BILL ANALYSIS �
SB 294
Page 1
SENATE THIRD READING
SB 294 (Emmerson)
As Amended September 3, 2013
Majority vote
SENATE VOTE :39-0
BUSINESS & PROFESSIONS 10-3 HEALTH 17-2
-----------------------------------------------------------------
|Ayes:|Gordon, Bocanegra, |Ayes:|Pan, Logue, Ammiano, |
| |Campos, Dickinson, | |Atkins, Bonilla, Bonta, |
| |Eggman, Hagman, Holden, | |Chesbro, Gomez, Roger |
| |Mullin, Skinner, Ting | |Hern�ndez, Lowenthal, |
| | | |Mansoor, Mitchell, |
| | | |Nazarian, Nestande, V. |
| | | |Manuel P�rez, Wagner, |
| | | |Wieckowski |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Jones, Maienschein, Wilk |Nays:|Maienschein, Wilk |
| | | | |
-----------------------------------------------------------------
APPROPRIATIONS 13-0
-----------------------------------------------------------------
|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Campos, | | |
| |Eggman, Gomez, Hall, | | |
| |Holden, Linder, Pan, | | |
| |Quirk, Weber | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
SUMMARY : Expands the types of sterile compounded drugs for
which a license is required, deletes the licensing exemption for
certain types of pharmacies, and requires inspection of
nonresident sterile compounding pharmacies by the Board of
Pharmacy (BOP). Specifically, this bill :
1)Requires BOP to adopt emergency regulations to establish
policies, guidelines, and procedures to initially implement
SB 294
Page 2
the provisions of this bill that go into effect on July 1,
2014, as specified.
2)States that the initial adoption, amendment, or repeal of a
regulation authorized by this bill is deemed to address an
emergency, as specified.
3)Permits BOP to request approval from the Office of
Administrative Law (OAL) to readopt the regulation as an
emergency regulation, as specified, after the initial
adoption, amendment, or repeal of an emergency regulation
pursuant to this bill.
4)Sunsets the provisions of 1) through 3) above, on July 1,
2014.
5)Requires a pharmacy that compounds sterile drug products (SDP)
for injection, administration into the eye, or inhalation to
have a sterile compounding pharmacy license (sterile license).
6)Requires BOP to adopt regulations to establish policies,
guidelines and procedures to implement this bill.
7)Requires BOP to review any formal revision to General Chapter
797 of the United States Pharmacopeia and the National
Formulary, relating to the compounding of sterile
preparations, not later than 90 days after the revision
becomes official, to determine whether amendments are
necessary for the regulations adopted by BOP.
8)Recasts "injectable sterile drug products" as SDP to include
compounded sterile drug products for administration into the
eye and for inhalation.
9)Deletes the sterile license exemption for pharmacies operated
by entities licensed by either BOP or the State Department of
Public Health and which have current accreditation from the
Joint Commission on Accreditation of Healthcare Organizations
or other private accreditation agencies approved by BOP.
10)Requires BOP to review the following prior to issuing or
renewing a sterile license:
a) A current copy of the pharmacy's policies and procedures
SB 294
Page 3
for sterile compounding; and,
b) The pharmacy's self-assessment form, as specified.
11)Requires BOP to receive the following before issuing a
sterile drug license:
a) Copies of all inspection reports conducted of the
pharmacy's premises, and any reports from a private
accrediting agency conducted in the prior 12 months
documenting the pharmacy's operations; and,
b) A list of all sterile medications compounded by the
pharmacy since the last license renewal.
12)Requires a pharmacy with a sterile license to do the
following:
a) Provide BOP a copy of any disciplinary or other action
taken by another state within 10 days of the action;
b) Notify BOP within 10 days of the suspension of any
accreditation held by the pharmacy;
c) Provide to BOP, within 12 hours, any recall notice
issued by the pharmacy for sterile drug products it has
compounded.
13)Requires that adverse effects reported and potentially
attributable to a pharmacy's sterile drug product to be
reported to BOP within 12 hours and immediately reported to
the MedWatch program of the federal Food and Drug
Administration (FDA).
14)Requires a nonresident pharmacy to obtain a sterile license
issued by BOP prior to compounding SDP for shipment into
California.
15)Deletes the provision exempting nonresident pharmacies from
needing a sterile license if the nonresident pharmacy is
operated by an entity licensed as a hospital, home health
agency, or a skilled nursing facility and has current
accreditation from the Joint Commission on Accreditation of
Healthcare Organizations, or other private accreditation
SB 294
Page 4
agencies approved by BOP.
16)Requires a nonresident pharmacy to be inspected by BOP and
found in compliance with this bill and any related regulations
prior to receiving a sterile license.
17)Requires the nonresident pharmacy to reimburse BOP for all
actual and necessary costs incurred by BOP in conducting an
inspection of the pharmacy at least once annually, as
specified.
18)Requires BOP to review the nonresident pharmacy's completed
self-assessment form, as specified, prior to issuing a sterile
license.
