BILL ANALYSIS
AB 2747
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2747 (Bonnie Lowenthal) - As Amended: April 14, 2010
SUBJECT : Prisoners: pharmacy services.
SUMMARY : Requires the California Department of Corrections and
Rehabilitation (CDCR) to maintain and operate a pharmacy
services program, as specified, and authorizes CDCR to operate
and maintain a centralized pharmacy distribution center.
Specifically, this bill :
1)Requires CDCR to maintain and operate a comprehensive pharmacy
services program for facilities under the jurisdiction of CDCR
that, at a minimum, contain all of the following:
a) A statewide pharmacy administration system with direct
authority and responsibility for program administration and
oversight;
b) Medically necessary pharmacy services using qualified
pharmacists, as specified, and written procedures and
operational practices pertaining to the delivery of
pharmaceutical services;
c) A statewide multidisciplinary Pharmacy and Therapeutics
(P&T) Committee responsible for developing and managing a
department formulary, and standardizing the strengths and
dosage forms for specified medications; maintaining and
monitoring a system for the review and evaluation of
corrective actions related to errors in prescribing,
dispensing, and administering medications; conducting
regular therapeutic category reviews for medications listed
in the formulary; and, evaluating medication therapies and
developing the disease management guidelines;
d) A requirement for the use of generic medications, when
available, unless an exception is reviewed and approved in
accordance with an established nonformulary approval
process; and,
e) Use of an enterprise-based pharmacy operating system
that provides management with information on prescription
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workloads, medication utilization, prescribing data, and
other key pharmacy information.
2)Authorizes CDCR to operate and maintain a centralized pharmacy
distribution center to provide specified cost advantages, and
increased public safety.
3)Requires the centralized pharmacy distribution center to
include systems to order and package bulk pharmaceuticals,
prescription, and stock orders for all facilities, as
specified; label medications as required to meet state and
federal prescription requirements; provide barcode validation
matching the drug to the specific prescription or floor stock
order, and sort completed orders for shipping and delivery to
department facilities.
4)Authorizes the centralized pharmacy distribution center to
package bulk pharmaceuticals into both floor stock and
patient-specific packs, and reclaim, for reissue, unused and
unexpired medications, and distribute packaged products, as
specified.
5)Requires the centralized pharmacy distribution center to
maintain a system of quality control checks on each process
used to package, label, and distribute medications, and
requires the quality control system to include a regular
process of random checks by a licensed pharmacist.
6)Authorizes CDCR to investigate and initiate potential
systematic improvements to provide for the safe and efficient
distribution, control, and accountability of drugs within
CDCR's statewide pharmacy administration system, which take
into account factors unique to the correctional environment.
7)Requires CDCR to ensure that there is a program providing for
the regular inspection of all specified pharmacies to verify
compliance with applicable law, rules, regulations, and other
applicable standards to achieve specified health outcomes.
8)Requires specified corrective actions to be documented in
writing and monitored by CDCR for compliance.
EXISTING LAW :
1)Provides that it is the intent of the Legislature that CDCR,
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in cooperation with the Department of General Services (DGS)
and other appropriate state agencies, take prompt action to
adopt cost-effective reforms in its drug and medical supply
procurement processes, as specified.
2)Authorizes CDCR to adopt regulations requiring manufacturers
of drugs to pay CDCR a rebate for the purchase of drugs for
offenders in state custody that is at least equal to the
rebate that would be applicable to the drug under the federal
Social Security Act.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill is
part of a package of bills that are sponsored by the federal
Receiver to reduce prison health care costs and bring the
health care system back to Constitutional levels. This bill
will ensure that pharmacy improvements achieved by the
Receivership are maintained by creating a centrally
administered and professional pharmacy practice with an active
P&T Committee. Additionally, this bill ensures a continued
focus on patient safety, evidence-based practices, and
cost-effective decision making. The author believes that this
bill will provide long-term cost savings in both staffing
costs and medication inventory through the establishment of a
central fill pharmacy system.
2)FEDERAL RECEIVER FOR CDCR . In February 2006, as a result of
Plata v. Schwarzenegger (N.D. Cal. Oct. 3, 2005) No. C01-1351
TEH (Plata), the federal court appointed a Receiver to control
the delivery of medical services for prisoners in California.
The court found that an inmate died needlessly every seven
days because of inadequate medical care in California's 33
adult prisons, which violated the Eighth Amendment of the U.S.
Constitution forbidding cruel and unusual punishment. Nearly
two years later, the court appointed a new Receiver to
continue the efforts made by the first Receiver to bring
prison medical care up to federal standards. The Receiver is
charged with taking over the operations of the state's prison
medical care system and bringing it up to constitutional
levels. The California Prison Health Care Services (CPHCS) is
comprised of the civil service employees, formerly from CDCR,
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who work at the direction of the federal Receiver, J. Clark
Kelso.
3)CDCR PHARMACY PROGRAM . According to CPHCS, pharmacy services
are provided through onsite pharmacies staffed by CDCR
pharmacists and pharmacy technicians at each prison. The
pharmacists review and label each prescription and provide the
medication to nursing staff who administer the medications to
the inmate-patients. CDCR currently spends $188 million a
year on prescription drugs for inmates and wrote about 608,000
prescriptions per month in 2009. Actual spending on
medications between 2000 and 2008 has more than doubled. The
federal Receiver states that the current prison pharmacy
program did not meet minimal patient care standards and wasted
millions of dollars of taxpayer money.
