BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2077 (Solorio)
Hearing Date: 8/9/2010 Amended: 6/23/2010
Consultant: Bob Franzoia Policy Vote: B,P&ED 7-0
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BILL SUMMARY: AB 2077 would modify the definition of "hospital
pharmacy" and "manufacturer" to allow acute care hospitals
associated with one another through a consolidated hospital
license to compound and repackage drugs.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Hospital pharmacy Up to $455*Up to $837 Up to
$837Special**
inspections Minor, absorbable costs***
Special****
* Department of Public Health estimate
** Department of Public Health Licensing & Certification Program
Fund (4265-3098)
*** Board of Pharmacy estimate
**** Pharmacy Board Contingent Fund
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
The Department of Public Health (department) licenses and
inspects hospitals. As such, hospital pharmacies fall under the
department's jurisdiction. According to the department,
increasing hospital pharmacy manufacturing or compounding
activities will increase the workload of its licensing and
certification staff. However, there is some uncertainly as to
the extent of the department's jurisdiction and how that
jurisdiction interacts with the Board of Pharmacy's (board)
jurisdiction.
Under current law, hospitals are only able to provide
pharmaceutical services to patients on the same hospital
grounds. Pursuant to a recent communication by the federal Food
and Drug Administration, which regulates the compounding of
patient prescriptions, states may pursue a centralized strategy
of regulation. This bill would allow one hospital pharmacy to
prepare compounded drugs, repackage them and prepare unit dose
packages to patients in other hospitals under common ownership.
The department would be required to provide regulatory oversight
to ensure that drugs manufactured or compounded in compliance
with the Current Good Manufacturing Practices for
pharmaceuticals when those drugs are repackaged and delivered to
another pharmacy or hospital.
Department staff conduct the following surveys pertaining to
hospital pharmacy services:
- Initial licensure surveys.
- Re-licensure surveys (every three years).
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AB 2077 (Solorio)
- MERP (medication error reporting and prevention) (every three
years).
- Validation surveys (randomly on 70 facilities annually).
- Complaint investigations (periodic surveys).
There are 433 general acute care hospitals, 37 acute psychiatric
hospitals and 6 chemical dependency rehabilitative hospitals
under the department's jurisdiction. Of those, 187 general
hospitals, 13 psychiatric hospitals and 1 rehabilitative
hospital share common ownership (201 of the total hospitals or
42 percent) and could prepare medications for any other hospital
pharmacy under common ownership. To perform all the necessary
surveys would require nearly 8,355 hours annually. This would
require 4.6 pharmacy consultants (1,800 hours per consultant) at
a fiscal year cost of $182,000 per consultant and an overall
cost of $837,000 annually. The department's estimate of
workload appears to based on an oversight model that will
require not only the survey and oversight of the hospital
pharmacy performing the manufacturing but the same level of
survey and oversight of the hospital pharmacies (under common
ownership) receiving the medications and distributing them to
the patients in the other hospitals.
At this time, information is unavailable on the number of
pharmacy consultants currently employed by the department, how
many hospital pharmacies manufacturer now or how many would in
the future. Not all hospital pharmacies under common ownership
would manufacture because of cost and demand which should argue
for an estimate of less than 42 percent of all hospitals needing
the full range of inspections. Additionally, this should not be
a new inspection but an additional component to existing
inspections of hospitals. How violations identified during
inspections would be addressed is uncertain because initial
information indicates hospital pharmacies are not issued
licenses. The department may enforce violations through its
food, drug and radiation safety authority.
Staff notes hospital pharmacies are also regulated by the board
which indicates this standardization will result in a minor
workload increase.