BILL ANALYSIS Ó ----------------------------------------------------------------------- |Hearing Date:June 17, 2013 |Bill No:AB | | |1045 | ----------------------------------------------------------------------- SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Ted W. Lieu, Chair Bill No: AB 1045Author:Quirk-Silva As Amended:June 6, 2013 Fiscal: Yes SUBJECT: Sterile compounding and nonresident pharmacies. SUMMARY: Requires patients to be notified within 24 hours of a recall notice for a sterile compounded drug, and requires the automatic suspension or revocation of a California pharmacy license if an out-of-state pharmacy's home state license is suspended or revoked. Existing law: 1) Provides for the practice of pharmacy and the licensing and regulation of pharmacies and pharmacists by the Board of Pharmacy (Board) within the Department of Consumer Affairs (DCA). 2) Authorizes the Board inspectors to inspect all pharmacies, wholesalers, dispensaries, stores or places where drugs or devices are compounded, prepared, furnished, dispensed or stored. (Business and Professions Code (BPC) § 4008) 3) Defines "manufacturer" as every person who prepares, derives, produces, compounds or repackages any drug or device except a pharmacy that manufactures on the immediate premises where the drug or device is sold to the ultimate consumer. (BPC § 4033) 4) Specifies that "manufacturer" does not mean : (Id.) a) A pharmacy compounding a drug for parenteral therapy, pursuant to a prescription. b) A pharmacy that, at a patient's request, repackages a drug previously dispensed to a patient, or to the patient's agent, AB 1045 Page 2 pursuant to a prescription. 1) Specifies that "manufacturer" means : (Id.) a) A person who prepares, derives, manufactures, produces or repackages a dangerous drug, as defined. b) A holder of or holders of a New Drug Application (NDA) and an Abbreviated New Drug Application (ANDA) or a Biologics License Application (BLA). c) A manufacturer's third-party logistics provider. d) A private label distributor for whom the private label distributor's prescription drugs are originally manufactured and labeled for the distributor and have not been repackaged. e) The distributor agent for the manufacturer, contract manufacturer, or private label distributor, whether the establishment is a member of the manufacturer's affiliated group or is a contract distributor site. 5)Prohibits an out-of-state pharmacy from selling or distributing dangerous drugs or devices in California through any other method than a Board-licensed wholesaler, unless the out-of-state pharmacy is licensed by the Board. (BPC § 4120) 6)States that any pharmacy that contracts to compound a drug for parenteral therapy, pursuant to a prescription, for delivery to another pharmacy, must report that contractual arrangement to the Board within 30 days of commencing that compounding. (BPC § 4123) 7)Requires the Board to adopt regulations establishing standards for compounding injectable sterile drug products (sterile injectables) in a pharmacy. Clarifies that a pharmacy cannot compound sterile injectables unless the pharmacy is licensed by the Board. States that a license to compound sterile injectables cannot be renewed without a Board inspection. Exempts pharmacies with accreditation by the Joint Commission on Accreditation of Healthcare Organizations or other accrediting agencies approved by the Board from these requirements. (BPC § 4127-4127.1) 8)Authorizes the Board to issue a cease and desist order to a pharmacy compounding sterile injectables whenever the Board has reasonable belief, based on information obtained through an investigation or inspection, that there is an immediate threat to public health or AB 1045 Page 3 safety. (BPC § 4127.3) 9)Allows a centralized hospital packaging pharmacy to prepare medications for administration only to inpatients within its own general acute care hospital, and one or more general acute care hospitals, if the hospitals are under common ownership and located within a 75-mile radius of each other. Requires a centralized hospital packaging pharmacy to obtain a specialty license from the Board. Authorizes a centralized hospital packaging pharmacy to: prepare unit dose packages for single administration to inpatients from bulk containers; prepare compounded unit dose drugs for parenteral therapy for administration to inpatients; and, prepare compounded unit dose drugs for administration to inpatients. Authorizes a centralized hospital packaging pharmacy to prepare and store a limited quantity of unit dose drugs prior to receiving a patient-specific prescription according to certain circumstances. Clarifies that all compounding functions shall only be performed in the licensed centralized hospital pharmacy. (BPC § 4128-4128.6) 10)Grants the Board certain enforcement abilities against out-of-state pharmacies, authorizes the Board to report actions against an out-of-state pharmacy and authorizes the Board to take any action against an out-of-state pharmacy that it would against a pharmacy in this state if the grounds for action are also grounds for action in the state in which the out-of-state pharmacy is permanently located. (BPC § 4303) This bill: 1) Provides that a pharmacy licensed by the Board to compound injectable sterile drug products in this state, or an out-of-state pharmacy that compounds sterile drug products for shipment into the state of California and licensed by the Board, which issues a recall notice regarding a sterile compounded drug shall, in addition to any other duties, contact the recipient pharmacy, prescriber or patient of the recalled drug and the Board within 24 hours of the recall notice if both of the following apply: a) Use or exposure to the recalled drug may cause serious adverse health consequences or death. b) The recalled drug was dispensed, or is intended for use, in California. 