BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 364
S
AUTHOR: Florez
B
AMENDED: April 13, 2009
HEARING DATE: April 29, 2009
3
CONSULTANT:
6
Hansel/sh
4
SUBJECT
Health facilities: cancer centers
SUMMARY
Provides that an officer, director, or member of a
governing board of a general acute care hospital that is
designated by the National Cancer Institute as a
comprehensive cancer center, and that accepts state funds,
shall not hold a position as an officer, director, or
member of the board, or a similar position, of a
corporation that manufactures or sells tobacco products, or
that has violated federal or state controlled substances
laws or regulations. Makes related legislative
declarations.
CHANGES TO EXISTING LAW
Existing law:
Provides for the licensing and regulation of health care
facilities, including general acute care hospitals, acute
psychiatric hospitals, and special hospitals by the
Department of Public Health (DPH).
Provides that an application for licensure as a health care
facility may be denied by DPH if the applicant, or a
significant officer, director, or shareholder, if the
Continued---
STAFF ANALYSIS OF SENATE BILL SB 364 (Florez)Page 2
applicant is a firm, partnership, corporation or public
entity, has been convicted of a crime, as defined, or
knowingly makes a false statement of fact in an application
for such licensure.
Requires DPH to consider several factors concerning an
applicant seeking licensure of a health care facility,
including whether the applicant is of reputable and
responsible character and has the ability to comply with
state and federal licensing laws and regulations, as
specified.
This bill:
Provides that an officer, director, or member of a
governing board of a general acute care hospital that is
designated by the National Cancer Institute as a
comprehensive cancer center to conduct cancer research and
treatment, and that accepts state funds shall not hold a
position as either of the following:
An officer, director, or member of the board, or a
similar position, of a corporation that manufactures or
sells tobacco products; or,
An officer, director, or member of the board, or a
similar position, of a corporation that has violated
federal or state controlled substances laws or
regulations, or that has been fined for violating
controlled substances laws or regulations.
Makes legislative declarations that it is misleading for a
general acute care hospital that is
designated as a comprehensive cancer center, and that is
provided resources by the state, to employ officers and
directors who profit from the sale and distribution of
tobacco products, and that such a hospital should seek to
ensure that its directors and officers do not profit from
the consumption of tobacco products and do not render
services to corporations that have violated federal or
state laws.
FISCAL IMPACT
Unknown.
STAFF ANALYSIS OF SENATE BILL SB 364 (Florez)Page 3
BACKGROUND AND DISCUSSION
According to the author, SB 364 is intended to prevent
cancer research and treatment facilities that receive state
funds from employing or appointing officers and directors
who also profit from the sale and distribution of tobacco
products, or who hold positions in corporations that have
violated federal or state controlled substance laws and
regulations.
The author cites the City of Hope as an example of a cancer
research center that receives millions of dollars in
Medi-Cal payments, whose President and CEO also sits on the
board of the Rite Aid Corporation, a large drugstore chain
that also sells tobacco products in its pharmacies, and
which recently agreed to pay $5 million to settle claims of
alleged violations of the federal Controlled Substances
Act. The author notes that Rite Aid has also been targeted
by several states' Attorneys General for its poor record of
selling tobacco products to minors, and has agreed to work
with 20 states to enact policies to curb this practice.
The author states that it is unethical and an untenable
conflict of interest for a cancer research center to employ
a high level officer who is a board member of a company
that sells tobacco products and has been cited for
controlled substances violations.
Efforts to restrict sale of tobacco products
A large variety of entities sell cigarettes and tobacco
products. According to 2005 data collected by the
California Tobacco Survey (CTS) convenience stores and gas
stations accounted for 53 percent of cigarette sales in
California, liquor stores and pharmacies accounted for 17.5
percent, tobacco discount stores accounted for 15 percent,
supermarkets accounted for 5 percent, and other discount
stores accounted for 4 percent. According to some
estimates, pharmacies account for roughly 4 percent of
tobacco product sales nationwide.
Retailers selling tobacco products have been subject to
numerous efforts to discontinue sales of cigarettes and
tobacco products and to implement tougher measures to guard
against sales to minors. Many large retailers, such as
Target, have voluntarily discontinued sales.
STAFF ANALYSIS OF SENATE BILL SB 364 (Florez)Page 4
At least two cities, San Francisco and Boston, have enacted
ordinances barring cigarette sales in pharmacies.
In response to suits brought by Attorneys General in 41
states, many retailers, including Walgreens, Walmart, Rite
Aid, and gas stations operated by Exxon, Mobil, ARCO, BP,
and Amoco, have agreed to settlements which call for them
to take additional steps to curtail the sale of tobacco
products to minors. As part of these settlements these
retailers have agreed to:
Train employees on state and local laws and company
policies pertaining to tobacco sales to minors, including
explaining health-related reasons for laws that restrict
youth access to tobacco;
Check the ID of anyone trying to buy tobacco who appears
to be younger than age 27;
Accept only valid government-issued photo identification
as proof of age; and use cash registers programmed to
prompt ID checks on all tobacco sales; and
Hire independent entities to conduct random compliance
checks in their stores.
