BILL ANALYSIS Ó
SB 1193
Page 1
Date of Hearing: June 28, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
SB 1193(Hill) - As Amended June 21, 2016
SENATE VOTE: 39-0
SUBJECT: Healing arts
SUMMARY: Extends the operation of the Board of Pharmacy (BOP)
and Pharmacy Law until January 1, 2021, and makes various
changes to the Pharmacy Law intended to improve BOP oversight of
licensees involved in the acquisition, storage, distribution and
dispensing of dangerous drugs and dangerous devices, including:
oversight by the BOP for outsourcing facilities; registration
with the BOP for use of an automated delivery device by a
pharmacy; timeline requirements for the BOP to approve clinic
licenses; and various other technical changes. This bill also
makes various changes that are intended to improve the
effectiveness of the Veterinary Medical Board (VMB) and extends
the VMB's sunset dates, until January 1, 2021.
EXISTING 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
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devices through the Food, Drug, and Cosmetic Act (FDCA).
(Title 21 United States Code (21 USC) Section 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, which:
a) Defines an outsourcing facility as a facility at one
geographic location or address that:
b) Is engaged in the compounding of sterile human drugs.
c) Has elected to register as an outsourcing facility.
d) Complies with all of the requirements in the newly
enacted Section 503B, including:
e) 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.
f) Compliance with the Current Good Manufacturing Practice
(CGMP) regulations.
g) Drugs are compounded under the direct supervision of a
licensed pharmacist in a registered facility.
h) Annual registration with the FDA.
i) Exempts drug products compounded at an outsourcing
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facilities from FDA approval requirements in Section 505 of
the FDCA and from requirements to label products with
adequate directions from use if the requirements in Section
503B listed above are met. (21 USC Section 353b)
3)Outlines the types of licensed professionals authorized to
establish a professional corporation. (Corporations Code
Section 13401.5)
4)Under the Pharmacy Law, provides for the licensure and
regulation of pharmacies, pharmacists and wholesalers of
dangerous drugs or devices by the BOP within the Department of
Consumer Affairs (DCA) until January 1, 2017. (Business and
Professions Code (BPC) Section 4000, et seq.)
5)Requires the BOP 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 BOP. States that a license to compound sterile
injectables cannot be renewed without a BOP inspection. (BPC
Sections 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 BOP. (BPC Section
4127.2)
7)Authorizes the BOP to issue a cease and desist order to a
pharmacy compounding sterile injectables whenever the BOP has
reasonable belief, based on information obtained through an
investigation or inspection, that there is an immediate threat
to public health or safety. (BPC Section 4127.3)
8)Authorizes a pharmacy to provide pharmacy services to a health
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facility through the use of an automated drug delivery system
(ADD) that need not be located at the same location as the
pharmacy. Provides that drugs stored in an ADD shall be part
of the inventory of the pharmacy providing pharmacy services
to that facility, and drugs dispensed from ADD shall be
considered to have been dispensed by that pharmacy. (BPC
Section 4119.1)
9)Establishes the California Veterinary Medicine Practice Act
until January 1, 2017, and requires the VMB within the DCA to,
among other things, license and regulate veterinarians, RVTs,
RVT schools and programs, and veterinary premises. (BPC
Section 4800, et seq.)
10)Defines "automated drug delivery system" as a mechanical
system that performs operations or activities, other than
compounding or administration, relative to the storage,
dispensing, or distribution of drugs; specifies that these
systems collect, control, and maintain all transaction
information to accurately track the movement of drugs into and
out of the system for security, accuracy, and accountability.
(Health and Safety Code (HSC) Section 1261.6)
THIS BILL:
11)Extends the operation of the BOP and its Executive Officer
(EO) until January 1, 2021.
12)Defines "outsourcing facility" as a facility that is located
within the United States at one address that is engaged in the
compounding of sterile and nonsterile drugs; has registered
with the FDA pursuant to 21 USC Section 353b; is doing
business within or into California; and, is licensed with the
BOP pursuant to BPC Section 4129.