In January 2007, the Receiver entered into an agreement with
Maxor National Pharmacy Services Corporation (Maxor) to
provide pharmacy consulting services and improve CDCR's
pharmacy system. While the Receiver retained responsibility
for pharmacy operations, Maxor provided guidance to facility
level pharmacy stag to implement specified objectives. As a
result, the Receiver adopted a Road Map that contained seven
primary goals to help achieve improved outcomes in the
delivery of pharmaceuticals, which were as follows: develop
meaningful and effective centralized oversight, control, and
monitoring over the pharmacy services program; implement and
enforce formulary controls, establish a P & T Committee, and
other specified management processes; establish a
comprehensive program to monitor pharmaceutical contracting
and procurement to ensure cost effectiveness; design,
construct, and operate a centralized pharmacy facility; and
design and implement a uniform pharmacy information management
system.
According to Maxor's Monthly Summary Report for the month of
February 2009, the CDCR pharmacy program is making progress
toward implementing the Road Map goals. The report stated
that they have completed system-wide pharmacy policies and
procedures, established a revised P&T Committee, developed and
implemented enforceable Disease Medication Management
Guidelines, among other objectives. The P&T Committee
continued to meet monthly to establish a formulary, discuss
and approve Disease Medication Management Guidelines, and
review and approve pharmacy policies and procedures.
AB 2747
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Additionally, the P&T Committee reviews and updates the
formulary on a monthly basis to achieve improved health
outcomes and cost effectiveness. Recently, the Receiver
established a centralized pharmacy distribution center in
Sacramento, California, which will begin distributing
prescription drugs to its first institution in June, one more
institution in July, and two additional institutions per month
with the goal of completing all 33 sites in 18 months.
4)OFFICE OF INSPECTOR GENERAL REPORT . On April 15, 2010 the
Office of the Inspector General (OIG) issued a special report
on California Prison Pharmacies, which found missed
opportunities for significant cost savings. The report found
that the pharmacy system failed to restock misused
medications, did not adhere to approved formulary medications,
had an unreliable pharmacy inventory system, and was
inconsistent in transferring inmates with medications.
Overall the report estimated that failure to restock
medications costs taxpayers at least $7.7 million and as much
as $20 million per year, while lack of adherence to the
prescription drug formulary cost at least $5.5 million in
2009. The report recommended the Receiver take several
actions to improve oversight and accountability, which are as
follows: establish and enforce procedures to maximize the
restocking of usable drugs; development procedures to
determine when to purchase unit dose versus loose tab
medications to maximize return on inventory; and, review
pharmacy staff levels to ensure adequate resources to restock
drugs. In order to improve formulary adherence, OIG
recommended that CPHCS improve the monitoring of
over-the-counter items, identify institutions and individual
prescribers that do not adhere to formulary and rectify the
behavior, and ensure strong clinical pharmacy presence to
reduce issuance of non-formulary prescriptions. The report
also made several other recommendations regarding inventory
control and inmate transfers.
The Receiver generally concurred with many of the
recommendations in the OIG Report and stated that many of the
recommendations are currently being addressed. highlighting
that pharmacy expenditures have only increased by 2% since
they implemented the new program. Additionally, the Receiver
highlights progress on both formulary and non-formulary costs
through the ongoing leadership of the P&T Committee. In 2009,
80% of prescription drugs were currently filled using generic
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medications, which achieved over $20 million in cost
avoidance. The Receiver also states that they will soon
achieve more cost savings through the implementation of
Central Fill Pharmacy. The Receiver also stated that reducing
the amounts of returned and wasted medications is a top
priority and anticipates saving $13 million through their new
return-to-stock program this fiscal year. To better address
lack of oversight of pharmacy operations, the Receiver stated
that it appointed a Chief of Pharmacy in 2009, who has direct
disciplinary authority over pharmacists who violate statewide
policies and practices.
5)RELATED LEGISLATION . AB 1785 (Galgiani), sponsored by the
federal Receiver, would require CDCR to maintain a statewide
telemedicine services program, require an operational
telemedicine program at each institution, and expand
telemedicine services and encounters. AB 1785 is double
referred to the Committees of Health and Public Safety. AB
1817 (Arambula), sponsored by the federal Receiver, would
require CDCR to maintain a statewide utilization management
program, ensure that each adult prison employ the same
program, and annually report to the Legislature, as specified.
AB 1817 is currently set to be heard in the Assembly
Committee on Health on April 20, 2010.
6)POLICY CONCERN . This bill should require more legislative
oversight to ensure that the Receiver's goals for fully
implementing the centralized pharmacy distribution center and
other stated goals in the bill are met.
REGISTERED SUPPORT / OPPOSITION :
Support
J. Clark Kelso, Federal Receiver, California Prison Health Care
Services (sponsor)
Opposition
None on file.
Analysis Prepared by : Martin Radosevich / HEALTH / (916)
319-2097