BILL ANALYSIS                                                                                                                                                                                                    Ó






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                                   THIRD READING 


          Bill No:  AB 2750
          Author:   Gomez (D) 
          Amended:  6/13/16 in Senate
          Vote:     21 

           SENATE HEALTH COMMITTEE:  7-0, 6/8/16
           AYES:  Hernandez, Nguyen, Mitchell, Monning, Nielsen, Pan, Roth
           NO VOTE RECORDED:  Hall, Wolk

           SENATE APPROPRIATIONS COMMITTEE:  6-0, 6/27/16
           AYES:  Bates, Beall, Hill, McGuire, Mendoza, Nielsen
           NO VOTE RECORDED:  Lara

           ASSEMBLY FLOOR:  78-0, 5/12/16 (Consent) - See last page for  
            vote

           SUBJECT:   Tissue banks


          SOURCE:    Author
          
          DIGEST:  This bill exempts from tissue bank licensure the  
          storage of allograft tissue by a person, as defined, if  
          specified criteria are met.

          ANALYSIS: 
           
          Existing law:

          1)Requires every tissue bank operating in California to have a  
            current and valid tissue bank license issued or renewed by the  
            Department of Public Health (DPH) with the following  
            exceptions:








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             a)   Licensed blood banks;
             b)   Entities collecting, processing, storing or distributing  
               tissue for autopsy, biopsy, training, education, or for  
               other medical or scientific research or investigation where  
               transplantation of the tissue is not intended;
             c)   A licensed physician and surgeon collecting tissue from  
               his or her patient, or the implantation of tissue into his  
               or her patient. This exemption does not apply to any  
               processing or storage of the tissue, except for the  
               processing and storage of semen collected from a semen  
               donor or obtained from a licensed tissue bank;
             d)   The collection, processing, storage, or distribution of  
               fetal tissue or tissue derived from a human embryo or  
               fetus;
             e)   The collection, processing, storage, or distribution by  
               an organ procurement organization;
             f)   The storage of prepackaged, freeze-dried bone by a  
               general acute care hospital;
             g)   The storage of freeze-dried bone and dermis by a  
               licensed dentist, provided that it has been obtained from a  
               licensed tissue bank and stored in accordance to the  
               manufacturer's instructions and is used for the express  
               purpose of implantation into a patient; and,
             h)   The storage of a human cell, tissue, or cellular- or  
               tissue-based product that is either a medical device  
               approved by the federal Food and Drug Administration (FDA),  
               or that is a biologic product approved under the federal  
               Public Health Service Act by a licensed physician or  
               podiatrist. The medical device or biologic product must  
               have been obtained from a licensed tissue bank, been stored  
               in accordance with the device's or product's package insert  
               and any other manufacturer instruction, and be used solely  
               for the use of direct implantation into or application on  
               the practitioner's own patient.

          2)Defines "tissue" as a human cell, group of cells, including  
            the cornea, sclera, or vitreous humor and other segments of,  
            or the whole eye, bones, skin, arteries, sperm, blood, other  
            fluids, and any other portion of a human body, but does not  
            include an organ when recovered for transplantation or  
            research purposes.

          3)Defines "person" as an individual, corporation, business  







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            trust, estate trust, partnership, association, state or local  
            government, or subdivision or agency thereof, or any other  
            legal entity.

          4)Requires the DPH to adopt rules and regulations, on or before  
            July 1, 2004, governing tissue banks engaged in the collection  
            of human musculoskeletal tissue, skin, and veins for  
            transplantation in humans; requires the regulations to be  
            substantially based upon criteria used by tissue bank trade  
            associations; and requires the regulations to include minimum  
            standards for storing and using tissue.  Requires DPH, on or  
            before July 1, 2003, to report to the appropriate policy and  
            fiscal committees of the Legislature regarding the status of  
            the proposed regulations.

