BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 223|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 223
Author: Margett (R)
Amended: 4/30/03
Vote: 21
SENATE LABOR & IND. RELATIONS COMMITTEE : 8-0, 4/23/03
AYES: Alarcon, Oller, Dunn, Figueroa, Kuehl, Margett,
McClintock, Romero
SUBJECT : Workers' compensation: generic drugs
SOURCE : Author
DIGEST : This bill provides that the
generic-drug-dispensing requirement, currently imposed on
pharmacies, applies to any person or entity that dispenses
medicines to a worker for a workers' compensation related
injury, except under specified circumstances.
ANALYSIS : Existing law requires pharmacies to provide
the generic equivalent of a name brand drug, when filling a
workers' compensation prescription, unless (1) there is no
generic drug equivalent available, or (2) the prescribing
physician has specifically provided otherwise in writing.
Self-insured employers and insurers are authorized under
current law to enter into contracts with pharmacies for
workers' compensation purposes. When such a contract is
entered into, employees that are subject to the contract
must be provided medicines and medical supplies in the
manner prescribed in the contract.
CONTINUED
SB 223
Page
2
Existing law also requires the Administrative Director (AD)
of the Division of Workers' Compensation to establish an
official pharmaceutical fee schedule by July 1, 2003.
This bill provides that the requirement for a generic drug
equivalent applies to any person or entity that dispenses
medicines and medical supplies to a worker to cure or
relieve the effects of an injury covered by workers'
compensation.
The bill provides that there is not a requirement to
dispense a generic drug equivalent under either of the
following circumstances:
1. When a generic drug equivalent is unavailable.
2. When the prescribing physician specifically provides in
writing that a nongeneric drug must be dispensed.
Comments
The author seeks to close a loophole created in last year's
generic drug requirement legislation to ensure that such
requirement is as effective as possible. Existing law
imposes this requirement on pharmacies, yet fails to impose
the requirement on other entities authorized to dispense
medicines.
Prior and related legislation
SB 228 (Alarc?n), of this year, currently before the Senate
Appropriations committee, contains a provision requiring
the AD to incorporate a pharmaceutical and pharmacy
services fee schedule into the official medical fee
schedule, and requires that such pharmaceutical and
pharmacy services fee schedule be based on Medi-Cal.
AB 749 (Calderon), Chapter 6, 2002, required that the AD
promulgate an official pharmaceutical fee schedule, and
imposed the requirement that pharmacies provide generic
drugs for workers' compensation prescriptions.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
SB 223
Page
3
Local: No
SUPPORT : (Verified 5/29/03)
Agricultural Council of California - Support in Concept
American Insurance Association
American International Group
Association of California Insurance Companies
Automotive Aftermarket Services, Inc.
CA Agricultural Aircraft Association - Support in Concept
CA Assoc. of Nurseries and Garden Centers - Support in
Concept
CA Beer and Beverage Distributors - Support in Concept
CA Citrus Mutual - Support in Concept
Ca Cotton Ginners Association - Support in Concept
CA Farm Bureau Federation - Support in Concept
CA Fig Institute - Support in Concept
CA Grocers Association - Support in Concept
CA Lodging Industry Association - Support in Concept
CA Plant Health Association - Support in Concept
CA Restaurant Association - Support in Concept
CA State Association of Counties - Support in Concept
CA Women for Agriculture - Support in Concept
California Association of Joint Powers Authority
California Chamber of Commerce
California Labor Federation, AFL-CIO
California Manufacturers and Technology Association
California Manufacturers and Technology Association
California Space Authority
California State Association of Counties (support in
concept)
Engineering and Utility Contractors Association
Golden State Builders Exchanges
Insurance Agents and Brokers Legislative Council
League of California Cities
League of California Cities - Support in Concept
Liberty Mutual Group
Los Angeles County Board of Supervisors
Milk Producers Council - Support in Concept
Murrieta Chamber of Commerce
National Federation of Independent Business - Support in
Concept
Orange County Business Council
Sacramento Metropolitan Chamber of Commerce
Western Growers Association - Support in Concept
SB 223
Page
4
ARGUMENTS IN SUPPORT : Proponents argue that inflation in
the costs of pharmaceuticals has outpaced that of health
care alone and is the fastest rising component of overall
health care cost inflation in the US economy. Moreover, a
generic drug prescription requirement is one of the only
tools available in the workers' compensation health care
arena, which can begin to rein in the costs.
Proponents further contend that this measure is necessary
to ensure employers are able to fully realize, the
potential cost savings, of a generic drug requirement in
the workers' compensation system. They assert that unless
this loophole is closed true generic-drug cost savings will
never be achieved.
The County of Los Angeles Board of Supervisors asserts that
the county's risk management office estimates that this
bill could produce, an annual cost-savings in excess of
$200,000.
NC:sl 6/3/03 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****