BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2747|
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THIRD READING
Bill No: AB 2747
Author: Bonnie Lowenthal (D), et al
Amended: 4/26/10 in Assembly
Vote: 21
SENATE PUBLIC SAFETY COMMITTEE : 7-0, 6/22/10
AYES: Leno, Cogdill, Cedillo, Hancock, Huff, Steinberg,
Wright
SENATE APPROPRIATIONS COMMITTEE : 11-0, 8/12/10
AYES: Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,
Price, Walters, Wolk, Wyland, Yee
ASSEMBLY FLOOR : 71-0, 5/24/10 - See last page for vote
SUBJECT : Department of Corrections and Rehabilitation:
Pharmacy
Services
SOURCE : California Prison Healthcare Services (Federal
Receiver)
DIGEST : This bill (1) requires the Department of
Corrections and Rehabilitation (CDCR) to maintain and
operate a comprehensive pharmacy services program, as
specified; (2) authorizes CDCR to operate and maintain a
centralized pharmacy distribution center, as specified; (3)
authorizes CDCR to investigate and initiate potential
systematic improvements within the department's statewide
pharmacy administration system, as specified; (4) requires
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CDCR to ensure that there is a program providing for the
regular inspection of all department pharmacies and
documentation of compliance; and (5) requires that, on
March 1, 2012, and each March 1 thereafter, CDCR report
specified information regarding pharmaceutical services to
specified legislative committees.
ANALYSIS : Existing law requires CDCR to consult with the
California Medical Assistance Commission (Commission) to
assist CDCR in planning and negotiating contracts for the
purchase of health care services. The Commission shall
advise CDCR, and may negotiate directly with providers on
behalf of CDCR, as mutually agreed upon by the Commission
and CDCR. (Penal Code Section 5023.)
Existing law 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. (Penal Code
Section 5024.)
This bill requires CDCR to maintain and operate a
comprehensive pharmacy services program for those
facilities under the jurisdiction of the department that,
at a minimum, incorporates all of the following:
1. A statewide pharmacy administration system with direct
authority and responsibility for program administration
and oversight.
2. Medically necessary pharmacy services using
professionally and legally qualified pharmacists,
consistent with the size and the scope of medical
services provided.
3. Written procedures and operational practices pertaining
to the delivery of pharmaceutical services.
4. A multidisciplinary, statewide Pharmacy and Therapeutics
Committee responsible for all of the following:
A. Developing and managing a department formulary.
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B. Standardizing the strengths and dosage forms for
medications used in department facilities.
C. Maintaining and monitoring a system for the
review and evaluation of corrective actions related
to errors in prescribing, dispensing, and
administering medications.
D. Conducting regular therapeutic category reviews
for medications listed in the department formulary.
E. Evaluating medication therapies and providing
input to the development of disease management
guidelines used in CDCR.
5. 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.
6. Use of an enterprise-based pharmacy operating system
that provides management with information on
prescription workloads, medication utilization,
prescribing data, and other key pharmacy information.
This bill authorizes CDCR to operate and maintain a
centralized pharmacy distribution center to provide
advantages of scale and efficiencies related to medication
purchasing, inventory control, volume production, drug
distribution, workforce utilization, and increased patient
safety.
1. The centralized pharmacy distribution center shall
include systems to do all of the following:
A. Order and package bulk pharmaceuticals and
prescription and stock orders for all department
correctional facilities.
B. Label medications as required to meet state and
federal prescription requirements.
C. Provide barcode validation matching the drug to
the specific prescription or floor stock order.
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D. Sort completed orders for shipping and delivery
to department facilities.
2. Notwithstanding any other requirements, the department
centralized pharmacy distribution center is authorized
to do the following:
A. Package bulk pharmaceuticals into both floor
stock and patient-specific packs.
B. Reclaim, for reissue, unused and unexpired
medications.
C. Distribute the packaged products to department
facilities for use within the state corrections
system.
3. The centralized pharmacy distribution center shall
maintain a system of quality control checks on each
process used to package, label, and distribute
medications. The quality control system shall include a
regular process of random checks by a licensed
pharmacist.
This bill authorizes CDCR to investigate and initiate
potential systematic improvements in order to provide for
the safe and efficient distribution, control, and
accountability of drugs within the department's statewide
pharmacy administration system, taking into account factors
unique to the correctional environment.
This bill requires CDCR to ensure that there is a program
providing for the regular inspection of all department
pharmacies in the state to verify compliance with
applicable law, rules, regulations, and other standards as
may be appropriate to insure the health, safety, and
welfare of CDCR's inmate patients. Corrective actions
necessary to resolve any discrepancies or deficiencies
shall be documented in writing and monitored by CDCR for
compliance.
This bill requires that, on March 1, 2012, and each March 1
thereafter, CDCR shall report all of the following to the
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Joint Legislative Budget Committee, the Senate Committee on
Appropriations, the Senate Committee on Budget and Fiscal
Review, the Senate Committee on Health, the Senate
Committee on Public Safety, the Assembly Committee on
Appropriations, the Assembly Committee on Budget, the
Assembly Committee on Health, and the Assembly Committee on
Public Safety:
1. The extent to which the Pharmacy and Therapeutics
Committee has achieved the objectives set forth in this
section, as well as the most significant reasons for
achieving or not achieving those objectives.
