BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2711


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          Date of Hearing:  March 30, 2016


           ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW


                               Cristina Garcia, Chair


          AB 2711  
          (Chiu) - As Amended March 17, 2016


          SUBJECT:  Pharmaceuticals:  purchasing


          SUMMARY:  Reinstates a previously repealed requirement for the  
          Department of General Services (DGS) to report to the  
          Legislature on its prescription drug bulk purchasing program.   
          Specifically, this bill:  



          1)Expresses legislative intent to enact legislation that would  
            include strategies to achieve the greatest savings on  
            prescription drugs with prescription drug manufacturers and  
            wholesalers. 

          2)Reinstates the repeal of a reporting requirement relating to  
            DGS' prescription drug bulk purchasing program.



          3)Requires the reinstated report to include, but not be limited  
            to, all of the following:


             a)   The number and description of entities that participate  
               in the program; 








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             b)   The number and description of contracts with  
               manufacturers and suppliers, including any discounts,  
               rebates or refunds obtained; 


             c)   A description of other cost containment strategies that  
               have been, or will be, implemented; and,


             d)   Estimates of the costs and savings associated with the  
               program.





          4)Requires DGS to provide the report to the appropriate fiscal  
            and policy committees of the Legislature by February 1, 2017.


          5)Sunsets the provisions of this bill on January 1, 2021.


          EXISTING LAW:  


          1)Authorizes DGS to negotiate and contract with manufacturers  
            and suppliers of prescription drugs in order to obtain  
            discounts, rebates, or refunds based on quantities purchased. 


          2)Requires the California Department of Corrections and  
            Rehabilitation, the Department of State Hospitals, and the  
            Department of Developmental Services to participate in the  
            prescription drug bulk purchasing program under the direction  
            of DGS and allows other governmental entities to voluntarily  
            participate.










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          3)Permits DGS to contract with a pharmaceutical benefits manager  
            or other entity to negotiate prescription drug rebates and  
            discounts for the state; purchase the drugs; or, act as a  
            consultant to the department.


          4)Provides that DGS may explore additional prescription drug  
            cost containment strategies.


          5)Repeals a requirement for DGS to report to the Legislature on  
            the prescription drug bulk purchasing program.



          6)Requires, in Government Code Section 10231.5, any bill that  
            imposes a reporting requirement to include a sunset date.


          FISCAL EFFECT:  Unknown


          COMMENTS:  SB 1315 (Sher), Chapter 483, Statutes of 2002,  
          authorizes DGS to administer and implement a prescription drug  
          bulk purchasing program, also referred to as the statewide  
          pharmaceutical program (SPP).  The SPP allows state and local  
          governmental entities to access contracts for pharmaceutical  
          products and medical or surgical supplies.  State prisons, state  
          hospitals, and state developmental centers are required to  
          purchase drugs through the SPP.  Other participating agencies  
          include California State University (CSU), California Highway  
          Patrol, California Emergency Medical Services Authority, and the  
          California Department of Veterans Affairs.



          Under the SPP, DGS contracts with a vendor, AmeriSourceBergen  
          Drug Corporation (ADC), to fill and distribute drug orders to  
          participating departments.  ADC acquires the drugs through  








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          competitively procured state contracts for generic drugs;  
          negotiated state contracts for brand-name drugs; or, through the  
          Massachusetts Alliance for State Pharmaceutical Buying, a group  
          purchasing organization for states.  Noncontract drugs are  
          acquired at discounted wholesale prices.





          SB 1315 also directed DGS to report specific information about  
          the SPP to the Legislature by February 1, 2005.  However,  
          subsequent legislation, AB 79 (Dutra), Chapter 409, Statutes of  
          2004, established a moratorium on numerous legislative reporting  
          requirements due to state budget constraints, including the SB  
          1315 report, and delayed its due date to January 1, 2008.


          AB 2877 (Frommer), Chapter 720, Statutes of 2006, repealed the  
          suspended SB 1315 report and instead required the information to  
          be included in a new report to the Legislature on joint  
          activities among DGS, the University of California, and the CSU  
          regarding the procurement of prescription drugs.  Finally, in  
          2009, DGS sponsored legislation, AB 1311 (Duvall), Chapter 284,  
          Statutes of 2009, that repealed reporting requirements it deemed  
          unnecessary to operations, including the SPP report.



          According to the author, reinstating the report will provide  
          "important and timely information necessary for the development  
          of policies that will ensure access to affordable medications  
          and deliver on the promise of health care coverage and  
          affordability."  By requiring information on the costs and  
          savings associated with the SPP, the report could demonstrate  
          whether the various participating entities have been able to  
          leverage their collective buying power to achieve better pricing  
          and more savings for the state.  









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          SUGGESTED AMENDMENT:  Committee staff recommends delaying the  
          report due date to July 2017 to give DGS time to produce it.





          REGISTERED SUPPORT / OPPOSITION:


          
          Support
          None on file
          Opposition
          None on file
          Analysis Prepared by:Cassie Royce / A. & A.R. / (916) 319-3600