improper and 
            unauthorized use of the PDMP. 

            According to the author, "SB 360 will help to prevent the 
            misuse of confidential information collected through the CURES 
            and ensure the integrity of the program and process for 
            practitioners and pharmacists to appropriately use patient's 
            controlled substances history information."

            Regarding the changes to the security printer processes, the 
            author states, "While the DOJ has established guidelines for 
            the security of prescription forms, current law lacks 
            sufficient safeguards against theft and fraudulent use of 
            prescription pads and the DOJ has seen an increase in criminal 
            enterprises involved in prescription form theft and fraud. SB 
            360 provides additional requirements and sanctions for 
            Security Printers to deter fraudulent use of prescription pads 
            and the illegal distribution of controlled substances."

           2)CURES and PDMP  . The state's controlled substances dispensary 
            database is known as the Controlled Substance Utilization 
            Review and Evaluation System. According to DOJ, CURES contains 
            over 100 million entries of controlled substance drugs 
            dispensed in California. Each year the CURES program responds 
            to more than 60,000 requests from practitioners and 
            pharmacists via the online PDMP system, which makes it easier 
            for authorized health practitioners to review controlled 
            substance information via the automated Patient Activity 
            Report (PAR) in an effort to identify and deter drug abuse and 
            diversion through accurate and rapid tracking of controlled 
            substances.

            The goal of CURES and PDMP is to reduce pharmaceutical drug 
            diversion without affecting legitimate medical practice or 








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            patient care.  

           3)Support  . According to DOJ, "The PDMP is a valuable 
            investigative, preventative, and educational tool for law 
            enforcement, regulatory boards, and health care providers.  
            However, current efforts at maintaining privacy and control of 
            CURES data are inadequate to protect confidential patient 
            information, and to deter misuse of confidential CURES data. 
            SB 360 authorizes DOJ to initiate administrative enforcement 
            actions to prevent and deter misuse of confidential patient 
            information collected through the CURES program.  

          "Under existing law, DOJ also manages the California Security 
            Prescription Printer Program, including approval of "Security 
            Prescription Printer" applications. Fraudulent prescriptions 
            are lucrative. One blank prescription pad of 500 prescriptions 
            can generate millions of dollars from the illegal sale of 
            controlled substances such as Oxycontin, Xanax, or Vicodin.  
            DOJ has seen an increase in criminal enterprises, from gangs 
            to organized crime, involved in prescription drug fraud.  
            Current law lacks adequate safeguards against the theft and 
            illegal distribution of prescription pads from Security 
            Prescription Printers. SB 360 provides additional requirements 
            and sanctions for Security Printers and their employees who 
            have direct contact with, or access to, controlled substance 
            prescription drug forms to deter fraudulent prescriptions and 
            illegal distribution of controlled substances."

           4)Prior Legislation .

             a)   AB 2548 (Block), 2010, was similar to the CURES/PDMP 
               provisions of SB 360, and was held on this committee's 
               Suspense File. 

             b)   AB 3042 (Takasugi), Statutes of 1996, established CURES 
               as a three-year pilot program.

             c)   SB 151 (Burton), Statutes of 2004, made the CURES system 
               permanent.
              

           Analysis Prepared by  :    Geoff Long / APPR. / (916) 319-2081 











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