          This bill exempts from tissue bank licensure the storage of  
          allograft tissue by a person, as defined in 3) of existing law  
          above, if all of the following apply:

          1)The person is a hospital or an outpatient setting regulated by  
            the Medical Board of California, including an ambulatory  
            surgical center; 

          2)The person maintains a log that includes the date on which the  
            allograft tissue was received, the expiration date of the  
            allograft tissue, the date on which each allograft tissue is  
            used for clinical purposes, and the disposition of any  
            allograft tissue samples that remain unused at the time the  
            allograft tissue expires; and,

          3)The allograft tissue meets all of the following:

             a)   Was obtained from a tissue bank licensed by the state; 
             b)   Is individually boxed and labeled with a unique  
               identification number and expiration date so that opening  
               the shipping container will not disturb or otherwise alter  
               any of the allograft tissue that is not being utilized; 
             c)   Is intended for the express purpose of implantation into  
               or application on a patient; 
             d)   Is not intended for further distribution; and, 
             e)   Is registered with the FDA and designated to be  
               maintained at ambient room temperature requiring no  
               refrigeration.








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          Background

          The Center for Biologics Evaluation and Research (CBER) within  
          the FDA regulates biological products for human use under  
          applicable federal laws, including the Public Health Service Act  
          and the Food, Drug, and Cosmetic Act.  Human cells or tissue  
          intended for implantation, transplantation, infusion, or  
          transfer into a human recipient are regulated as human cell,  
          tissue, and cellular- and tissue-based product. Examples of such  
          tissue are bone, skin, corneas, ligaments, tendons, heart  
          valves, oocytes, and semen. CBER does not regulate the  
          transplantation of vascularized human organs, such as the  
          kidney, liver, heart, lung, or pancreas. Federal regulations  
          require tissue banks to screen and test donors, to prepare and  
          follow written procedures for the prevention of the spread of  
          communicable disease, and to maintain records. In California,  
          tissue banks are licensed by DPH for an annual license fee of  
          $975.
          
          Comments

          1)Author's statement.  According to the author, due to the  
            burdens of licensure, many hospitals and ambulatory surgical  
            centers located in California are simply opting not to obtain  
            a tissue bank license from the state. Rather, they make daily  
            deliveries of the specified tissue grafts at the beginning of  
            the calendar day, and then use a courier to return any unused  
            tissue grafts at the end of the day. Courier fees have been  
            known to cost one California licensed tissue supplier over  
            $150,000 in one year. These fees are generally included in the  
            overall cost of providing tissue grafts in California, further  
            increasing the cost of health care. AB 2750 is intended to  
            help mitigate courier costs by enabling hospitals and  
            ambulatory surgery centers to store certain tissue products  
            under certain protocols, without having a tissue bank license.
            
          2)DPH regulations. Current law requires DPH to develop  
            regulations regarding tissue banks engaged in the collection  
            of human tissue, skin, and veins for transplantation into  
            humans. According to DPH, regulations were drafted in 1998 but  
            were not successfully promulgated because a subcommittee of  
            the Clinical Laboratory Technology Advisory Committee (CLTAC)  
            stated that it would take several years to develop a  
            regulatory package of this complexity. CLTAC stated that  







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            technical and administrative changes were advancing at such a  
            rate that the regulations would be out of date before being  
            promulgated. Instead, it was recommended that, by reference,  
            the American Association of Tissue Bank (AATB) standards and  
            the annual updates be adopted into law. 

            To date, regulations have yet to be promulgated. DPH instead  
            has developed a frequently asked questions (FAQ) document to  
            provide guidance to entities as to whether or not they need to  
            apply for a tissue bank license. The FAQ states that entities  
            will need to apply for a tissue bank license if they perform  
            any or all of four functions: collection, processing, storage,  
            or distribution of human tissue for purposes of  
            transplantation. The FAQ further states that a facility needs  
            a tissue bank license whenever the facility stores any  
            material without using it or does not return unused tissue on  
            the same calendar day.

            AB 1822 (Bonta, of 2014), which was substantially similar to  
            this bill, was vetoed by Governor Brown. Subsequently, DPH  
            issued a document, "Important Notice Regarding Storage of  
            Allograft Tissue," in which it announced that the FAQ was  
            updated to state that a facility does not need a tissue bank  
            license if it orders a frozen or cryopreserved allograft for a  
            specific patient and holds it in the unopened, validated,  
            temperature-controlled shipping container for no longer than  
            the validation expiration date and time specified by the  
            shipper before implanting, returning, or discarding the  
            tissue. The updated FAQ does not allow for the temporary  
            storage of room temperature allografts that do not require  
            refrigeration. The FAQ also states that DPH's Tissue Bank  
            Program of Laboratory Field Services is in the process of  
            formulating regulations to interpret and clarify tissue bank  
            statutes. However, no expected date for when the regulations  
            would be promulgated is provided.

