BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 809|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 809
Author: DeSaulnier (D) and Steinberg (D), et al.
Amended: 5/24/13
Vote: 27 - Urgency
SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 7-2, 4/15/13
AYES: Price, Block, Corbett, Galgiani, Hernandez, Hill, Padilla
NOES: Emmerson, Wyland
NO VOTE RECORDED: Yee
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-2, 5/8/13
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu
NOES: Knight, Emmerson
SENATE APPROPRIATIONS COMMITTEE : 5-1, 5/23/13
AYES: De León, Hill, Lara, Padilla, Steinberg
NOES: Gaines
NO VOTE RECORDED: Walters
SUBJECT : Controlled substances: reporting
SOURCE : Attorney General Kamala Harris
DIGEST : This bill imposes an annual tax on Schedule II, III,
and IV drug manufacturers, beginning on January 1, 2015; charges
fees for prescribing health practitioners, dispensers and
wholesalers of controlled substances; allows grant and gift
moneys for the purposes of upgrading, maintain and enforcing the
Controlled Substances Utilization Review and Evaluation System
(CURES) program; requires the Medical Board of California (MBC)
CONTINUED
SB 809
Page
2
to periodically develop and disseminate to each licensed
physician and surgeon and to each general acute care hospital in
California information and educational materials relating to the
assessment of a patient's risk of abusing or diverting
controlled substances and information relating to CURES; and
makes conforming changes.
ANALYSIS : Existing law, under the Health and Safety Code,
establishes the California Uniform Controlled Substances Act
which regulates controlled substances.
Existing law, under the Business and Professions Code:
1. Establishes various Acts which provide for the licensing,
certification, and regulation of health practitioners by
boards within the Department of Consumer Affairs (DCA).
2. Provides that a certified nurse-midwife or nurse
practitioner may furnish or order drugs or devices, including
controlled substances, in accordance with standardized
procedures or protocols as specified.
3. Establishes the Pharmacy Law which provides for the
licensure and regulation of pharmacies, pharmacists and
wholesalers of dangerous drugs or devices by the Board of
Pharmacy within the DCA.
4. Specifies certain requirements regarding the dispensing and
furnishing of dangerous drugs and devices, and prohibits a
person from furnishing any dangerous drug or device except
upon the prescription of a physician, dentist, podiatrist,
optometrist, veterinarian or naturopathic doctor.
5. Requires the MBC to periodically develop and disseminate
information and educational materials regarding various
subjects, including pain management techniques, to each
licensed physician and surgeon and to each general acute care
hospital in California.
This bill:
1. States legislative findings and declarations relating to
CURES:
CONTINUED
SB 809
Page
3
2. Requires the following health practitioner boards to
additionally charge licensees under their supervision that
are authorized to prescribe, order, administer, furnish, or
dispense controlled substances a fee of up to 1.16% of the
renewal fee that the license was subject to as of July 1,
2013, assessed annually. This fee is due and payable at the
time the licensee renews his/her license and must be
submitted with the licensee's renewal fee, and clarifies that
in no case shall the fee exceed the reasonable costs
associated with operating and maintaining CURES: MBC; Dental
Board of California (DBC); Board of Pharmacy (BOP);
Veterinary Medical Board (VMB); Board of Registered Nursing
(BRN); Physician Assistant Committee of the MBC; Osteopathic
Medical Board (OMB); Naturopathic Medicine Committee of the
OMB; Board of Optometry (CBO); and the Board of Podiatric
Medicine (BPM).
3. Requires the BOP to additionally charge fees for wholesalers
and out-of-state wholesalers of dangerous drugs and
veterinary food-animal drug retailers of up to 1.16% of the
renewal fee that the wholesaler or nonresident wholesaler was
subject to as of July 1, 2013, assessed annually. This fee
is due and payable at the time the wholesaler or nonresident
wholesaler renews its license and must be submitted with the
wholesaler's or nonresident wholesaler's renewal fee.
Clarifies that in no case shall this fee exceed the
reasonable costs associated with operating and maintaining
CURES.
