BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1045
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1045 (Quirk-Silva)
          As Amended  June 19, 2013
          Majority vote
           
           ----------------------------------------------------------------- 
          |ASSEMBLY:  |74-0 |(May 23, 2013)  |SENATE: |37-0 |(August 19,    |
          |           |     |                |        |     |2013)          |
           ----------------------------------------------------------------- 
            
           Original Committee Reference:    B.,P. & C.P.
           
           SUMMARY  :  Requires a recipient pharmacy, prescriber, or patient  
          of a recalled drug and the California Board of Pharmacy (BOP) to  
          be notified within 12 hours of a recall notice for a sterile  
          compounded drug, and requires the automatic suspension,  
          cancellation, or revocation of a California pharmacy license if  
          an out-of-state pharmacy's home state license is suspended,  
          cancelled, or revoked.  

           The Senate amendments  :

          1)State that a pharmacy must notify a recipient pharmacy,  
            prescriber, or patient of a recalled drug and BOP as soon as  
            possible within 12 hours of notice of a recall, as specified;  
            and,

          2)Authorize BOP to cancel a nonresident pharmacy registration if  
            the home state pharmacy license is cancelled. 

          3)Make technical changes.

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.  


           COMMENTS  :   

           1)Sterile compounding pharmacy problems  .  A compounding pharmacy  
            is a licensed pharmacy that prepares, alters or combines drugs  
            or drug ingredients by or under the supervision of a licensed  
            pharmacist pursuant to a prescription.  There are 286 licensed  
            sterile injectable compounding pharmacies in California and 93  
            nonresident licensed sterile injectable compounding pharmacies  
            that ship to the state.  








                                                                  AB 1045
                                                                  Page  2


            Sterile compounding is a specific sub-type of general  
            compounding in which the compounded drug product is sterile.   
            These products are often placed directly into the body through  
            injection, via eye drops, or inhaled, and so it is exceedingly  
            important these drugs be produced in the most sanitary,  
            regulated environments and be absolutely sterile to avoid  
            infection.    

            Compounding pharmacies have been compounding greater volumes  
            of sterile drugs in recent years because these pharmacies are  
            increasingly asked by hospitals and health care providers to  
            help address drug shortages.  According to the Food and Drug  
            Administration (FDA), there has been an almost 500% increase  
            in manufactured drug shortages since 2006, the majority of  
            which are for critical, medically necessary, generic sterile  
            injectable drugs.  

            In September 2012, the New England Compounding Center (NECC),  
            a compounding pharmacy in Massachusetts, was found to be  
            responsible for 47 meningitis deaths across 19 states due to  
            its sale of a contaminated injectable steroid.  That pharmacy  
            was primarily regulated by the Massachusetts Board of  
            Pharmacy, with concurrent authority by the FDA.  NECC  
            surrendered its license to the Massachusetts Board of  
            Pharmacy, but BOP was unable to immediately revoke NECC's  
            licensed based on its Massachusetts license. 
           
            2)Minimal federal regulation of compounding pharmacies  .  The FDA  
            regards traditional pharmacy compounding as the combining or  
            altering of ingredients by a licensed pharmacist, in response  
            to a licensed practitioner's prescription for an individual  
            patient.  FDA regulates compounding only if it rises in scale  
            to the level of manufacturing, but that threshold is not  
            precisely defined.  

            Although compounding originated as patient-specific drug  
            modification, federal law does not prohibit anticipatory  
            compounding (compounding in advance of a prescription) or the  
            compounding of drugs that are essentially copies of  
            FDA-approved drugs.  Doctors and hospitals are increasingly  
            turning to compounding pharmacies to meet their patients' drug  
            needs because of shortages caused by diminishing production of  
            generics and the lower prices charged by compounders.  As a  
            result, some compounding pharmacies have been producing far  








                                                                  AB 1045
                                                                  Page  3

            larger quantities of products than the FDA guidelines might  
            permit.  This occurs in large part because of a lack of  
            clarity as to how much production constitutes "manufacturing"  
            requiring federal oversight. 