19)Requires BOP to be provided with copies of all inspection
reports conducted of the nonresident pharmacy's premises in
the last 12 months documenting the pharmacy's operations.
20)Requires BOP to receive a list of all sterile drug products
compounded by the nonresident pharmacy in the prior 12 months.
21)Requires a nonresident pharmacy with a sterile license to do
the following:
a) Provide to BOP a copy of any disciplinary or other
action taken by its state of residence or another state
within 10 days of the action.
b) Notify BOP within 10 days of the suspension of any
accreditation held by the pharmacy.
c) Provide to BOP, within 12 hours, any recall notice
issued by the pharmacy for sterile drug products it has
compounded that have been shipped into, or dispensed in,
California.
d) Advise BOP of any complaint it receives from a provider,
pharmacy, or patient in California.
22)Requires any adverse effects reported or potentially
attributable to a nonresident pharmacy's SDP to be reported to
BOP within 24 hours and immediately reported to the MedWatch
SB 294
Page 5
program of the federal FDA.
23)Requires BOP to provide a report to the Legislature regarding
the regulation of nonresident pharmacies by January 1, 2018,
that provides, at minimum, the following:
a) A detailed description of BOP activities related to the
inspection and licensure of nonresident pharmacies;
b) Whether fees and travel costs collected provide revenue
in an amount sufficient to support BOP's inspection and
licensure of nonresident pharmacies;
c) The status of proposed changes to federal law that are
serious consideration and that would govern compounding
pharmacies, including legislation pending before the United
States Congress, administrative rules, regulations, or
orders under consideration by the federal Food and Drug
Administration or other appropriate federal agency, and
cases pending before the courts;
d) If applicable, recommended modifications to BOP's
statutory duties related to nonresident pharmacies as a
result of changes to federal law or any additional
modifications necessary to protect the health and safety of
the public.
24)Establishes a fee of $780 for the initial issuance and
renewal of a nonresident sterile license.
25)Requires a nonresident pharmacy to pay, in addition to an
application or application renewal fee, a reasonable amount as
determined by BOP necessary to cover BOP's estimated cost of
performing a licensing inspection.
26)States that failure to submit the inspection deposit at the
time of application or renewal will cause the application to
be deemed incomplete.
27)Requires BOP to provide a written invoice to the applicant
for any difference between the inspection deposit and the
actual costs of inspection, and prohibits BOP from taking
action on the application or renewal until the full amount has
been paid to BOP.
SB 294
Page 6
28)Requires BOP to remit the difference to the applicant if the
applicant paid more than the actual and necessary costs
incurred for the inspection.
29)Makes the provisions of this bill generally operative on July
1, 2014, and makes inoperative conflicting provisions of law
on July 1, 2014, and repeals those sections on January 1,
2015.
30)Makes technical and clarifying amendments.
31)States that no reimbursement is required by this act pursuant
to Section 6 of Article XIIIB of the California Constitution
because the only costs that may be incurred by a local agency
or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the
meaning of Section 17556 of the Government Code, or changes
the definition of a crime within the meaning of Section 6 of
Article XIIIB of the California Constitution.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs of $50,000 to the BOP (Pharmacy Board
Contingent Fund) for regulations and development of
reimbursement protocols for out-of-state pharmacies.
2)Approximately $1.2 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 approximately 100 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.
SB 294
Page 7
3)Annual revenues of $1.2 million (Pharmacy Board Contingent
Fund), including additional licensure fee revenues of
approximately $650,000 and $550,000 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 $3,500 per licensed nonresident
pharmacy. If actual reimbursements are lower than assumed,
revenues will be insufficient to fully cover the expected
workload.
COMMENTS :
1)Purpose of this bill . This bill provides greater regulation
of in-state pharmacies and out-of-state pharmacies that
compound SDPs for use in California. This bill will also
remove licensing exemptions on California pharmacies and
require out-of-state pharmacies to be inspected by BOP in
order to obtain a sterile license. These provisions provide
for a six month delay in the operation date in order to
provide pharmacies enough time to ensure compliance. This
bill is sponsored by BOP.
2)Author's statement . According to the author's office, "Recent
events have highlighted the need to increase oversight of
sterile compounding pharmacies to ensure that sterile drug
products are safe for consumers. For instance, 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.
"Then in October 2012, the New England Compounding Center based
in Massachusetts shipped contaminated drug products throughout
the country, including California, resulting in the death of
more than 50 people and 700 patients becoming ill from the
tainted steroid injections. To strengthen consumer
protection, SB 294 would require both resident and nonresident
pharmacies that compound sterile drug products for injection,
administration into the eye, or inhalation for the purpose of
dispensing or shipping these medications into the state to
apply to the California State Board of Pharmacy for a sterile
compounding pharmacy license.