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13)Requires a pharmacy using an automated drug delivery system
(ADD) to register use of the ADD with the BOP within 30 days
of installation of the device, and annually thereafter,
including the address at which the ADD is being used; and,
requires a pharmacy to advise the BOP within 30 days if the
pharmacy discontinues the use of an ADD.
14)Allows a pharmacy to use an ADD only if the pharmacy uses
the ADD consistent with legal requirements; the pharmacy's
policies and procedures related to the ADD include appropriate
security and monitoring measures; the pharmacy reports drug
losses as required by law; and, the pharmacy license is
unexpired and not subject to disciplinary action. Exempts
from registration with the BOP an ADD operated by a licensed
hospital pharmacy for doses administered in a facility
operated under a consolidated license.
15)Authorizes the BOP to prohibit a pharmacy from using an ADD
if these conditions are not met; requires the BOP to give the
pharmacy written notice explaining the basis for the
determination; and allows the pharmacy to appeal the decision
within 30 days.
16)Requires a pharmacy that issues a recall notice regarding a
nonsterile compounded drug product to contact the recipient
pharmacy, prescriber, or patient (as applicable) and the BOP
within 12 hours of the recall notice if both the use or
exposure to the recalled drug may cause serious adverse health
consequence or death, and if the recalled drug was dispensed
or intended for use in this state.
17)Requires a pharmacy to report to MedWatch within 72 hours if
the pharmacy has been advised that a patient has been harmed
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by using a nonsterile compounded product potentially
attributable to the pharmacy.
18)Requires outsourcing facilities, as defined under federal
law, to be licensed by the BOP; prohibits an outsourcing
facility to be simultaneously licensed with the BOP 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
BOP 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 BOP 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 BOP to issue a cease and desist order to an
outsourcing facility if the BOP 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 an
outsourcing facility license.
19)Includes pharmacists in the list of licensed professionals
authorized to establish a professional corporation.
20)Extends the sunset date for the VMB and Executive Officer
until January 1, 2021.
21)Authorizes a veterinarian and RVT, who is under the director
supervision of a veterinarian with a current and active
license, to compound a drug for anesthesia, the prevention,
cure, or relief of a wound, fracture, bodily injury, or
disease of an animal in a premises currently and actively
registered with the VMB, as specified, and would authorize the
BOP and the VMB to ensure compliance with these requirements.
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22)Requires veterinarians engaged in the practice of veterinary
medicine and employed by the University of California or by
Western University of Health Sciences, while engaged in the
performance of specific duties, to be licensed as a
veterinarians in the state or hold a university license issued
by the VMB, and that the applicant for a university license to
meet certain requirements, including that the applicant passes
a specified exam.
23)Provides that a veterinary premise registration may be
canceled after five years of delinquency, unless the VMB finds
circumstances or conditions that would justify a new premise
registration to be issued.
24)Makes technical changes to the BPC regarding the VMB.
FISCAL EFFECT: According to the May 27, 2016, Senate Committee
on Appropriations analysis, the provisions of this bill related
to the BOP will result in:
1)Ongoing costs of $20 million per year for the continued
operation of the Board of Pharmacy. The Board's operations
are fully supported by licensing fees.
2)One-time costs of $335,000 and ongoing costs of $320,000 per
year for licensing and inspection activities relating to
outsourcing facilities.
3)Ongoing costs of about $160,000 per year for the BOP to
coordinate inspection and enforcement activities with respect
to the regulation of drug compounding on veterinary premises.
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4)Ongoing costs of about $160,000 per year for the BOP to
coordinate inspection and enforcement activities with respect
to the regulation of drug compounding on veterinary premises.
According to the May 27, 2016, Senate Committee on
Appropriations analysis for SB 1195, pertaining to the VMB, this
bill will result in:
1)Ongoing costs of about $4.8 million per year for the continued
operation of the VMB. All costs to operate the VMB are funded
with licensing fees.
2)Minor costs are anticipated by the VMB for the changes in the
bill to its statutory requirements and procedures.
