BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de Le�n, Chair


          SB 294 (Emmerson) - Sterile drug products.
          
          Amended: As introduced          Policy Vote: B&P 10-0
          Urgency: No                     Mandate: Yes
          Hearing Date: May 23, 2013      Consultant: Brendan McCarthy
          
          SUSPENSE FILE.  AS PROPOSED TO BE AMENDED.
          
          
          Bill Summary: SB 294 would require the Board of Pharmacy to  
          inspect compounding pharmacies before such pharmacies could be  
          licensed to distribute compounded drugs in the state.

          Fiscal Impact: 
              Projected ongoing costs to the Board of Pharmacy for  
              inspections and licensing activities of about $1 million per  
              year (Pharmacy Board Contingent Fund). These costs will be  
              covered by fees and reimbursements from regulated  
              compounding pharmacies. As noted below, fee revenues may not  
              be sufficient to fully cover the expected workload required  
              under the bill.

          Background: Under current law, drug manufacturers are regulated  
          by the federal Food and Drug Administration. Pharmacies are  
          regulated at the state level. Compounding pharmacies do not  
          manufacture drugs, but they do combine or process drugs.  
          Compounding pharmacies typically change the form of a drug (for  
          example from a pill to an injectable liquid) to remove unwanted  
          ingredients or to achieve the exact dose required. Historically,  
          compounding pharmacies have processed drugs for an individual  
          patient. Recently, compounding pharmacies have begun to compound  
          drugs in larger batches.
          
          Under current state law, pharmacies and pharmacists are licensed  
          and regulated by the Board of Pharmacy. The Board of Pharmacy is  
          required to license both in-state and out-of-state pharmacies.  
          In-state compounding pharmacies generally must be inspected by  
          the Board of Pharmacy prior to licensing. However, current law  
          exempts pharmacies that are licensed by the Department of Public  
          Health and/or have certain accreditations from the requirement  
          that they be licensed by the Board of Pharmacy (for example,  
          compounding pharmacies operated by hospitals). Out-of-state  








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          compounding pharmacies are required to provide a copy of an  
          inspection report from their state licensing authority or a  
          report from a private accrediting agency to the Board of  
          Pharmacy before a license can be issued. 

          Proposed Law: SB 294 would require annual inspection of a  
          compounding pharmacy before a license to sell sterile compounded  
          products in the state could be issued. (This requirement would  
          expand the Board of Pharmacies authority, by requiring direct  
          inspection of all in-state compounding pharmacies and  
          out-of-state compounding pharmacies that sell products in the  
          state.)

          The bill requires out-of-state compounding pharmacies to  
          reimburse the Board of Pharmacy for the travel costs incurred  
          during inspections (in addition to existing licensing fees).

          The bill requires a compounding pharmacy to provide information  
          to the Board of Pharmacy regarding: 1) notification of any  
          recall of sterile drugs, 2) a list of all compounded drugs it  
          produces, and 3) notification of any discipline or suspension of  
          accreditation of the compounding pharmacy.

          Staff Comments: The Board of Pharmacy has indicated that the  
          fees paid by licensed compounding pharmacies currently  
          authorized in statute ($780 per year) and authorized in this  
          bill (recovery of travel costs for out-of-state inspections)  
          will be sufficient to cover the costs of increased inspections.  
          There are a large number of compounding pharmacies in the state  
          (about 700) and out-of-state (about 150) that have not  
          previously been inspected. Under this bill those compounding  
          pharmacies will have to be inspected and it is not clear whether  
          fee revenues will be sufficient to pay for the increased  
          inspection workload.

          The only costs that may be incurred by a local agency under the  
          bill relate to crimes or infractions (due to potential  
          violations of provisions of the bill). Such costs are  
          non-reimbursable by the state under the California Constitution.

          Proposed author's amendments: would delay implementation until  
          July 1, 2014 and specify the maximum fee amount to be paid by  
          out-of-state compounding pharmacies.









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