4. Creates CURES accounts within the Contingent Fund of the
MBC, the State Dentistry Fund, the BOP Contingent Fund, the
VMB Contingent Fund, the BRN Fund, the Naturopathic Doctor's
Fund, the OMB Contingent Fund, the CBO Fund, and the BPM
Fund. Provides that the monies collected from licensing fees
for CURES shall be deposited into the CURES account in each
fund.
5. Provides that monies in the various CURES accounts shall be
deposited into the CURES Fund, established within the State
Treasury, consisting of all funds made available to DOJ to
operate and maintain CURES.
6. Requires the MBC to periodically develop and disseminate
information and education material regarding assessing a
CONTINUED
SB 809
Page
4
patient's risk of abusing or diverting controlled substances
and information relating to CURES to each licensed physician
and surgeon and to each general acute care hospital in this
state. Requires MBC to consult with the Department of Health
Care Services and DOJ in developing the materials, as
specified.
7. Authorizes DOJ to seek and use grant funds to pay the costs
incurred by the operation and maintenance of CURES; and
requires DOJ to annually report to the Legislature and make
available to the public the amount and sources of funds it
receives for support of CURES. Prohibits grant funds from
being appropriated from the MBC, the BOP Contingent Fund, the
State Dentistry Fund, the BRN Fund, the Naturopathic Doctor's
Fund, the OMB Contingent Fund, the VMB Contingent Fund, the
CBO Fund, or the BPM Fund, for the purpose of funding CURES.
8. Provides that the operation of CURES must comply with all
applicable federal and state privacy and security laws and
regulations.
9. Allows DOJ to establish policies, procedures, and
regulations regarding using, accessing, evaluating, managing,
implementing, operating, storing, and securing the
information within CURES.
10.Allows DOJ to invite stakeholders to assist, advise, and
make recommendations on the establishment of rules and
regulations necessary to ensure the proper administration and
enforcement of the CURES database. All prescriber invitees
must be licensed, as specified, in active practice in
California, and a regular user of CURES.
11.Requires DOJ, prior to upgrading CURES, to consult with
licensed prescribers, as specified, one or more of the
identified regulatory boards or commissions, and any other
stakeholder identified by DOJ for the purpose of identifying
desirable capabilities and upgrades to the CURES PDMP.
12.Allows DOJ to establish a process to educate authorized
subscribers of CURES on how to access and use CURES.
13.Requires a licensed health care practitioner eligible to
prescribe Schedule II, III or IV controlled substances, or a
CONTINUED
SB 809
Page
5
pharmacist, to submit an application to participate in the
CURES PDMP. Requires DOJ, upon approval of the practitioner
or pharmacist subscriber, to release the electronic history
of controlled substances dispensed to an individual under
his/her care based on data contained in the CURES PDMP.
Increases, from 10 to 30 days, the time in which an
authorized subscriber must notify the DOJ of any changes to
the subscriber account. Requires DOJ to notify applicants,
the Secretary of State, the Secretary of the Senate, the
Chief Clerk of the Assembly, and the Legislature when CURES
is upgraded and can accommodate all users and include
notification on the DOJ Web site, but not before June 1,
2015.
14.Establishes the CURES Tax Law with the following
definitions:
A. "Controlled substance" is a drug, substance or
immediate precursor in Schedule II, Schedule III or
Schedule IV.
B. "Insurer" means an admitted insurer writing health
insurance, as defined in Insurance Code (INS) Section 106,
and an admitted insurer writing workers' compensation
insurance, as defined in INS Section 109.
C. "Qualified manufacturer" is a manufacturer of a
controlled substance which is not a wholesaler or
out-of-state wholesaler of dangerous drugs, a veterinary
food-animal drug retailer or a licensee of any of the
above-mentioned boards.
D. "Health care service plan" as an entity licensed
pursuant to the Knox-Keene Health Care Service Plan Act of
1975.
1. Allows DOJ to seek grant moneys from insurers and health
care service plans for the purpose of supporting CURES.
Insurers and health care service plans may contribute by
submitting their payment to the State Controller which is
then deposited in the CURES Fund. Requires DOJ to make
information about the amount and source of all private grant
funds received for CURES available to the public. A grant or
gift made to the CURES Fund will be nondeductible for state
CONTINUED
SB 809
Page
6
tax purposes.
