BILL ANALYSIS Ó SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Jerry Hill, Chair 2015 - 2016 Regular Bill No: SB 619 Hearing Date: April 27, 2015 ----------------------------------------------------------------- |Author: |Morrell | |----------+------------------------------------------------------| |Version: |April 6, 2015 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Janelle Miyashiro, Sarah Mason | |: | | ----------------------------------------------------------------- Subject: Pharmacy: outsourcing facilities: licensure SUMMARY: Requires an outsourcing facility, as defined by federal law, to be licensed by the California State Board of Pharmacy before doing business within and across state lines. Existing federal law: 1)Establishes the United States Food and Drug Administration (FDA) to protect the public health by assuring the safety, effectiveness, quality, and security of human and veterinary drugs, vaccines and other biological products, and medical devices through the Food, Drug, and Cosmetic Act (FDCA). (21 United States Code (USC) § 301 et seq.) 2)Establishes the Drug Supply Chain Security Act as part of the Drug Quality and Security Act (DQSA), which outlines steps to build an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States. a) Includes in the term "current good manufacturing practice", the implementation of oversight and controls over the manufacture of drugs to ensure quality, including managing the risk of and establishing the safety of raw materials, materials used in the manufacturing of drugs, and finished drug products. (21 USC § 351) SB 619 (Morrell) Page 2 of ? 1)Establishes standards for introduction of new drugs into interstate commerce, including submission of safety and effective use reports, list of articles and compositions used as components in the drug, methods used, and the manufacture, processing, and packing of the drug. (21 USC § 355) 2)Establishes the DQSA, which: a) Defines an outsourcing facility as a facility at one geographic location or address that: i) Is engaged in the compounding of sterile human drugs. ii) Has elected to register as an outsourcing facility. iii) Complies with all of the requirements in the newly enacted Section 503B, including: 1. Reporting biannually to the Secretary of Health and Human Services (HHS) on what drugs are compounding in the facility, the source of ingredients used to compound, and submission of all adverse event reports. 2. Compliance with the Current Good Manufacturing Practice (CGMP) regulations. 3. Drugs are compounded under the direct supervision of a licensed pharmacist in a registered facility. 4. Annual registration with the FDA. a) Exempts drug products compounded at an outsourcing facilities from FDA approval requirements in section 505 of the FD&C Act and from requirements to label products with adequate directions from use if the requirements in section 503B listed above are met. (21 USC § 353b) Existing California law: 1)Establishes the practice of pharmacy and provides for the licensing and regulation of pharmacies and pharmacists by the SB 619 (Morrell) Page 3 of ? Board of Pharmacy (Board). (Business and Professions Code (BPC) § 4000 et seq.) 2)Authorizes Board inspectors to inspect all pharmacies, wholesalers, dispensaries, stores or places where drugs or devices are compounded, prepared, furnished, dispensed or stored. (BPC § 4008) 3)Prohibits an out-of-state pharmacy from selling or distributing dangerous drugs or devices in California through any other method than a Board-licensed wholesaler, unless the out-of-state pharmacy is licensed by the Board. (BPC § 4120) 4)States that any pharmacy that contracts to compound a drug for parenteral therapy, pursuant to a prescription, for delivery to another pharmacy, must report that contractual arrangement to the Board within 30 days of commencing that compounding. (BPC § 4123) 5)Requires the Board to adopt regulations establishing standards for compounding injectable sterile drug products (sterile injectables) in a pharmacy. Clarifies that a pharmacy cannot compound sterile injectables unless the pharmacy is licensed by the Board. States that a license to compound sterile injectables cannot be renewed without a Board inspection. Exempts pharmacies with accreditation by the Joint Commission on Accreditation of Healthcare Organizations or other accrediting agencies approved by the Board from these requirements. (BPC §§ 4127-4127.1) 6)States that a nonresident pharmacy cannot compound sterile drug products for shipment into California without a sterile compounding pharmacy license issued by the Board. (BPC § 4127.2) 7)Authorizes the Board to issue a cease and desist order to a pharmacy compounding sterile injectables whenever the Board has reasonable belief, based on information obtained through an investigation or inspection, that there is an immediate threat to public health or safety. (BPC § 4127.3) 8)Allows a centralized hospital packaging pharmacy to prepare medications for administration only to inpatients within its own general acute care hospital, and