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). SB 809 (DeSaulnier and Steinberg) Page 1 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 SB 809 (DeSaulnier and Steinberg) Page 2 $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. SB 809 (DeSaulnier and Steinberg) Page 3 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.