COMMENTS:
Purpose. This bill extends the operation of the BOP and
Pharmacy Law until 2021 and makes various changes to the
Pharmacy Law intended to improve BOP oversight of licensees
involved in the acquisition, storage, distribution and
dispensing of dangerous drugs and dangerous devices, including:
oversight by the BOP for outsourcing facilities; registration
with the BOP for use of an automated delivery device by a
pharmacy; timeline requirements for the BOP to approve clinic
licenses; and technical changes. The bill also makes various
changes that are intended to improve the effectiveness of the
VMB and extends the VMB's sunset dates.
This bill is sponsored by the author, and is one of five "sunset
bills" the author is sponsoring this year. According to the
author, "this bill is necessary to make changes to the Pharmacy
Law and Veterinary Practice Act in order to strengthen the laws
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to improve [BOP] and VMB oversight of licensees."
Background. Joint Oversight Hearings and Sunset Review of DCA
Licensing Boards. In March of 2016, the Assembly Committee on
Business and Professions and the Senate Committee on Business,
Professions and Economic Development (Committees) conducted
multiple joint oversight hearings to review 11 regulatory boards
within the DCA and one regulatory entity outside of the DCA.
The sunset bills are intended to implement legislative changes
recommended in the respective background reports drafted by the
Committee staff for the agencies reviewed this year.
The Sunset Review Process. The sunset review process provides a
formal mechanism for the DCA; the Legislature; the regulatory
boards, bureaus and committees; interested parties; and
stakeholders to make recommendations for improvements to the
authority of consumer protection boards and bureaus. This is
performed on a standard four-year cycle and was mandated by SB
2036 (McCorquodale), Chapter 908, Statutes of 1994. Each
eligible agency is required to submit to the Committees a report
covering the entire period since last reviewed that includes,
among other things, the purpose and necessity of the agency and
any recommendations of the agency for changes or reorganization
in order to better fulfill its purpose. During the sunset
review hearings, the Committees take public testimony and
evaluate the eligible agency prior to the date the agency is
scheduled to be repealed. An eligible agency is allowed to
sunset unless the Legislature enacts a law to extend,
consolidate, or reorganize the eligible agency.
The legislation pertaining to this bill is based on specific
issues raised and addressed in the reports on the BOP and VMB
released by the Senate Committee on Business, Professions and
Economic Development along with the Sunset Review Hearing on
March 14, 2016.
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Background on the BOP. The BOP 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 BOP 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 BOP activity, with consumer protection
at the core of the BOP's operations. The BOP's regulatory
authority, as described in the Pharmacy Law, extends over
individuals and firms located both within and outside
California, if they provide services in California. The BOP
notes that it also ensures the safety of drug products dispensed
to patients and regulates those who handle, store, and ship
products from the manufacturer through the supply chain to the
pharmacy and ultimately to the patient.
The BOP is a special fund agency whose activities are funded
through regulatory fees and license fees. Pharmacists also
convey information related to drug therapy management and are
the health care provider most educated on pharmaceutical care
and management. The BOP has a highly diverse and detailed
licensing program for the individuals and facilities the BOP
regulates, reflecting the careful and deliberative manner in
which the U.S. regulates the manufacturing, distributing, and
dispensing of prescription drugs and devices.
The BOP's enforcement activities are the core of its program,
with the majority of its staff and resources dedicated to
enforcement functions. The BOP aims to prevent events that
could result in patient harm and ensure that there are
consequences to deter events from occurring in other pharmacies.
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The BOP employs investigators who work from home offices
throughout the state and perform random, unannounced inspections
to detect violations, investigate complaints, monitor licensees
on probation, educate licensees about Pharmacy Law requirements,
serve as expert witnesses in disciplinary hearings and identify
violations and issues that non-pharmacists may not be able to
identify.
The following are some of the major issues pertaining to the BOP
that this bill addresses.
1)Outsourcing Facilities. The BOP currently licenses entities
that would be considered outsourcing facilities as sterile
compounding pharmacies. They are referred to as "resident"
facilities if they are located in California and
"non-resident" facilities if located out of state and ships
into California. There is no distinction between large scale
and small scale facilities. This bill requires outsourcing
facilities to be licensed by the BOP; prohibits an outsourcing
facility to be simultaneously licensed with the BOP 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
BOP 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 BOP 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 BOP to issue a cease and desist order to an
outsourcing facility if the BOP 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 an
outsourcing facility license.