"Because current law allows for accreditation in lieu of
licensure, the board lacks the ability to appropriately
SB 294
Page 8
regulate such entities and in the case of sterile compounding
pharmacies, even the ability to inspect such facilities to
ensure compliance with pharmacy law. Therefore, SB 294 will
require licensure by the board and will expressly authorize
the board to conduct inspections of facilities that are
licensed to dispense or ship compounded products into
California. By doing so, this will ensure consistent
oversight of these pharmacies and increase consumer
protection."
3)Regulation of compounding pharmacies under current law .
a) Federal . 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, to produce
medication tailored to that patient's special medical
needs. Pharmacy compounding is primarily regulated by the
states. FDA regulates compounding if it rises in scale to
the level of manufacturing.
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 larger quantities of products than the
FDA guidelines permit. This occurs in large part because
of a lack of clarity as to how much production triggers
federally regulated "manufacturing."
There is pending federal legislation that would clarify
FDA's role in regulating compounding pharmacies (S.959
(Harkin)).
b) California . California currently has one of the most
comprehensive sets of 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 in-state
SB 294
Page 9
(resident) and out-of-state (nonresident) sterile
injectable compounding facilities. California requires a
nonresident sterile injectable pharmacy license for those
pharmacies that compound drugs for shipment into
California. Even with these protections, however, other
states' tainted drug products affect California because BOP
relies on the pharmacy's home regulator, the FDA, and
private accreditors to certify safety.
There are 286 licensed sterile injectable compounding
pharmacies in California, and 93 nonresident licensed
sterile injectable compounding pharmacies operating in
California.
4)Voluntary adverse reaction reporting via MedWatch . MedWatch
is a voluntary reporting program sponsored by the FDA for
consumers, prescribers, dispensers, or manufacturers to report
a serious adverse event, product quality problem, product use
error, or therapeutic failure that is suspected to be
associated with the use of an FDA-regulated drug, biologic,
medical device, dietary supplement or cosmetic. As a result
of MedWatch reports, FDA may require a modification in use or
design of a product.
5)The BOP inspection process . BOP provided the following
information regarding their pharmacy inspection process:
To conduct an inspection of a nonresident compounding
pharmacy, one Pharmacy Inspector will conduct an
in-person review to determine whether the compounding
pharmacy meets the requirements for licensure to do
business in California. A list of items reviewed and
deficiencies needing correction will be noted on the
inspection report the inspector will prepare during
the inspection. This report will be signed by both
the inspector and the pharmacist-in-charge or another
senior pharmacist at the conclusion of the inspection
before the inspector leaves.
During the inspection, the inspector will discuss CA
compounding requirements, pharmacy issues and
SB 294
Page 10
processes with those who work in the pharmacy,
although primarily this discussion will take place
with the pharmacist-in-charge. An in-depth review of
the compounded products and quantities of products
prepared by the pharmacy will occur, and compounding
procedures and staff training records will be
reviewed. The inspector will perform an assessment of
product testing and stability studies performed to
establish expiration dates to ensure appropriate
testing takes place for potency, absence of pyrogens,
stability and sterility. Daily compounding logs will
be reviewed for accuracy, and analysis of appropriate
ingredients used and whether they match the master
formula. Reviews also will include an inspection of
the drug stock in the pharmacy, prescription labeling,
etc. The inspector will check for the existence of
appropriate equipment, equipment certifications and
calibration records. The general premises will be
inspected to ensure sterility and compliance with
California building requirements.
The inspector will review any accreditation reports or
home-state inspection reports that exist, and
appropriate licensure in all states in which the
pharmacy does business. A key document used in the
overall review will be an item review of the
compounding self-assessment by the inspector with the
pharmacist-in-charge to look for areas where
deficiencies were noted but not corrected.
Pictures will memorialize the findings of the
inspector and will be noted on the inspection report.
A typical inspection will be conducted in one business
day and no special equipment is used, other than a
computer, portable printer and a camera. For
non-resident pharmacies, the inspector would most
frequently travel on the day before, conduct the
inspection, and return home late in the evening of the
second day. In some cases, a second overnight stay
may be required, while in other cases, especially
inspections conducted in neighboring states, no
overnight travel will be necessary.
Inspections are unannounced.
SB 294
Page 11
6)This bill in practice . This bill will subject all resident
and non-resident sterile compounding pharmacies to the same
California laws and regulations to obtain a sterile license,
which includes annual on-site inspections by BOP. Nonresident
pharmacies will have to pay for BOP inspections in addition to
their sterile license application fee.
This bill also deletes the licensing exemption for both resident
and nonresident pharmacies that are licensed as hospitals and
clinics and are accredited, and requires that adverse effects
potentially attributable to a pharmacy's sterile drug product
be immediately reported to BOP and the MedWatch program.
BOP estimates that it will regulate an additional 700 in-state
and 150 nonresident pharmacies under this bill. These
provisions provide for a six month delay in the effective date
in order to provide pharmacies with enough time to ensure
compliance.
Analysis Prepared by : Sarah Huchel / B.,P. & C.P. / (916)
319-3301
FN: 0002263