BILL ANALYSIS Ó AB 467 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 467 (Stone) As Amended March 11, 2014 2/3 vote. Urgency ---------------------------------------------------------------------- |ASSEMBLY: | |(May 28, 2013) |SENATE: |32-0 |(March 13, 2014) | ---------------------------------------------------------------------- (vote not relevant) ------------------------------------------------------------------------ |COMMITTEE VOTE: |14-0 |(March 25, 2014) |RECOMMENDATION: |concur | |(B., P. & C.P.) | | | | | ------------------------------------------------------------------------ Original Committee Reference: E.S. & T.M. SUMMARY : Establishes a license and regulatory framework for a "surplus medication collection and distribution intermediary" (SMCDI) to facilitate the donation of surplus medications in California. The Senate amendments delete the Assembly version of this bill, and instead: 1)Define a "SMCDI" as a firm, association, partnership, corporation, limited liability company (LLC), state governmental agency, or political subdivision that performs the functions specified in this bill for the purpose of an authorized surplus prescription drug collection and distribution program (Program). 2)Require a SMCDI to be licensed annually and regulated by the Board of Pharmacy (BOP). The license application shall state the name, address, usual occupation, and professional qualifications, if any, of the applicant. If the applicant is an entity other than a natural person, the application shall state the information as to each person beneficially interested in that entity. 3)Define the term "person beneficially interested" to mean and include: a) If the applicant is a partnership or other unincorporated association, each partner or member; AB 467 Page 2 b) If the applicant is a corporation, each of its officers, directors, and stockholders, provided that no natural person shall be deemed to be beneficially interested in a nonprofit corporation; and, c) If the applicant is an LLC, each officer, manager, or member. 4)Require any applicant that is a 501(c)(3) charitable organization to furnish BOP with the organization's articles of incorporation and names of the controlling members. 5)Require any applicant that is a partnership or other unincorporated association, an LLC or a corporation that has more than five partners, members, or stockholders to state that fact on the application and provide additional information on each of the five partners, members, or stockholders who own the five largest interests in the applicant's entity. Upon request by BOP's executive officer (EO), the applicant shall provide specified information on partners, members, or stockholders not named in the application, or shall refer BOP to an appropriate source of that information. 6)Require the application to contain a statement to the effect that the applicant or persons beneficially interested have not been convicted of a felony and have not violated state law, as specified. If the applicant cannot make this statement, the application shall contain a statement of the violation, if any, or reasons which will prevent the applicant from being able to comply with the requirements with respect to the statement. 7)Require the BOP EO to issue or renew a license to operate as a SMCDI upon approval of the application, compliance with specified state laws, and payment of $300. 8)Require fees received for the SMCDI license to be deposited into the Pharmacy Board Contingent Fund. 9)Exempt government-owned or 501(c)(3) non-profit applicants from the fee requirement. 10)Exempt SMCDI licensees from licensure as a wholesaler. 11)Require a licensed SMCDI to keep and maintain for three years complete records for which the intermediary facilitated the AB 467 Page 3 donation of medications to, or transfer of, medications between participating entities. 12)Define a "donor organization" as those health and care facilities already authorized under existing law to donate centrally stored unused medications under a Program, as specified. 13)Exclude a SMCDI from criminal or civil liability for injury caused when facilitating the donation of medications to, or transfer of, medications in compliance with Program laws. 14)Require a SMCDI to comply with the following: a) It shall not take possession, custody, or control of dangerous drugs and devices; b) It shall ensure that notification is provided to participating entities that a package has been shipped when the SMCDI has knowledge of the shipment and provided logistical support to facilitate a shipment directly from a donor organization to a participating entity; and, c) It shall not select, or direct a donor organization to select, a specific participating entity to receive surplus medications. 15)Authorize a SMCDI to do the following: a) Charge membership, administrative, or overhead fees sufficient to cover the reasonable costs of the support and services provided; and, b) Contract directly with a county to facilitate the donation of medications to or transfer of medications between participating entities and provide general support in a county's implementation of a Program. 16)Prohibit a participating entity from receiving donated medication directly from a SMCDI. 17)State that no reimbursement is required by this act because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, changes the penalty AB 467 Page 4 for a crime or infraction, or changes the definition of a crime. 18)Declare this bill to be an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect in order to "ensure that California's medication donation program is allowed to continue to operate to facilitate the distribution of medications to the indigent population which would not otherwise have access to these medications". 19)Make other technical and clarifying changes. FISCAL EFFECT : According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS : 1)Purpose of this bill . This bill authorizes a third party, licensed and regulated by BOP, to facilitate the donation and transfer of surplus medications under an established state surplus medication donation program. This bill is author sponsored. 2)Author's statement . According to the author, "Current law accounts for wholesale activities and the appropriate licensing for those activities, but does not account for third party intermediaries. Third party intermediaries provide significantly different services than a wholesaler, and therefore need licenses that reflect those services." 3)Background . The Program was created by SB 798 (Simitian), Chapter 444, Statutes of 2005, and SB 1329 (Simitian), Chapter 709, Statutes of 2012, which authorized counties to establish a system to facilitate the collection and distribution of surplus unused medications to medically indigent persons. The enabling legislation did not anticipate the need for a third party facilitating the transfer and donation of drugs, however. Current law requires any entity that brokers or negotiates drugs for distribution to obtain a wholesaler license and be subject to numerous regulations, including posting a surety bond, designating a representative in charge, and extensive reporting requirements. SMCDIs are unlike wholesalers, however, because they never take possession, custody, or control of dangerous AB 467 Page 5 drugs and devices, nor do they exercise judgment in the selection of a recipient to receive surplus medications. This bill establishes a specific license for the sole purpose of the Program, and establishes what a SMCDI may and may not do within the terms of licensure. To date, two counties in California (Santa Clara and San Mateo) have established a Program through local ordinance, although the Santa Clara Program is the only current operational program. Analysis Prepared by : Sarah Huchel / B., P. & C.P. / (916) 319-3301 FN: 0003091