2)Automated Drug Delivery Systems (ADDS). The BOP reports that
it is not currently able to track how many of these delivery
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devices are in use, where they are in use, or which pharmacy
is responsible for specific delivery devices. A registration
would enable the BOP to identify which pharmacies operate
these delivery devices and where each is located. This bill
requires a pharmacy using an automated drug delivery system
(ADD) to register use of the ADD with the BOP, including the
address at which the ADD is being used.
3)Backlogs. The BOP aims to issue a permit as quickly as
possible once the applicant has been determined to be
qualified for licensure. The BOP notes that it works with
applications from new businesses that must be licensed by the
BOP, and strives to ensure that they can open on the date they
desire, even when they turn applications in very close to the
desired opening date. This bill requires the BOP 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.
4)Cease and Desist for Unlicensed Activity. The BOP does not
currently have the authority to issue a cease and desist order
to businesses involved in unlicensed activity. Simply citing
and fining an unlicensed business is often an insufficient
consequence to stop unlicensed activity because the Board
reports that frequently the business will continue to do the
very action which violates the law. This bill authorizes the
BOP to issue a cease and desist to an entity practicing
activities without a license if those activities would require
licensure by the BOP.
5)Professional Corporations. Pharmacy corporations were
authorized in 1996 in the Pharmacy Practice Act, rather than
the Corporations Code. Current law allows a pharmacy
corporation's officers, directors, and shareholders to be
anyone who is a "licensed person" as defined in Section 13401
of the Corporations Code. The "same professional services"
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rendered by the corporation is an expansive concept, it can be
argued that a physician can be an officer, director, or
shareholder of a pharmacy corporation. It follows, then, that
it would be equitable for a pharmacist to be an officer,
director, or shareholder of a medical corporation. This bill
includes pharmacists in the list of licensed professionals
authorized to establish a professional corporation.
6)Continued Regulation by the BOP. The BOP has shown over the
years a strong commitment to improve its overall efficiency
and effectiveness and has worked cooperatively with the
Legislature and this Committee to bring about necessary
changes. This bill extends the operation of the BOP and its
executive officer until January 1, 2021.
Background on the VMB. The mission of the VMB is to protect
consumers and animals through development and maintenance of
professional standards, licensing of veterinarians, RVTs, and
premises, and diligent enforcement of the California Veterinary
Medicine Practice Act. The VMB is composed of eight members:
four veterinarians, one RVT, and three public members. The VMB
licenses 12,086 Veterinarians and 6,424 RVTs. The licensee
population has increased steadily over the past five years. The
VMB also requires registration of all premises where veterinary
medicine, veterinary dentistry, veterinary surgery, and the
various branches thereof, is being practiced. The VMB currently
registers 3,636 veterinary premises.
The VMB seeks to assure the public that veterinarians and RVTs
possess the level of competence required to perform services by
developing and enforcing standards for examinations, licensing,
and hospital and school inspection. The VMB also conducts
regular practice analyses to validate the licensing examinations
for both veterinarians and RVTs. Additional eligibility pathways
have also been approved for licensure of internationally trained
veterinary graduates and certification of RVTs to allow
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qualified applicants from other states in the U.S. and countries
around the world to come to California and to improve the
provision of veterinary health care for consumers and their
animals. The VMB's goals, as stated in its Strategic Plan,
include decreased enforcement cycle times, enhanced quality and
training of hospital inspectors, inspecting existing hospitals
within one year of registration, and working with DCA to reduce
the amount of unlicensed activity occurring in the marketplace.
The following are some of the major issues pertaining to the VMB
that this bill addresses.
1)University Licensure. Because veterinarians working at
universities are exempt from licensure, the VMB states that it
has no authority to pursue disciplinary action and must advise
consumers to seek recourse through the university's complaint
mediation process. The exemption presents consumer protection
issue, and the VMB believes that all veterinarians providing
treatment to the public's animals should be licensed and
regulated. This bill requires the VMB to provide a separate
licensure category for veterinarians practicing solely within
the university setting.
