BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1193| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 1193 Author: Hill (D), et al. Amended: 5/31/16 Vote: 21 SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 4/18/16 AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen SUBJECT: Pharmacy: outsourcing facilities SOURCE: Author DIGEST: This bill extends the operations of the Board of Pharmacy (Board) and Pharmacy Law until 2021 and makes various changes to the Pharmacy Law intended to improve Board oversight of licensees involved in the acquisition, storage, distribution and dispensing of dangerous drugs and dangerous devices, including: oversight by the Board for outsourcing facilities; registration with the Board for use of an automated delivery device by a pharmacy; timeline requirements for the Board to approve clinic licenses; and technical changes. ANALYSIS: Existing law provides for the licensure and regulation of pharmacies, pharmacists and wholesalers of dangerous drugs or devices by the Board within the Department of Consumer Affairs (DCA) until January 1, 2017. (Business and Professions Code § 4000 et seq.) SB 1193 Page 2 This bill: 1) Extends the operation of the Board and Board Executive Officer until January 1, 2021. 2) Requires outsourcing facilities [as defined under federal law] to be licensed by the Board; prohibits an outsourcing facility to be simultaneously licensed with the Board as a sterile compounding pharmacy at the same location; prohibits a licensed outsourcing facility from filling patient specific prescriptions; requires an outsourcing facility to notify the Board of any disciplinary or other action taken by another state or the FDA or of any recall notices or any adverse events potentially attributable to an outsourcing facility's products; 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; authorizes the Board to issue a cease and desist order to an outsourcing facility if the Board has reasonable belief that the products produced by the facility poses an immediate threat to the public health or safety and; establishes a $780 fee for outsourcing facility licensure. 3) Requires a pharmacy using an automated drug delivery system (ADD) to register use of the ADD with the Board, including the address at which the ADD is being used. 4) Requires the Board to issue a license to, or incorporate changes reported by, a clinic, within 30 days of receiving a completed application and payment of any prescribed fees. 5) Authorizes the Board to issue a cease and desist to an entity practicing activities without a license if those activities would require licensure by the Board. 6) Includes pharmacists in the list of licensed professionals authorized to establish a professional corporation. 7) Requires license renewals to be consolidated for commonly owned clinics. 8) Requires notification to the Board of compounded drug recalls. SB 1193 Page 3 9) Requires the Pharmacy Board Contingent Fund to be subject to appropriation by the Legislature. 10)Makes various technical changes. Background This bill is sponsored by the Author, and is one of five "sunset bills" the Author is sponsoring this Session. According to the Author, this bill is necessary to make changes to the Pharmacy Law in order to improve Board oversight of licensees involved in the acquisition, storage, distribution and dispensing of dangerous drugs and dangerous devices. Board of Pharmacy. The Board is responsible for enforcing federal and state laws pertaining to the acquisition, storage, distribution and dispensing of dangerous drugs (including controlled substances) and dangerous devices. The Board has over 140,000 licensees in 23 license categories that include both personal and business licenses. As an agency that regulates the individuals and businesses that dispense, compound, provide, store and distribute prescription drugs and devices and pharmaceutical services to the public, or to other health care practitioners in compliance with state and federal law, the licensing of pharmacists, pharmacies, and pharmacy technicians is the primary focus of Board activity, with consumer protection at the core of the Board's operations. The Board's regulatory authority, as described in the Pharmacy Law, extends over individuals and firms located both within and outside California, if they provide services into California. 2015-16 Sunset Review. Beginning in 2015, the Senate Business and Professions Committee and the Assembly Business and Professions Committee (Committees) conducted joint oversight hearings to review 12 regulatory entities. The Committees conducted two hearings in March and joined with the Senate Committee on Education and Assembly Committee on Higher Education to review the Bureau for Private Postsecondary Education. This bill and the accompanying sunset bills are intended to implement legislative changes as recommended by staff of the Committees and which are reflected in the Background Papers prepared by Committee staff for each agency and program reviewed this year. SB 1193 Page 4 In response to issues stemming from the Pharmacy Law's lack of formal recognition for outsourcing facilities and in order to ensure that the state's hospitals and practitioners have access to high quality, carefully compounded sterile medication, this bill establishes a regulatory framework in California for outsourcing facilities operating under provisions of the federal Drug Quality and Security Act which created a voluntary compliance regime in which large-scale compounding pharmacies may voluntarily register as "outsourcing facilities" and be subject to oversight by the FDA in much of the same way that traditional pharmaceutical manufacturers are monitored. In response to concerns that the Board is not currently able to track how many ADDs are in use, where they are in use, or which pharmacy is responsible for specific delivery devices, this bill establishes a registration process to enable the Board to identify which pharmacies operate these delivery devices and where each is located. In response to backlogs, this bill clarifies current law related to processing timelines for applications filed by clinics opening a new location, reporting a change to an existing location or updating certain information like changes to corporate officers to ensure a streamlined process for commonly-owned clinics to use just one application which in turn will speed up processing timelines. This bill also requires license renewals to be consolidated for commonly owned clinics. In response to concerns that the Board does not currently have the authority to issue a cease and desist order to businesses involved in unlicensed activity and the fact that simply citing and fining an unlicensed business is often an insufficient consequence to stop unlicensed activity, as frequently the business will continue to do the very action which violates the law, this bill authorizes the Board to issue a cease and desist to an entity practicing activities without a license if those activities would require licensure by the Board. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes SB 1193 Page 5 According to the Senate Committee on Appropriations analysis dated May 27, 2016, this bill will result in ongoing costs of $20 million per year for the continued operation of the Board the Board's operations are fully supported by licensing fees. The analysis also cites one-time costs of $335,000 and ongoing costs of $320,000 per year for licensing and inspection activities relating to outsourcing facilities. SUPPORT: (Verified5/31/16) Planned Parenthood Affiliates of California OPPOSITION: (Verified5/31/16) None received ARGUMENTS IN SUPPORT: Planned Parenthood Planned Parenthood Affiliates of California supports the provisions in this bill related to processing efficiencies for clinic applications and renewals. Prepared by:Sarah Mason / B., P. & E.D. / (916) 651-4104 5/31/16 20:45:41 **** END ****