one or more general acute SB 619 (Morrell) Page 4 of ? care hospitals, if the hospitals are under common ownership and located within a 75-mile radius of each other. Requires a centralized hospital packaging pharmacy to obtain a specialty license from the Board. Authorizes a centralized hospital packaging pharmacy to: prepare unit dose packages for single administration to inpatients from bulk containers; prepare compounded unit dose drugs for parenteral therapy for administration to inpatients; and prepare compounded unit dose drugs for administration to inpatients. Authorizes a centralized hospital packaging pharmacy to prepare and store a limited quantity of unit dose drugs prior to receiving a patient-specific prescription according to certain circumstances. Clarifies that all compounding functions shall only be performed in the licensed centralized hospital pharmacy. (BPC §§ 4128-4128.6) 9)Grants the Board certain enforcement abilities against out-of-state pharmacies, authorizes the Board to report actions against an out-of-state pharmacy and authorizes the Board to take any action against an out-of-state pharmacy that it would against a pharmacy in this state if the grounds for action are also grounds for action in the state in which the out-of-state pharmacy is permanently located. (BPC § 4303) This bill: 1) Requires outsourcing facilities [as defined under federal law] to register with the Board annually. 2) Requires a licensed outsourcing facility to compound drugs in compliance with federal Current Good Manufacturing Practices. 3) Prohibits an outsourcing facility to be simultaneously licensed with the Board as a sterile compounding pharmacy at the same location. 4) Prohibits a licensed outsourcing facility from filling patient specific prescriptions. 5) Requires an outsourcing facility to notify the Board of any disciplinary or other action taken by another state or the FDA within 10 days of the action. SB 619 (Morrell) Page 5 of ? 6) Requires an outsource facility to notify the Board within 24 hours of any recall notices or the reporting of any adverse events potentially attributable to an outsourcing facility's products. 7) Requires the Board to inspect the location of a nonresident outsourcing facility to ensure that the facility is in compliance with all laws and regulations before issuing or renewing a nonresident outsourcing facility's license. This includes: a) A revision of a current copy of the nonresident outsourcing facility's policies and procedures for sterile and non-sterile compounding. b) Copies of all inspection reports of the nonresident outsourcing facility's premises conducted in the past 12 months. c) A list of all sterile and non-sterile drug products compounded within the past 12 months. 1) Authorizes the Board to issue a cease and desist order to an outsourcing facility if the Board has reasonable belief, based on information obtained during an inspection or investigation, that the products produced by the facility poses an immediate threat to the public health or safety. 2) Establishes a fine of up to $5,000 per occurrence for a violation of any of the provisions or regulations outlined above. FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by Legislative Counsel. COMMENTS: 1. Purpose. This bill is sponsored by the California State Board of Pharmacy . The Author states that this bill creates SB 619 (Morrell) Page 6 of ? California licensing requirements for a new category of prescription drug compounding entity called an outsourcing facility. The Author adds that the federal government has created this new category of compounding facilities at the federal level via the Drug Quality and Security Act (DQSA) and that the DQSA allows for federal registration of outsourcing facilities under section 503B (in order to recognize specialized businesses that compound prescription medication in large quantities which are typically not pursuant to a patient-specific prescription that typically sell this medication to practitioners, hospitals and sometimes patients in multiple states.) The Author cites the 2012 incident related to compounded drug products from the New England Compounding Center in Massachusetts, when more than 65 people in multiple states were killed and hundreds of others were severely injured due to contaminated compounded medication, as sparking state and federal policy actions. The Author states that "each of the 50 states is grappling with how to regulate these outsourcing facilities as a new category of prescription drug compounder" in order to hold these compounding facilities to a high standard for public health and safety. 