2)Delinquent Registration Status. Currently, there is no
provision for the premises registration to cancel after five
years, as would be consistent with other license types
regulated by the VMB. Instead hospital premises registrations
are left in a delinquent status indefinitely and remain on the
VMB's records, which can be confusing for consumers who try to
find registered veterinary premises and retrieve data on
hospitals that have been in a delinquent status for hospitals
that no longer operate veterinary premises. This bill allows
for a premise registration to be canceled after five years of
delinquency.
3)Drug Compounding. There are no specific provisions in the
Practice Act to provide oversight of a veterinarian
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compounding drugs for use in day-to-day veterinary practices
and for dispensing to clients. Instead, the VMB has looked to
laws and regulations governing pharmacies because
veterinarians are authorized prescribers under BPC Section
4170. Pharmacy regulations not only include specific
requirements for pharmacies that compound and dispense
medications, but also define the "reasonable quantity" of a
compounded medication that may be furnished to the pharmacy to
administer to the prescriber's patients within their facility,
or to dispense to their patient/client. It should be noted
that the BOP is currently pursuing a regulatory amendment to
its Compounding Drug Preparation regulations that includes
amendments to the "reasonable quantity" definition of
compounded drugs that may be supplied to veterinarians for the
purposes of dispensing. This bill establishes authority for
drug compounding in the practice of veterinary medicine.
Current Related Legislation. SB 1039 (Hill) of the current
Legislative Session, contains several provision relevant to the
boards and bureaus in the sunset review process. Among other
things, the bill makes an exception for veterinarians holding a
current, valid license in good standing in another state or
country who provide assistance to a California licensed
veterinarian and attend on a specific case, subject to specified
conditions; and, modifies specified fees to be paid by licensees
and applicants for licensure from the BOP. STATUS: This bill
will also be heard before the Assembly Committee on Business and
Professions during today's hearing.
Prior Related Legislation. SB 1243 (Lieu), Chapter 395,
Statutes of 2014, extended until January 1, 2017, the provisions
establishing the VMB and the term of the executive officer of
the Board.
SB 304 (Lieu), Chapter 515, Statutes of 2013, extended until
January 1, 2016, the provisions establishing the VMB, subjects
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the VMB to a review by the appropriate policy committees of the
Legislature, and clarifies that the review of the VMB shall be
limited to those issues identified by the appropriate policy
committees.
SB 1236 (Price), Chapter 332, Statutes of 2012, extended the
operation BOP and its authority to appoint an executive officer
until January 1, 2017, among other provisions.
ARGUMENTS IN SUPPORT:
The California Veterinary Medical Association (CVMA) , writes in
support, "CVMA supports the continued existence of a [VMB],
under the [DCA], to regulate the practice of veterinary medicine
and to provide necessary protection for California consumers."
Community Action Fund of Planned Parenthood of Orange and San
Bernardino Counties, Planned Parenthood Affiliates of
California, Planned Parenthood Action Fund of the Pacific
Southwest, Planned Parenthood Action Fund of Santa Barbara,
Planned Parenthood Advocacy Project Los Angeles County, Planned
Parenthood Mar Monte, Planned Parenthood Northern California
Action Fund, and Planned Parenthood Advocates Pasadena and San
Gabriel Valley similarly write in support, "This bill creates a
streamlined process for affiliates to report changes in
corporate officers, consulting pharmacists, or medical directors
for BOP clinic permits similarly to when they report these
changes for DPH clinic licenses. Instead of reporting such
changes for each affiliate owned clinic on a "change of permit"
application costing $100 per application, this bill allows
affiliates to report these changes on a single application for
all their clinics."
REGISTERED SUPPORT:
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California Veterinary Medical Association
Community Action Fund of Planned Parenthood of Orange and San
Bernardino Counties
Planned Parenthood Affiliates of California
Planned Parenthood Action Fund of the Pacific Southwest
Planned Parenthood Action Fund of Santa Barbara
Planned Parenthood Advocacy Project Los Angeles County
Planned Parenthood Mar Monte
Planned Parenthood Northern California Action Fund
Planned Parenthood Advocates Pasadena and San Gabriel Valley
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Gabby Nepomuceno / B. & P. / (916) 319-3301