2. Imposes an annual tax, beginning on January 1, 2015, on all
qualified manufacturers for the purpose of establishing and
maintaining enforcement of CURES.
3. Requires the Board of Equalization (BOE) to collect the
annual tax prescribed by this bill under the Fee Collection
Procedures Law.
4. States that BOE shall not accept or consider a petition for
redetermination or a claim for refund based on the assertion
that a determination by DOJ (a) incorrectly determined that a
qualified manufacturer is subject to the tax, or (b)
improperly or erroneously calculated the amount of that tax.
Requires BOE to forward to DOJ any appeal of a determination
or any claim for a refund, as specified.
5. Requires DOJ to determine the annual tax by dividing the
cost to establish and maintain enforcement of CURES by the
number of qualified manufacturers. (For 2015, CURES cost
shall be $4.2 million; beginning 2016, and each calendar year
thereafter, DOJ shall adjust the rate annually to reflect
increases/decreases in the cost-of-living during the prior
fiscal year, as measured by the California Consumer Price
Index for all items.)
6. Requires that DOJ provide to BOE the name and address of
each qualified manufacturer liable for the annual tax, the
amount of tax, and the due date.
7. Provides that all annual tax referred to BOE for collection,
as specified, shall be paid to BOE.
8. Makes various technical and conforming changes.
Background
CURES 2.0 . DOJ is proposing a modernization program for CURES,
CURES 2.0 which "seeks to quickly and efficiently serve the
state's large medical practitioner community as well as meet the
demanding analytical and information requirements of the
criminal justice community."
CONTINUED
SB 809
Page
7
DOJ reports in "CURES 2.0: An Integrated Approach to Preventing
Drug Abuse and Diversion" that the current CURES PDMP demands
heavy personnel resources for information processing and
dissemination. The system also requires the equivalent of seven
Information Technology staff but is slow, frequently freezes and
is not capable of accommodating a large influx of new users.
The current registration process for the program is time
intensive and requires manual data entry and work. DOJ also
notes that the system is currently reactive in nature and has
limited reporting and analytical capabilities, as well as
underutilized, with only 3.6% of the eligible prescriber and
pharmacist licensee field registered as users of CURES. The
current system also has discrepancies between its two data
sources that can result in unreliable information.
A modernized system as outlined by DOJ will result in fewer
staff required to maintain the PDMP as well as increased
analytical capabilities for regulatory boards and law
enforcement to investigate and prevent drug diversion.
According to DOJ, CURES 2.0 will provide a streamlined program,
system and enrollment process; integration with current major
health information systems; timely Patient Activity Reports to
prescribers and dispensers; inquiry capabilities to law
enforcement and regulatory boards; and, a method of secure data
exchange among PDMP users and DOJ. According to DOJ, the
modernized PDMP will enhance information sharing about
prescription drug dispensing and prescribing while "promoting
legitimate medical practice and quality patient care" and
implement two "newly created State of California Regional
Investigative Prescription Teams (SCRIPT), a collaborative
effort to significantly diminish the availability and use of
illegally obtained prescription drugs through education,
training and apprehending those responsible for the distribution
and diversion of prescription drugs". The modernization effort
would take approximately 12 to 16 months to complete once
funding has been secured and system design efforts begin. The
costs associated with CURES 2.0, as provided by DOJ, are as
follows:
-------------------------------------------------------
|PDMP Modernization One-Time Cost - Two Year Period |
-------------------------------------------------------
|-------------------------------------------+-----------|
CONTINUED
SB 809
Page
8
|Item |Amount |
|-------------------------------------------+-----------|
|Hardware (Server, storage and network) |$520,541 |
|-------------------------------------------+-----------|
|Software (Licensing and maintenance) |$542,102 |
|-------------------------------------------+-----------|
|Design, Development, and Implementation |$1,032,000 |
|(Consultant contract based on 4 contract | |
|staff working an estimate of 8600 hours at | |
|$120 per hour) | |
|-------------------------------------------+-----------|
|Estimated One-Time Cost |$2,090,643 |
| | |
-------------------------------------------------------
The $2,090,643 cost above would be for modernizing the PDMP to
meet the needs of medical practitioners and law enforcement.