2. The extent to which the department is achieving the
objective of operating a fully functioning and
centralized pharmacy distribution center, as set forth
in this section, which distributes pharmaceuticals to
every adult prison under the jurisdiction of the
department, as well as the most significant reasons for
achieving or not achieving that objective.
3. The extent to which the centralized pharmacy
distribution center is achieving cost savings through
improved efficiency and distribution of unit dose
medications.
4. A description of planned or implemented initiatives to
accomplish the next 12 months' objectives for achieving
the goals set forth in this section, including a fully
functioning and centralized pharmacy distribution center
that distributes pharmaceuticals to every adult facility
under the jurisdiction of the department.
5. The costs for prescription pharmaceuticals for the
previous fiscal year, both statewide and at each adult
prison under the jurisdiction of the department, and a
comparison of these costs with those of the prior fiscal
year.
This bill provides that the requirement for submitting a
report imposed under subdivision (e) is inoperative on
March 1, 2016, pursuant to Section 10231.5 of the
Government Code.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Pharmacy & Likely minor,
ongoing workload General
Therapeutics Committee
Pharmacy Information Future annual maintenance costs of $63
General
System
Pharmacy distributionUnknown; potential future
savings/costs General
center
Reporting requirement Likely minor
future workload General
The provisions of this bill serve primarily to codify
existing plans of the Federal Receiver to overhaul CDCR's
pharmacy services, as outlined by these provisions. CDCR
prison health care is currently in federal receivership.
In 2005, the United States District Court for the Northern
District of California established a Receivership to take
control of the delivery of medical services to all CDCR
inmates. In its order, the Court set forth comprehensive
duties for the Receiver, including leadership and executive
management of the California prison medical health care
delivery system. The Court expressly ordered the Receiver
to "exercise all powers vested by law in the Secretary of
the CDCR as they relate to the administration, control,
management, operation, and financing of the California
Medical health care system." The Court suspended the
Secretary's exercise of these powers for the duration of
the Receivership. Moreover, the Court's order expressly
provides that, "all costs incurred in the implementation of
the policies, plans, and decisions of the Receiver relating
to the fulfillment of his duties under this Order shall be
borne by (the state). (The state) shall also bear all
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costs of establishing and maintaining the Office of
Receiver, including the compensation of the Receiver and
his staff."
SUPPORT : (Verified 8/16/10)
California Prison Healthcare Services (Federal Reciever)
ARGUMENTS IN SUPPORT : According to the author's office,
"Existing law gives CDCR permissive authority to adopt cost
effective reforms in its drug and medical supply
procurement processes:
Penal Code Sec. 5024:
provides that it is the intent of the Legislature
that the Department of Corrections and Rehabilitation,
in cooperation with the Department of General Services
and other appropriate state agencies, take prompt
action to adopt cost-effective reforms in its drug and
medical supply procurement processes, as specified.
authorizes the Secretary of the Department of
Corrections and Rehabilitation to adopt regulations
requiring manufacturers of drugs to pay the department
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.
"Despite this statute, the California prison pharmacy
program was not meeting minimal standards of patient care,
and was wasting millions of dollars of taxpayer money.
"To remedy that, the Receiver asked for an independent
review from Maxor National Pharmacy Services Corporation.
The June 2006 Maxor audit confirmed the results of several
previous audits, finding a chaotic operation lacking in
inventory and purchasing controls, and rife with medical
error. Further, it estimated that prison pharmacies cost
California taxpayers $46 to $80 million more than
equivalent prison systems.
"The Receiver then hired Maxor to oversee a turnaround of
the pharmacy system. This overhaul started in January 2007
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and lasted three years, and sought to create a
patient-centered, centralized, efficient and better
organized pharmacy system for California's 33 adult prisons
and nearly 175,000 inmate patients.
"The Receiver and Maxor instituted a plan to reverse these
trends. The nuts and bolts of that plan are encapsulated
in AB 2747.
"The framework for effective pharmacy services included in
this bill has been set in place by the Receiver. This new
framework has both improved pharmacy care and avoided
millions in pharmacy costs over the last three years when
compared to prior trend lines. Examples of such actions
have included:
Implemented a system of targeted contracts for
formulary medications resulting in more than $36
million in savings over previous drug pricing
contracts.
Implemented a system of contract/purchasing
monitoring and interventions resulting in savings of
$8.6 million.
Reduced monthly atypical psychiatric medication
costs by almost $2 million per month.
Reclaiming more than $12 million in unused
medication through a "return to stock" process.
Negotiated and implemented a returns contract
resulting in recovery of $4.7 million in previous drug
waste.
"This bill is needed to ensure this improved system stays
in place when prison healthcare is turned back over to
CDCR."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De
La Torre, De Leon, DeVore, Emmerson, Eng, Feuer,
Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,
Galgiani, Garrick, Gilmore, Hagman, Harkey, Hayashi,
Hill, Huber, Huffman, Jeffries, Jones, Lieu, Logue,
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Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nestande,
Niello, Nielsen, Norby, V. Manuel Perez, Portantino,
Ruskin, Salas, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Yamada, John A. Perez
NO VOTE RECORDED: Bass, Evans, Hall, Hernandez, Knight,
Nava, Saldana, Villines, Vacancy
RJG:do 8/16/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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