BILL ANALYSIS Ó
SB 294
Page 1
Date of Hearing: August 21, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 294 (Emmerson) - As Amended: August 15, 2013
Policy Committee: Business and
Professions Vote: 10-3
Policy Committee: HealthVote:17-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill increases Board of Pharmacy oversight of sterile
compounding pharmacies. Specifically, this bill, effective July
1, 2014:
1)Requires a pharmacy that compounds sterile drugs to have a
sterile compounding license issued by the Board of Pharmacy
(BOP), and stipulates some licensure requirements.
2)Requires sterile compounding pharmacies, including nonresident
(out of state) pharmacies, to be inspected prior to licensure.
3)Removes exemptions from licensure for sterile compounding
pharmacies accredited by third-party entities.
4)Stipulates a fee for issuance or renewal of nonresident
pharmacies of $780, and additionally requires nonresident
pharmacies to pay the actual and necessary costs of BOP
inspection, including travel costs.
5)Exempts entities reconstituting sterile powders, if the powder
was obtained from a manufacturer and if it is reconstituted
for administration by a licensed health care professional,
from the licensure requirement.
FISCAL EFFECT
1)One-time costs of $50,000 to the BOP (Pharmacy Board
Contingent Fund) for regulations and development of
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reimbursement protocols for out-of-state pharmacies.
2)Approximately $1 million in costs to BOP annually (Pharmacy
Board Contingent Fund) to inspect and license approximately
700 new in-state pharmacies and 250 total nonresident sterile
compounding pharmacies.
This estimate includes 93 nonresident pharmacies that are
currently licensed by BOP but not inspected. BOP currently
relies on third-party accreditation reports or licensing
inspections from other states for nonresident pharmacies.
Additionally, the removal of exemptions from licensure for
pharmacies accredited by third-party entities will require BOP
to inspect and license a much larger number of pharmacies than
they do under current law.
3)Annual revenues of $1 million (Pharmacy Board Contingent
Fund), including additional licensure fee revenues of
approximately $550,000 and $450,000 in reimbursements to BOP
for travel and inspection costs for nonresident pharmacies.
This estimate assumes travel and inspection costs are
reimbursed at an average of $3,000 per licensed nonresident
pharmacy. If actual reimbursements are lower than assumed,
revenues will be insufficient to fully cover the expected
workload.
COMMENTS
1)Rationale . The BOP is sponsoring this bill to improve
oversight of sterile compounding pharmacies. The author
believes this bill strengthens consumer protection and helps
ensure that sterile compounding pharmacies that dispense or
ship sterile drug products meet California standards.
2)Background . Recent events involving contaminated drugs from
compounding pharmacies have highlighted the need for better
quality control and an improved regulatory approach. For
example, a 2012 outbreak of fungal meningitis and other
infections, which ultimately claimed 733 victims in 23 states,
killing 53, was traced back to steroid injections from a
single compounding pharmacy in Massachusetts. According to a
National Conference of State Legislatures (NCSL) report on the
subject, when the U.S. Food and Drug Administration inspected
the compounding center, it found 83 vials of the steroid that
contained "greenish black foreign matter." Under current law,
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BOP lacks authority to, and is not required to, inspect
nonresident pharmacies that compound drugs for sale in the
state.
Sterile compounding pharmacies combine active and inactive
ingredients in a sterile environment, often changing the form
of a drug from, for example, a powder to an injectable
solution or a cream. This industry has grown dramatically in
recent years for a number of reasons. Some observers have
noted compounding pharmacies occupy a regulatory grey area
between average pharmacies that produce drugs for individual
patients pursuant to a prescription, which fall under state
regulation, and drug manufacturers, which are regulated by
FDA. FDA states it lacks sufficient authority to regulate even
large-scale sterile compounding pharmacies that ship tens of
thousands of doses at a time, in advance of a prescription, as
manufacturers. Federal legislation is being considered by
Congress to allow FDA authority to regulate these entities.
3)Concerns . The California Hospital Association (CHA) and the
Hospital Corporation of America (HCA) state that the health
care industry is experiencing extreme shortages of medications
and that compounding organizations help reduce the incidence
of shortages. They indicate concern that requiring
out-of-state compounding organizations to comply with unique
California regulations may force some to no longer be
interested in the California market, potentially exacerbating
medication shortages.
4)Related Legislation . AB 1045 (Quirk-Silva) requires patients
to be notified as soon as possible and within 12 hours of a
recall notice for a sterile compounded drug and requires the
automatic cancellation, suspension, or revocation of a
California pharmacy license if an out-of-state pharmacy's home
state license is canceled, suspended, or revoked. AB 1045 is
pending on the Senate Floor.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081