          Related/Prior Legislation
          
          AB 1822 (Bonta, 2014) was substantially similar to this bill.   
          AB 1822 was vetoed by Governor Brown who stated, in part, "While  
          I support eliminating overly burdensome regulation, I'm not  
          convinced that the bill strikes the right balance between safety  
          and economy.  I will direct DPH to continue working with  
          interested parties to develop an approach that balances  







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          appropriate oversight with cost savings for suppliers."

          AB 995 (Block, Chapter 497, Statutes of 2009) provided an  
          exemption from tissue bank licensure for medical devices  
          approved pursuant to Section 510 or 515 of the Federal Food,  
          Drug, and Cosmetic Act (21 U.S.C. Sec. 360, 360e) or that is a  
          biologic product approved under Section 351 of the federal  
          Public Health Service Act (42 U.S.C. Sec. 262) by a licensed  
          physician or podiatrist acting within the scope and authority of  
          his or her license and practicing in a lawful practice setting.

          AB 1060 (Laird, Chapter 427, Statutes of 2008) established an  
          exemption from existing tissue bank licensure requirements for  
          licensed dentists who store freeze-dried bone and dermis, under  
          specified conditions.

          SB 1135 (Polanco, Chapter 929, Statutes of 2002) required DPH,  
          on or before July 1, 2004, to adopt rules and regulations  
          governing tissue banks, and requires the rules and regulations  
          to be substantially the same as the standards set forth in the  
          most recent publication of the AATB Standards for Tissue  
          Banking. Required DPH, on or before July 1, 2003, to report to  
          the appropriate policy and fiscal committees of the Legislature  
          regarding the status of the proposed regulations.

          AB 2209 (Speier, Chapter 801, Statutes of 1991) required tissue  
          banks to be licensed by the Department of Health Services (now  
          DPH) with certain exceptions.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee, ongoing  
          reduction in licensing workload and fee revenues, likely less  
          than $100,000 per year (Tissue Bank License Fund). Currently,  
          there are about 270 hospitals and ambulatory surgical centers  
          that are licensed as tissue banks. Under the bill, some portion  
          of those facilities could surrender their tissue bank license,  
          to the extent that such entities have a tissue bank license only  
          due to their storage of allograft tissue that meets the  
          exemption requirement in the bill. The share of hospitals or  
          ambulatory surgical centers that only have a tissue bank license  
          due to their storage of such tissue is unknown. Because the  







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          exemption provided for in this bill is only for tissue that is  
          designated for storage at ambient room temperature, there are  
          likely to be a significant number of hospitals and ambulatory  
          surgical centers that will still need to maintain their tissue  
          bank license, in order to continue to store other tissues. For  
          example, if 40% of such facilities surrendered their license,  
          the reduction in licensing workload and fee revenue would be  
          about $100,000 per year.


          SUPPORT:   (Verified6/28/16)




          MiMedx




          OPPOSITION:   (Verified 6/28/16)


          None received

          ARGUMENTS IN SUPPORT: MiMedx states that Governor Brown, when  
          vetoing AB 1822, directed DPH to work with tissue providers on  
          new guidance to strike a balance between appropriate oversight  
          and cost savings for suppliers. MiMedx states that DPH's FAQ  
          still requires that each tissue sample be shipped individually,  
          which is wasteful and unnecessary, especially when one considers  
          that many of the products are approved to be stored at ambient  
          temperatures for extended periods of time. MiMedx argues that  
          this bill mitigates the need for additional oversight and  
          reduces costs, and, as a result, will make more tissue readily  
          available to hospitals and ambulatory surgery centers, and  
          ultimately patients.
          
          ASSEMBLY FLOOR:  78-0, 5/12/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Calderon,  
            Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  







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            Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger  
            Hernández, Holden, Irwin, Jones, Kim, Lackey, Levine, Linder,  
            Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Rendon
          NO VOTE RECORDED:  Burke, Jones-Sawyer

          Prepared by:Reyes Diaz / HEALTH / (916) 651-4111
          6/30/16 9:04:15


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