2)Provides that the recall notice shall be made according to the AB 1045 Page 4 following: a) If the recalled drug was dispensed directly to the patient, the recall notice shall be made to the patient. b) If the recalled drug product was dispensed directly to the prescriber, the recall notice shall be made to the prescriber who shall ensure the patient is notified. c) If the recalled drug was dispensed directly to a pharmacy, the notice shall be made to the pharmacy who shall notify the prescriber or patient as appropriate. If the pharmacy notifies the prescriber, the prescriber shall ensure the patient is notified. 3)Provides that if the home state license of an out-of-state pharmacy also licensed by the Board is revoked or suspended for any reason, the license issued by the Board shall be immediately revoked or suspended by operation of law. FISCAL EFFECT: This measure has been keyed "fiscal" by Legislative Counsel. According to the Assembly Committee on Appropriations analysis dated May 15, 2013, this bill will result in minor and absorbable costs to the Board. COMMENTS: 1. Purpose. This bill is sponsored by the Author . According to the Author, AB 1045 protects patients from drugs made by compound pharmacies that may cause serious adverse health consequences or death by codifying the proper procedure to ensure patients are safe. According to information provided by the Author, California requires pharmacies that compound sterile injectable drug products to have a special license. Currently, there are 286 licensed sterile injectable compounding pharmacies in California, and 93 licensed sterile injectable compounding pharmacies operating in another state. The Author states that California has some of the most comprehensive laws and regulations for compounding pharmacies in the nation, and in the last decade, the Board developed its own sterile injectable compounding requirements, and created a licensing system for sterile injectable compounding facilities in California and in other states. The Author states that even with these protections, the recent New AB 1045 Page 5 England Compounding Center (NECC) product contamination of 2012 affected California because California relies on the pharmacy's home regulator, the Food and Drug Administration (FDA), and private accreditors to certify safety in out-of-state pharmacies; none of which acted after receiving multiple warnings. Later on October 4, 2012, the Board issued a cease and desist order to NECC following notice of the outbreak so NECC could no longer ship products into the state. However, if the Board had the authority, the Board would have also revoked or suspended the California license, in addition to obtaining the cease and desist order. 2. The Current Regulatory Framework. Under the current regulatory system, drug manufacturers are regulated by the federal Food and Drug Administration (FDA). Compounding organizations are regulated by their respective states of residence. Compounding organizations also make drugs, but they are limited to producing small amounts in response to a specific patient's prescription, or to create a small supply for an identifiable patient population to ensure continuity of treatment. The state-by-state approach to regulating compounding organizations yields inconsistent standards and varying levels of enforcement on an industry that ships dangerous drugs across state lines. 3. New England Compounding Center: Outbreak of Fungal Meningitis: In October 2012, the New England Compounding Center (NECC), based in Massachusetts, shipped contaminated product throughout the country, including California, that resulted in the death of more than 40 people and 461 patients have become ill from the tainted steroid injections. NECC's compounding facility had obvious ongoing safety violations, but continued to operate and ship products despite employee whistleblower complaints to management. The compounding facility failed to maintain its clean room. The air intake for the clean room was contaminated and shared with the neighboring furniture recycling facility, and employees discovered mold on various work and storage surfaces several times per year. Yet, NECC remained accredited and was licensed to ship sterile compounded injectable products into California. Because California's Board had to rely on third party accreditation, the Board asserts that it did not have the opportunity or authority to inspect NECC or prevent NECC from shipping products into California until patients in other states AB 1045 Page 6 had already been harmed. NECC is not the only compounding pharmacy to have recently caused significant patient harm. In June 2012, a sterile injectable pharmacy located in Florida shipped contaminated product into California which resulted in significant patient harm, including blindness in some cases. According to the Board, it was again only able to take protective actions after patient harm had already occurred. The Author asserts that these events clearly demonstrate the need to increase oversight of compounding pharmacies to ensure that sterile drug products are safe for California consumers. 4. FDA Oversight a) The Federal Role in Inspecting Compounding Facilities: The FDA's oversight authority is limited, and according to the agency, is not the right fit to provide appropriate and efficient oversight of the growing compounding industry. The FDA is currently working with states to inspect certain state-licensed pharmacies that produce sterile drug products that the FDA believes may present the highest risk. However, even during this time of heightened awareness, FDA inspectors are being delayed in their work or denied full access to records at some of the facilities they are inspecting. b) The Federal Response to NECC and Proposed Federal Regulation: It is possible that regulation may occur at the federal level, pre-empting state law on this issue. The FDA has been working with Congress to craft legislation authorizing increased federal oversight of compounding pharmacies. The FDA asserts that there should be minimum federal standards for firms that compound sterile drug products in advance of or without a prescription and ship them interstate. The FDA also wants clear authority to proactively inspect pharmacies to determine the scope and nature of their operations. 