BILL ANALYSIS �
AB 2369
Page 1
Date of Hearing: April 24, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2369 (Valadao) - As Introduced: February 24, 2012
SUBJECT : Prisoners: pharmacy services.
SUMMARY : Requires the California Department of Corrections and
Rehabilitation's (CDCR) comprehensive pharmacy services program
to use generic medications, when available, unless an exception
is reviewed and approved in accordance with CDCR's existing
nonformulary approval process. Makes other technical and
conforming changes.
EXISTING LAW :
1)Authorizes CDCR to maintain and operate a comprehensive
pharmacy services program (pharmacy program) for facilities
under its jurisdiction that is both cost effective and
efficient.
2)Allows the pharmacy program to incorporate the following:
a) A statewide pharmacy administration system with direct
authority and responsibility for program administration and
oversight;
b) Medically necessary pharmacy services using
professionally and legally qualified pharmacists, as
specified;
c) Written procedures and operational practices pertaining
to the delivery of pharmaceutical services;
d) A multidisciplinary, statewide Pharmacy and Therapeutics
(P&T) Committee with specified duties;
e) A requirement for the use of generic medication, when
available, unless an exception is reviewed and approved in
accordance with an established nonformulary approval
process; and,
f) Use of an enterprise-based pharmacy operating system
that provides management with information on prescription
workload, medication utilization, prescribing data, and
other key pharmacy information.
3)Authorizes CDCR to operate and maintain a centralized pharmacy
distribution center to provide advantages of scale and
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efficiencies, as specified. Specifies requirements for the
centralized pharmacy distribution center.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, as management
of prison health care services transitions from the control of
the federal Receiver and back to the jurisdiction of CDCR, it
is critical that fiscal responsibility is maintained while
upholding quality patient care. The author states that
generic medications are an excellent way to maintain fiscal
responsibility because they have the equivalent active
ingredient as the brand name versions and must work under the
same safety and effectiveness standards as approved by the
federal Food and Drug Administration but cost significantly
less.
2)CDCR PHARMACY SERVICES . In April 2010, the California Office
of Inspector General (OIG) released a special report entitled
"Lost Opportunities For Savings Within California Prison
Pharmacies" (OIG report). The OIG report states that CDCR
provides for the custody and care of approximately 167,000
inmates, which includes pharmacy services at each of the 33
adult prisons. At the time the report was conducted (fiscal
year 2009-10 Governor's budget), CDCR proposed to spend close
to $2 billion to provide medical, dental, and mental health
care services to inmates. About $190 million was allocated
for pharmaceuticals.
In 2001, a class action lawsuit was filed by the Prison Law
Office on behalf of California inmates alleging that the state
provided inadequate medical care at its prisons, violating
inmates' constitutional rights. In 2005, a United States
district court judge appointed a Receiver to raise the
delivery of medical care at these prisons within
constitutional standards. Specifically, the district court
judge found the CDCR's prison pharmacy operations to be
"unbelievably poor." In 2007, the Receiver entered into an
agreement with Maxor National Pharmacy Services (Maxor) to
assist in the implementation of an action plan that was
created to improve CDCR's pharmacy operations. Under this
arrangement, the Receiver retained overall responsibility for
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pharmacy operations and Maxor was responsible for providing
guidance to facility level pharmacy staff in order to
implement the objectives of the agreement. The OIG report
pointed out that a vacuum in leadership was created when
prison pharmacy managers started reporting to Maxor rather
than through the Receiver's management team who were more
familiar with the challenges and complexities of state
government.
In the summer of 2009, OIG inspectors were approached by
pharmacy staff during regularly scheduled semi-annual
inspections who were concerned with medication waste in prison
pharmacies. As a result, the OIG launched an in-depth review
involving nine prison pharmacies and made the following
findings: a) usable medications not being restocked in prison
pharmacies cost California taxpayers at least $7.7 million
annually; b) not ensuring the use of approved medications
costs California taxpayers an additional $5.5. million
annually; c) unreliable computer inventories in prison
pharmacies result in additional staff labor and increased
costs; and, d) inconsistent practices in handling medications
for inmates who transfer between prisons result in waste and
increased costs.
The OIG made various recommendations as a result of the review,
among them: establish and enforce procedures to maximize the
restocking of reusable drugs; review staffing levels to
determine if there are adequate resources to restock drugs in
inventory; monitor the prescribing of over-the-counter items
that have limited medical necessity and develop processes to
limit prescribers' ability to provide such items; identify
institutions and individual prescribers that consistently do
not adhere to the formulary and provide instructions to
rectify the prescribing behavior; develop and implement
procedures to ensure an accurate computer inventory system so
as to monitor inventory shrinkage; and, monitor transferring
inmates and identify prisons that are not forwarding
medications to the receiving prison.