            This ambiguity leaves primary regulation of small to medium  
            scale compounding pharmacies to the states. 

           3)California regulation of compounding pharmacies  .  California  
            currently has some of the most comprehensive laws and  
            regulations for compounding pharmacies in the nation.  In the  
            last decade, BOP developed its own sterile injectable  
            compounding requirements and created a licensing system for  
            resident and nonresident (out-of-state) sterile injectable  
            compounding facilities.  Even with these protections, however,  
            the NECC product contamination affected California because  
            California generally relies on the pharmacy's home regulator,  
            the FDA, and private accreditors to certify safety in  
            out-of-state pharmacies, none of which acted on multiple  
            warnings in the NECC case.  The BOP issued a cease and desist  
            order to NECC on October 4, 2012, following notice of the  
            outbreak so NECC could no longer ship product into the state,  
            but BOP could not act immediately to revoke or suspend its  
            license.  

            Currently, BOP must go through an extensive process to suspend  
            or revoke a license.  BOP is required to compile an  
            investigation report that substantiates serious violations of  
            law, and then transfer the report and evidence to Attorney  
            General's office, which prepares and serves an accusation on  
            the pharmacy.  If the pharmacy does not respond, the license  
            is cancelled by a default decision.  If a statement of defense  
            is filed, BOP will attempt to settle the case with a  
            stipulation that may include a cessation of shipping into the  
            state, or go to hearing to obtain a proposed decision from an  
            administrative law judge to stop shipments.  The stipulation  
            or proposed decision must be approved by BOP.  Once approved  
            by board vote, the decision generally takes effect in 30 days.  
             This entire process usually takes about two to three years.   
            This bill would immediately suspend, cancel, or revoke an  
            out-of-state pharmacy's California license by operation of law  
            based on the suspension, cancellation, or revocation of its  
            home state license.  

           4)Drug recalls  .  Recall is a voluntary process.  Drug recalls  








                                                                 AB 1045
                                                                  Page  4

            for tainted products or inappropriate labeling may be  
            undertaken voluntarily and at any time by manufacturers,  
            compounders, or distributors, or at the FDA's request.   
            However, since a recall is voluntary, the FDA has no authority  
            to impose or seek sanctions for an entity's refusal to carry  
            out the recall.  FDA may institute legal action respecting the  
            underlying violation that led to FDA's request, but this is  
            not usually necessary.  There have been eight recalls of  
            sterile compounded drugs nationwide since the beginning of  
            2013. 

            FDA has issued industry guidelines for recalls, and in the  
            event of a recall works with the recalling entity to develop  
            an effective strategy.  After an entity decides to recall its  
            product and notifies the FDA, it is the entity's own  
            responsibility to monitor the progress of the recall.  In some  
            cases where it is more difficult for an entity to institute a  
            recall at the consumer level, the FDA, state and local  
            agencies will assist. 

            BOP currently requires pharmacies to subscribe to BOP's  
            mailing list, and BOP sends licensees notifications from FDA  
            on recalled drugs.  BOP currently works with pharmacies to  
            appropriately notify and remove recalled products and alert  
            consumers.  There are no California statutory provisions  
            guiding this process, however.

            This bill aims to codify best practices for sterile compounded  
            drug recalls.  This bill would require a California or  
            nonresident pharmacy that issues a recall notice for a sterile  
            compounded drug to contact the pharmacy, prescriber, or  
            patient who received the recalled drug and the BOP as soon as  
            possible within 12 hours of the recall notice if use of or  
            exposure to the recalled drug may cause serious adverse health  
            consequences or death.  BOP has existing authority to develop  
            any regulations that may be necessary to implement this bill.   
               
           

          Analysis Prepared by  :    Sarah Huchel / B.,P. & C.P. / (916)  
          319-3301 


                                                               FN: 0001665 









                                                                  AB 1045
                                                                  Page  5