2. Background. On November 27, 2013, President Obama signed the DQSA which established provisions relating to the oversight of compounded human drugs. Title I of the DQSA, the Compounding Quality Act, removed certain provisions from section 503A of the FDCA that were found to be unconstitutional by the U.S. Supreme Court in 2002. The Compounding Quality Act simultaneously created a new section, 503B, to allow compounding facilities to become a registered "outsourcing facility". Registration as an outsourcing facility is a voluntary program, and companies must meet the requirements in 503B to continue operating as an outsourcing facility. The law defines an "outsourcing facility" as a facility at one geographic location or address that is engaged in the compounding of sterile human drugs, has elected to register as an outsourcing facility, and complies with all of the requirements of section 503B; including biannual reporting to the Secretary of Health and Human Services on what drugs are compounded in the facility, the source of ingredients used to SB 619 (Morrell) Page 7 of ? compound, submission of all adverse event reports, and compliance with the CGMP regulations. Outsourcing facilities are subject to inspection by the FDA according to a risk-based schedule and must meet FDA reporting requirements for product recalls and adverse events. An outsourcing facility is not required to be a licensed pharmacy and may or may not obtain prescriptions from identified individual patients. Drugs that are compounded by an outsourcing facility can qualify for exemptions from the FDA new drug approval requirements and the requirement to label products with adequate directions for use if all the conditions in 503B are met. However, drug products compounded by a registered outsourcing facility must have a prominent label that identifies the drug as a compounded drug product. Currently, there are no specific FDA requirements for licensure as an outsourcing compounding facility. The FDA released draft guidance in February 2015 titled "For Entities Considering Whether to Register as Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act" for those facilities that are considering registration under 503B. This draft guidance, however, does not include CGMP standards, inspection schedules, or staffing requirements specific to outsourcing facilities. The FDA has currently issued licenses to 54 outsourcing facility entities that ship compounded drug products within and across state lines. Three of these federally licensed outsourcing facilities are located in California. There has been some debate as to how outsourcing facilities should be licensed and regulated at the state level. An outsourcing facility must be licensed federally with the FDA to perform the duties of large scale compounding. Under current California and federal law, a pharmacy may compound medication prescribed for a patient by a prescriber. The Board licenses these entities as resident sterile compounding pharmacies if they are located in California or as non-resident compounding pharmacies if the pharmacy ships the sterile compounded products into California. However, outsourcing facilities integrate both the functions traditionally performed by drug manufacturers (non-patient SB 619 (Morrell) Page 8 of ? specific mass drug manufacturing) with the traditional functions of pharmacies (compounding and supplying drug products to prescribers and hospitals). The FDA does not require an entity to be licensed as a pharmacy in order to be licensed as an outsourcing facility. However, the FDA does not authorize pharmacies to compound and distribute non-patient specific medications. This bill will create new licensure requirements, specific to the state of California, for in state and out of state outsourcing facilities doing business within and across state lines. These new requirements will prohibit an outsourcing facility to be located in the same licensed premises as a pharmacy, therefore only allowing outsourcing facilities to distribute compounded drugs for non-patient specific prescriptions. Since the FDA has yet to release specific federal requirements for outsourcing facilities, this bill anticipates future federal requirements and creates California specific standards by which licensed outsourcing facilities must comply. 3. Prior Related Legislation. SB 600 (Lieu, Chapter 492, Statutes of 2014) repealed California's electronic pedigree law to conform to the DQSA and declared that any foreign dangerous drug that is not approved by the FDA, or that is obtained outside the licensed supply chain, to be misbranded and that anyone who purchases or sells that drug is guilty of a misdemeanor and subject to a fine of not more than $10,000. AB 2605 (Bonilla, Chapter 507, Statutes of 2014) requires third party logistic providers who provide storage, handling, or distribution services, to be licensed by the California Board of Pharmacy. SB 294 (Emmerson, Chapter 565, Statutes of 2013) requires an inspection by the California Board of Pharmacy (Board) prior to licensure for all compounding pharmacies that make or distribute compounded drugs in California. Requires a compounding pharmacy to notify the Board within 24 hours of initiating any recall, to provide a list of all drugs it compounds to the Board, and to notify the Board of any discipline or suspension of accreditation. SB 619 (Morrell) Page 9 of ? SUPPORT AND OPPOSITION: Support: Board of Pharmacy (Sponsor) Opposition: None on file as of April 21, 2015. . -- END --