BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, 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 SB 294 (Emmerson) Page 1 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. SB 294 (Emmerson) Page 2