5. Recent Action by the Board - Compounding Regulations. New regulations governing compounding took effect last summer. According to the Board, a Workgroup on Compounding was formed in 2004 comprised of board members, board staff and industry representatives. The workgroup recognized that current pharmacy regulations addressing compounding only govern the physical AB 1045 Page 7 circumstances, procedures and record keeping requirements for general compounding and do not address quality, strength or purity. The Board adopted regulations in Article 7 of Division 17 of Title 16 of the California Code of Regulations (commencing with Section 1751) to implement provisions for pharmacies that compound sterile injectable products as required in statute. As there were no similar provisions in regulation for general compounding, the Board approved the addition of language that will establish parameters and provide uniformity for pharmacies that carry out compounding in general (including sterile injectable). Pharmacies that compound sterile injectable products must now go above and beyond the requirements for compounding in general. Subsequent to that workgroup activity, in response to patient deaths and recalls due to contaminated compounded drugs, the Board recently formed a Compounding Sub-Committee to address the issues unique to effectively regulating compounding pharmacies located in or shipping into this state. The Sub-Committee's first meeting occurred on March 15, 2013. The Compounding Sub-Committee is responsible for shaping the Board's future changes to its regulations on compounding pharmacies. 6. Related Legislation This Session. SB 294 (Emmerson) requires an inspection by the Board prior to licensure for all compounding pharmacies that make or distribute compounded drugs in California. Requires a compounding pharmacy to notify the Board within 24 hours of initiating any recall, to provide a list of all drugs it compounds to the Board, and to notify the Board of any discipline or suspension of accreditation. ( Status : The bill is pending in the Assembly.) 7. Prior Related Legislation. AB 377 (Solario, Chapter 687, Statutes of 2012) provides for centralized pharmacy packaging in a hospital, allowing the pharmacy to be located outside of the hospital on either the same premises or separate premises that is regulated under a hospital's license. Modifies the definition of "manufacturer" so that the compounding that is done at a pharmacy serving multiple hospitals does not inappropriately transform the same compounding activities, that are now lawful at a hospital pharmacy, into manufacturing activities which would be considered as unlawful. AB 2779 (Solario) of 2010 would have set conditions for reimbursement of a compounded drug under workers' compensation law according to specified conditions, including a requirement that all AB 1045 Page 8 active ingredients in the compounded drug are ingredients in drug products that have been approved by the FDA and all other ingredients are listed by the United States Pharmacopeia. ( Status : The bill failed passage on the Senate Floor.) AB 2077 (Solario) of 2010 was virtually identical to AB 377. ( Status : This bill was vetoed by the Governor. In his veto message, the Governor expressed concern that the bill could result in "a greater likelihood of product mix-up, loss of product identity, contamination and cross-contamination, and lack of adequate control systems.") AB 1370 (Solario) of 2009 would have created a separate licensing category for centralized hospital pharmacies. ( Status : The bill was held in the Assembly Committee on Business and Professions.) 8. Arguments in Support. According to supporters, like the Board of Pharmacy and the California Senior Legislature , this bill takes preventive measure to ensure that patients are immediately notified of any serious public health risks or safety recalls of drugs from compounding pharmacies. 9. Suggested Author's Amendment. Providing immediate and timely notification to patients, pharmacies and providers when a compounding pharmacy has received notice that one of their products has been recalled, is an imperative aspect of consumer protection and will ensure that patients take swift action in the event they have come into contact with a recalled product. The Committee suggests that the Author ensure that patients are notified as soon as possible, no later than 12 hours of a recall being activated, rather than the current 24 hour time frame as outlined in the bill. On page 5, line 28, after "board, before "within", insert ", as soon as possible," On page 5, line 28, strike "24" and replace it with "12" (a) A pharmacy licensed pursuant to Section 4127.1 or 4127.2, including a pharmacy that is exempt from licensure pursuant to subdivision (d) of Section 4127.1 and subdivision (c) of Section 4127.2, that issues a recall notice regarding a sterile compounded drug shall, in addition to any other duties, contact the recipient pharmacy, prescriber, or patient of the recalled drug and AB 1045 Page 9 the board , as soon as possible, within2412 hours of the recall notice if both of the following apply: 10.Suggested Technical Amendments. At the request of the Board, the Author is amending the bill to include reference to a "cancelled license" in another state as a trigger for the Board to also revoke the California license of an out-of-state compounding pharmacy. On page 6, line 15, insert "cancel," after "may" and before "deny". "The board may cancel, deny, revoke, or suspend a nonresident" On page 6, line 24, insert "cancelled," after "is" and before "revoked". On page 6, line 26, insert "cancelled," before "revoked". "(c) If the home state pharmacy license of a nonresident pharmacy is cancelled, revoked or suspended for any reason, any license issued pursuant to Section 4112 or 4127.2 shall be immediately cancelled, revoked or suspended by operation of law." SUPPORT AND OPPOSITION: Support: California Senior Legislature California Society of Health-System Pharmacists California State Board of Pharmacy Opposition: None on file as of June 12, 2013. Consultant: Sarah Mason