The California Medical Association Foundation has launched
a statewide media campaign to encourage tobacco-free
pharmacies. As part of the campaign, 400 pharmacies
throughout the state will display a "Proud to be Tobacco
Free" decal in their windows. To support these pharmacies,
physicians and other health care providers will use a
corresponding prescription-pad sticker encouraging their
patients to look for the "Proud to be Tobacco Free" window
decal when filling their prescriptions.
Pharmacy violations of the Controlled Substances Act
The Controlled Substances Act (CSA), enacted by Congress in
1970, establishes procedures that must be followed by drug
manufacturers, researchers, physicians, pharmacists, and
others involved in the manufacture, distribution,
prescribing, and dispensing of controlled drugs. These
procedures provide for accountability for a drug from its
initial production through distribution to the patient, and
are intended to reduce diversion of controlled drugs from
legitimate medical or scientific use. The Act creates five
STAFF ANALYSIS OF SENATE BILL SB 364 (Florez)Page 5
schedules for controlled drugs, based on their potential
for abuse and their accepted medical uses, and is enforced
by two federal agencies, the Drug Enforcement
Administration (DEA) and the Food and Drug Administration.
Earlier this year, Rite Aid and nine of its subsidiaries in
eight states agreed to pay $5 million to settle charges
that the company violated provisions of the CSA. Among the
allegations that the DEA lodged were that Rite Aid
pharmacies had knowingly filled prescriptions for
pseudoephedrine that weren't for a legitimate medical
purpose. Violations were found at Rite Aid pharmacies in
California, Kentucky, New Jersey, New York, Maryland,
Michigan, Pennsylvania, and Virginia.
To settle the charges, Rite Aid is taking several steps to
ensure that it is in compliance with the CSA, and with DEA
regulations, including auditing each pharmacy to make sure
controlled substances are secured, and implementing a
system linking all sales transactions involving
pseudoephedrine or ephedrine, for each of its retail
locations.
Comprehensive cancer centers
Federally designated cancer centers, which are designated
through a competitive award process, serve as centers for
cancer research and development of new approaches to cancer
prevention, diagnosis, and therapy. They also deliver
medical treatments to patients, educate health-care
professionals and the public, and serve underserved
populations. The centers use their grant funds to foster
greater interaction between basic laboratory, clinical, and
population-based medical professionals and scientists, and
provide a forum for investigators to access services and
technologies that are necessary to their research efforts.
Requests from eligible institutions are subjected to a
competitive peer review process that evaluates and ranks
applications according to their merit. Close to 40 medical
research centers nationally have received designation as
Comprehensive Cancer Centers, including six in California.
Prior legislation
Not applicable.
STAFF ANALYSIS OF SENATE BILL SB 364 (Florez)Page 6
Arguments in support
The California Medical Association states that due to the
serious, inherent health risks from smoking, CMA physicians
have consistently supported ways to discourage smoking and
to restrict minors' access to tobacco products, to prevent
them from becoming addicted. CMA notes that it has long
called for hospitals, pharmacies, and other establishments
where health care services are delivered to refrain from
selling or allowing the use of tobacco products on their
premises, as well as to divest themselves of entities that
profit from tobacco sales. CMA argues that no health
entity should be affiliated with any person or entity that
profits from tobacco addiction, especially cancer
hospitals.
COMMENTS
1. Should there be a threshold for barred relationships?
A variety of entities sell tobacco products, including many
for whom it is an incidental part of their business.
Examples might include hotel chains, restaurants, and
entertainment venues and companies. As drafted, the bill
would preclude an officer, director, or member of
comprehensive cancer center from having a relationship with
such entities, regardless of their general purpose or the
importance of tobacco product sales to their operations.
Should the bill limit precluded relationships to entities
that are either health care related entities, or that
derive more than a minimal amount of their revenues from
tobacco products?
2. Prior violations of the CSA. Similarly, health care
providers, including pharmacies, can be cited for
violations of the CSA that range from minor to very
serious. Many health care providers may have violations
from some time ago on their records, but have otherwise
been in compliance with CSA for several years. Should the
bill limit precluded relationships to entities that have
had more recent violations of the CSA, e.g. in the last
five years?
3. Should other health care entities be included? As
drafted, this bill applies only to general acute care
hospitals that are designated as comprehensive cancer
STAFF ANALYSIS OF SENATE BILL SB 364 (Florez)Page 7
centers. While the mission of cancer centers is at odds
with those of entities that promote or sell tobacco
products, arguably the same could be said of any health
care provider or entity. The author may wish to consider
broadening the scope of entities that are subject to the
restrictions in the bill to include additional health care
providers.
POSITIONS
Support: California Medical Association
Oppose: None received
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