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SUMMARY: Reinstates a previously repealed requirement for the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