BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 809 (DeSaulnier and Steinberg) - Controlled substances:  
          reporting.
          
          Amended: May 14, 2013           Policy Vote: B&P 7-2, G&F 5-2
          Urgency: Yes                    Mandate: Yes
          Hearing Date: May 20, 2013      Consultant: Brendan McCarthy
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: SB 809 would require various regulating boards  
          within the Department of Consumer Affairs to increase licensing  
          fees and would impose a tax on certain drug manufacturers.  
          Revenues generated would be used to fund system upgrades and  
          maintenance of an existing system for tracking prescription drug  
          use and related enforcement activities by the Department of  
          Justice.

          Fiscal Impact: 
              One-time costs likely in the low millions for the Board of  
              Equalization to set up billing and collection procedures,  
              make information technology changes, and train staff  
              (General Fund). Because these costs will be incurred before  
              new tax revenues are collected, they will most likely be  
              funded from the General Fund.

              Ongoing revenues from the tax imposed on certain drug  
              manufacturers of $4.2 million per year (CURES fund),  
              beginning in 2015.

              Potential one-time costs in the hundreds of thousands for  
              various professional regulating boards within the Department  
              of Consumer Affairs to revise regulations to increase  
              existing fees (various special funds).

              Ongoing revenue increase of $1.6 million from increases in  
              various professional licensing fees (various special funds).

              One-time costs of about $4.6 million over two years to  
              continue operation of the existing CURES system and develop  
              an upgraded system by the Department of Justice (CURES  
              fund).








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              Ongoing costs of about $5.2 million per year to maintain  
              the upgraded CURES and to support enforcement activities by  
              the Department of Justice (CURES fund).

          Background: Under current law, the California Department of  
          Justice manages the Controlled Substances Utilization Review and  
          Evaluation System (CURES). This system is used to track  
          prescriptions of Schedule II, III, and IV drugs. Pharmacies are  
          required to submit information on those prescriptions when they  
          are dispensed. Prescribers (such as physicians), law enforcement  
          personnel, and regulatory agencies are authorized to access  
          CURES. For example, a physician (who has been approved by the  
          Department of Justice) can access CURES to review whether a  
          patient has already been prescribed controlled substances before  
          issuing a new prescription.

          The 2011 Budget Act eliminated General Fund support for CURES.  
          To date, the Department of Justice has received funding from  
          licensing boards to maintain the system.

          Proposed Law: SB 809 would require various regulating boards  
          within the Department of Consumer Affairs to increase licensing  
          fees.

          The following boards and committees would be required to  
          increase licensing and certification fees by up to 1.16% (not to  
          exceed the reasonable costs of maintaining CURES):
              Medical Board of California;
              Dental Board of California;
              California State Board of Pharmacy (including licensing  
              fees for pharmacists, drug wholesalers, and veterinary drug  
              retailers);
              Veterinary Medical Board; 
              Board of Registered Nursing;
              Physician Assistant Committee of the Medical Board of  
              California;
              Osteopathic Medical Board of California;
              State Board of Optometry;
              California Board of Podiatric Medicine;
              Board of Pharmacy.

          The bill would impose a tax on certain manufacturers of Schedule  
          II, III, and IV drugs. The amount of this tax would be set at  








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          $4.2 million divided by the number of taxed firms, to be  
          increased annually by inflation. This tax would be imposed  
          beginning January 1, 2015.

          The bill would also authorize health plans and health insurers  
          to voluntarily contribute to funding CURES.

          Revenues generated under the bill are to be used to fund system  
          upgrades and maintenance of CURES and related enforcement  
          activities by the Department of Justice.

          The bill requires health care practitioners and pharmacists to  
          register with the Department of Justice to gain access to the  
          CURES system. (Currently, it is optional for prescribers and  
          pharmacists to apply for access to CURES.)

          Upon notification by the Department of Justice that the CURES  
          system is capable of accommodating the workload, health care  
          practitioners and pharmacists would be required to check the  
          CURES system before prescribing or dispensing Schedule II, III,  
          or IV drugs.

          This bill is an urgency measure.

          
          Related Legislation: 
              SB 62 (Price) would require coroner's reports from deaths  
              related to prescription drug use to be transmitted to the  
              Medical Board. That bill is on this committee's Suspense  
              File.
              SB 670 (Steinberg) provides the Medical Board with  
              additional authority to investigate allegations of  
              overprescribing of controlled substances. That bill is on  
              the Senate Floor.
              SB 616 (DeSaulnier, 2012) would have increased licensing  
              fees for prescribers to fund CURES. That bill failed passage  
              in the Assembly Business, Professions and Consumer  
              Protection Committee.
              SB 1071 (DeSaulnier, 2010) would have imposed a tax on  
              manufacturers of Schedule II, III, and IV drugs to fund  
              CURES. That bill failed passage in the Senate Health  
              Committee.










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          Staff Comments: Because implementation of the tax on drug  
          manufacturers would not begin until 2015, the revenues generated  
          under the bill may not be sufficient to upgrade CURES until that  
          time.
          
          The only costs that may be incurred by a local agency relate to  
          crimes and infractions. Under the California Constitution, such  
          costs are not reimbursable by the state.