BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 1193  
          (Hill) - As Amended August 1, 2016


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill extends the operation of the Board of Pharmacy (BOP)  
          until January 1, 2021, and makes various changes to the Pharmacy  
          Law intended to improve BOP oversight, including the following: 


          1)Defines and licenses resident and nonresident outsourcing  
            facilities, and establishes a licensure fee, requires a report  
            by January 1, 2018 related to BOP's outsourcing facility  
            regulation, and specifies the report must examine adequacy of  
            fee revenue for funding oversight activities.    









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          2)Requires registration of automated drug delivery systems in  
            pharmacies. 


          3)Requires the BOP to issue a license within 30 days of  
            receiving a completed application and payment of any fees.


          4)Allows pharmacists to establish a professional corporation. 


          5)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.


          It also extends the operation of the Veterinary Medical Board  
          (VMB) until January 1, 2021, and makes various minor changes  
          related to the VMB, including the following: 


          1)Requires the VMB to provide a separate licensure category for  
            veterinarians practicing solely within the university setting.


          2)Establishes authority for drug compounding in the practice of  
            veterinary medicine.


          FISCAL EFFECT:


          BOP provisions (All costs are fee-supported - Pharmacy Board  
          Contingent Fund):


          1)Ongoing costs of $20.1 million per year for the continued  
            operation of the BOP.  








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          2)One-time costs of $335,000 and ongoing costs of $320,000 per  
            year, for licensing and inspection activities relating to  
            outsourcing facilities.  The BOP also estimates $288,000 in  
            revenue from an outsourcing facilities fee authorized by this  
            bill in the first year, and $244,000 annually in the second  
            year.  Costs related to other provisions, including  
            information technology costs, are expected to be minor and  
            absorbable.
          VMB provisions (All costs are fee-supported-Veterinary Medical  
          Board Contingent Fund):


          1)Ongoing costs of about $5.0 million per year for the continued  
            operation of the VMB. All costs to operate the VMB are funded  
            with licensing fees.





          2)Costs related to VMB-related provisions are anticipated to be  
            minor and absorbable.  
          COMMENTS:


          1)Purpose. In March 2016, the Senate Business and Professions  
            Committee and the Assembly Business and Professions Committee  
            conducted joint oversight hearings to review 11 different  
            regulatory entities.  Sunset review bills, such as this one,  
            are intended to implement any legislative changes identified  
            as a result of the hearings and extend regulatory authority  
            for entities reviewed at the hearings. This bill extends the  
            sunset for the BOP and the VMB for four years and makes  
            necessary changes.










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          2)Background. 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 personnel, such as pharmacists, as well as business  
            licenses, such as pharmacies.  



            The most substantive change to the BOP statute relates to  
            outsourcing facilities, generally large-scale production  
            facilities licensed by federal law to compound large  
            quantities of medications for use by other entities. In  
            contrast, compounding pharmacies, which the BOP currently  
            licenses, may compound a sterile medication pursuant to a  
            patient-specific prescription or in limited quantities in  
            anticipation of a patient-specific prescription. The BOP  
            currently licenses those entities that are federally defined  
            as outsourcing facilities, as compounding pharmacies. The BOP  
            indicates licensing compounding pharmacies and outsourcing  
            facilities separately aligns with federal requirements and is  
            a more appropriate regulatory approach, due to differences  
            between the facility types. 





            The mission of the VMB is to protect consumers and animals  
            through development and maintenance of professional standards,  
            licensing of veterinarians, registered veterinary technicians  
            (RVTs), and premises, and diligent enforcement of the  
            California Veterinary Medicine Practice Act.  The VMB licenses  
            about 12,000 veterinarians, 6,500 RVTs, and 3,600 veterinary  
            premises.








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          3)Related Legislation. AB 2190 through AB 2194 (Salas) and SB  
            1192 through 1196 (Hill) are all 2016 sunset review bills on  
            various topics. 



          4)Prior Legislation. SB 619 (Morrell) of 2015 would have  
            established licensure of outsourcing facilities as separate  
            entities both within and outside California to ship into the  
            state. This bill was held on the suspense file of the Senate  
            Appropriations Committee.
          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081