BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 467
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        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;









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           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  








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          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  








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          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  








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          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