3)USE OF GENERICS . The OIG report pointed out that CDCR policy
requires that pharmacists substitute generic medications for
patented brand name medication, unless otherwise specified.
However, health care providers determine which medication is
prescribed to the patient, and these providers can specify any
medication in their prescriptions, including brand name
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medication, by submitting a nonformulary drug request to
prescribe a drug not listed on the CDCR drug formulary. The
drug formulary is a list of approved medications, many of
which are the generic versions of brand name medications.
Since formulary costs are about 65% less than nonformulary
medications, prescribing formulary as much as possible can
result in considerable cost-savings to CDCR.
AB 1628 (Committee on Budget), Chapter 729, Statutes of 2010,
was a Budget Trailer Bill that, among other things, authorized
CDCR to maintain a comprehensive pharmacy services program for
state prisons, and authorized CDCR to incorporate various
elements into its comprehensive pharmacy services program,
including 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. This bill, instead of just authorizing CDCR to
incorporate a requirement for the use of generic medications
when available, requires the pharmacy program to use generic
medications, when available, unless an exception is reviewed
and approved in accordance with an established nonformulary
approval process.
4)EXISTING NONFORMULARY APPROVAL PROCESS . According to CDCR,
requests for the use of brand name medication are only
considered formulary exceptions and are subject to CDCR's
nonformulary approval process. This process allows
prescribers to prescribe nonformulary drugs for use by a
specific patient-inmate. A Nonformulary Drug Request Form
(request form) is required to accompany the prescription
order. Blanket authorizations are not permitted. Both the
prescription and request form must be submitted for approval
to the Facility Medical Authority (FMA) prior to submission to
the pharmacy for processing. The FMA usually consists of the
Chief Medical Executive (CME), the Chief of Mental Health or
Chief Psychiatrist for psychiatric nonformulary requests, and
the Supervising Dentist for dental requests, or their
respective designees. The prescriber may request verbal
approval by the FMA or designee for the pharmacy to
immediately procure the nonformulary medication if a delay of
therapy could result in harm or injury to the patient-inmate.
The prescriber is then subsequently required to submit the
formal written request within 72 hours.
CDCR notes that reasons for using a nonformulary drug include,
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but are not limited to, treatment failures with medications
listed in the formulary; documented allergy, side effect, or
adverse reaction that prevents the use of a medication listed
in the formulary; and, one-time exceptions for use prior to
review by the P&T Committee of new medications that represent
potential saving of life or prevention of significant
morbidity when alternative options did not previously exist.
A request for addition to the formulary should be submitted
along with the nonformulary request form. If the request for
a nonformulary medication is denied, or if a delay could
result in harm or injury to the patient-inmate, the prescriber
may appeal in writing or verbally to the CME, then the Deputy
Medical Executive or the Deputy Director for Mental Health.
CDCR indicates that the nonformulary drug is required to be
approved for the duration of the patient inmate's
prescription.
5)REPORT TO THE LEGISLATURE . AB 1628 also required CDCR to
annually report to the Legislature beginning on March 1, 2012,
until March 1, 2016, the progress of the comprehensive
pharmacy services program, including the extent to which CDCR
is achieving the objective of operating a fully functioning
and centralized pharmacy distribution center; the extent to
which cost savings are achieved; and, the costs for
prescription pharmaceuticals for the previous fiscal year,
both statewide and at each adult prison. CDCR staff indicated
to Committee staff that this report would not be available
until the end of April 2012.
6)DOUBLE REFERRAL . This bill is double referred. It was heard
in the Assembly Committee on Business, Professions and
Consumer Protection on April 17, 2012, and failed passage out
with a vote of 4-3; this bill was granted reconsideration and
is set on April 24, 2012 for vote only. If it passes the
second vote, then it will be heard in this committee.
7)OPPOSITION . BayBio states that current law already permits
CDCR to implement requirements for the use of generic
medications if and when appropriate. By requiring generics in
all situations, BayBio fears that patients may not get the
right treatment at the right time, with potentially dangerous
consequences not only to patients but also to those in close
contact with them within the correctional system.
REGISTERED SUPPORT / OPPOSITION :
AB 2369
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Support
Peace Officers Research Association of California
Opposition
BayBio
Analysis Prepared by : Rosielyn Pulmano / HEALTH / (916)
319-2097