-------------------------------------------------------
| Transitional System Cost - Two Year Period |
-------------------------------------------------------
|-------------------------------------------+-----------|
|System |Amount |
|-------------------------------------------+-----------|
| Information Technology Staff (7) |$1,300,000 |
|-------------------------------------------+-----------|
| Electronic Data Service (to obtain |$260,000 |
| pharmacy data) | |
|-------------------------------------------+-----------|
| Maintenance (hardware, software) |$270,000 |
|-------------------------------------------+-----------|
|Estimated Cost to Operate System During |$1,830,000 |
|Two Year Period: | |
-------------------------------------------------------
The $1,830,000 cost identified above would be necessary to
operate and maintain the current PDMP until data could be
migrated to the modernized PDMP. This bill seeks to fund the
modernization effort and transitional system through the
proposed onetime tax assessment on health insurance plans and
workers compensation insurers.
CONTINUED
SB 809
Page
9
-------------------------------------------------------
|CURES 2.0 Program and System Cost Ongoing - Year Three |
| |
-------------------------------------------------------
|-------------------------------------------+-----------|
|Program |Amount |
|-------------------------------------------+-----------|
| CURES Support Staff (9) |$ 776,554 |
|-------------------------------------------+-----------|
| Travel/Training (system registration |$15,000 |
| outreach; training system users; | |
| stakeholder meetings) | |
|-------------------------------------------+-----------|
| System | |
|-------------------------------------------+-----------|
| Information Technology Staff (5) |$500,000 |
|-------------------------------------------+-----------|
| Electronic Data Service (to obtain |$130,000 |
| pharmacy data) | |
|-------------------------------------------+-----------|
| Maintenance (hardware, software) |$200,000 |
|-------------------------------------------+-----------|
|Total: |$1,621,554 |
| | |
-------------------------------------------------------
The $1,621,554 cost identified above would be for staffing,
operating, and maintaining the modernized PDMP on a yearly
basis. This cost would include any necessary hardware and/or
software upgrades. This bill seeks to fund this effort through
the proposed 1.16% increase in licensing fees for prescribers,
pharmacists and wholesalers. As proposed, this fee increase
would result in approximately:
$9 increase on the current $808 licensing fee for physicians
and surgeons.
$4 increase on the current $365 licensing fee for dentists.
$2 increase on the current $150 licensing fee for
pharmacists.
$7 increase on the current $600 licensing fee for
wholesalers, including out-of-state wholesalers.
CONTINUED
SB 809
Page
10
$5 increase on the current $405 licensing fee for veterinary
retailers.
$3 increase on the current $290 licensing fee for
veterinarians.
$2 increase on the current $140 licensing fee for nurse
midwives.
$2 increase on the current $140 licensing fee for nurse
practitioners.
$3 increase on the current $300 licensing fee for physician
assistants.
$5 increase on the current $400 licensing fee for
osteopathic physicians and surgeons.
$5 increase on the current $425 licensing fee for
optometrists.
$10 increase on the current $900 licensing fee for permanent
doctors of podiatric medicine.
-------------------------------------------------------
|Statewide SCRIPT Team |
-------------------------------------------------------
|-------------------------------------------+----------|
|Program - SCRIPT Team (19) |$ |
| | 4,307,343|
|-------------------------------------------+----------|
|Total: |$ |
| |4,307,343 |
| | |
------------------------------------------------------
The $4,307,343 cost identified above would fund two SCRIPT, with
one team located in Northern California and one in Southern
California. These SCRIPT teams would be tasked with
investigating prescription drug diversion, coordinating cases
with the MBC, as well as the coordination of state, federal and
local law enforcement efforts. These teams would provide
CONTINUED
SB 809
Page
11
statewide jurisdiction for cases involving organized diversion
and the misuse of scheduled medication. This bill seeks to fund
the SCRIPT teams through an annual tax levy on narcotic drug
manufacturers who do business in this state.
NOTE: For detailed information relating to the five Schedules
of controlled substances, prescription drug
abuse/deaths/monitoring, and CURES, refer to the Senate
Business, Professions and Economic Development
Committee's analysis.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
One-time costs likely in the low millions for the BOE 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 DCA to revise
regulations to increase existing fees (various special
funds).
Ongoing revenue increase of $800,000 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 DOJ (CURES Fund).
Ongoing costs of about $5.2 million per year to maintain the
upgraded CURES and to support enforcement activities by DOJ
(CURES Fund).
SUPPORT : (Verified 5/28/13)
CONTINUED
SB 809
Page
12
Attorney General Kamala Harris (source)
ALPHA Fund
American Cancer Society Cancer Action Network
Association of California Healthcare Districts
Association of California Insurance Companies
Behind the Orange Curtain, the Documentary
California Association for Nurse Practitioners
California Association of Joint Powers Authority
California Chapter of the American College of Emergency
Physicians
California Coalition on Workers' Compensation
California Department of Insurance
California Joint Powers Insurance Authority
California Labor Federation
California Medical Association
California Narcotic Officers Association
California Pharmacists Association
California Police Chiefs Association
California Professional Association of Specialty Contractors
California Retailers Association
California Self-Insurers Association
California Society of Health-System Pharmacists
California State Association of Counties
California State Board of Pharmacy
California State Sheriffs' Association
City and County of San Francisco
County Alcohol and Drug Program Administrators Association of
California
CSAC Excess Insurance Authority
Deputy Sheriffs' Association of San Diego County
Employers Group
Gallagher Bassett Services, Inc.
Golden Oak Cooperative Corporation
Grimmway Farms
Health Officers Association of California
Healthcare Distribution Management Association
Independent Insurance Agents and Brokers of California
Metro Risk Management
Michael Sullivan & Associates
National Association of Chain Drug Stores
National Coalition Against Prescription Drug Abuse
Nordstrom
Safeway
CONTINUED
SB 809
Page
13
Schools Insurance Authority
Schools Insurance Group
Sedgwick Claims Management Services
Shaw, Jacobsmeyer, Crain, and Claffey
South Orange County Coalition
Troy and Alana Pack Foundation
University of California
Western Occupational & Environmental Medical Association
Western Propane Gas Association
OPPOSITION : (Verified 5/24/13)
BayBio
BIOCOM
California Healthcare Institute
Endo Health Solutions, Inc.
Generic Pharmaceutical Association
Pharmaceutical Research and Manufacturers of America
Teva Pharmaceuticals
ARGUMENTS IN SUPPORT : According to the author's office, the
automated PDMP within the CURES program is a valuable
investigative, preventative, and educational tool for law
enforcement, regulatory boards, and health care providers, but
recent budget cuts to the Attorney General's Division of Law
Enforcement have resulted in insufficient funding to support the
CURES PDMP. The author's office states that the PDMP is
necessary to ensure health care professionals have the necessary
data to make informed treatment decisions and to allow law
enforcement to investigate prescription drug diversion. Without
a dedicated funding source, the CURES PDMP is not sustainable
and will be suspended July 1, 2013. To keep the program going
and increase its effectiveness, this bill establishes funds to
upgrade the system to be fully modernized and provides dedicated
ongoing funding to ensure the program is sustainable.
The bill's sponsor, California Attorney General Kamala Harris
(AG), notes that without the funding this bill provides, the AG
will be forced to disband the CURES program later this year,
making California one of only two states in the nation without a
PDMP and that closing the CURES program would "exacerbate a
prescription drug diversion problem that is already the fastest
growing drug problem in the United States."
CONTINUED
SB 809
Page
14
According to the Healthcare Distribution Management Association,
this bill outlines a fair and equitable approach to funding
CURES. The group believes that PDMPs are worthwhile and can be
effective in the fight against abuse of controlled substances
and other prescription drugs.
ARGUMENTS IN OPPOSITION : Pharmaceutical Research and
Manufacturers of America (PhRMA) states that this bill creates
an open-ended and permanent funding requirement on manufacturers
to finance a "strike-team" to enforce California's anti-drug
efforts. PhRMA supports the use of PDMPs and believes these and
related enforcement programs should be funded with state General
Fund dollars, federal grant monies or other fiscal resources
rather than a tax on the industry.
MW:k 5/28/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED