BILL ANALYSIS �
AB 467
Page 1
Date of Hearing: March 25, 2014
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
AB 467 (Stone) - As Amended: March 11, 2014
SUBJECT : Prescription drugs: collection and distribution
program.
SUMMARY : Establishes a license and regulatory framework for a
"surplus medication collection and distribution intermediary"
(SMCDI) to facilitate the donation of surplus medications in
California. Specifically, this bill :
1)Defines a "SMCDI" as a firm, association, partnership,
corporation, limited liability company (LLC), state
governmental agency, or political subdivision that performs
the functions specified in this bill for the purpose of an
authorized surplus prescription drug collection and
distribution program (Program).
2)Requires a SMCDI to be licensed annually and regulated by the
Board of Pharmacy (BOP). The license application shall state
the name, address, usual occupation, and professional
qualifications, if any, of the applicant. If the applicant is
an entity other than a natural person, the application shall
state the information as to each person beneficially
interested in that entity.
3)Defines the term "person beneficially interested" to mean and
include:
a) If the applicant is a partnership or other
unincorporated association, each partner or member;
b) If the applicant is a corporation, each of its officers,
directors, and stockholders, provided that no natural
person shall be deemed to be beneficially interested in a
nonprofit corporation; and,
c) If the applicant is a LLC, each officer, manager, or
member.
4)Requires any applicant that is a 501(c)(3) charitable
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organization to furnish BOP with the organization's articles
of incorporation and names of the controlling members.
5)Requires any applicant that is a partnership or other
unincorporated association, a LLC or a corporation that has
more than five partners, members, or stockholders to state
that fact on the application and provide additional
information on each of the five partners, members, or
stockholders who own the five largest interests in the
applicant's entity. Upon request by BOP's executive officer
(EO), the applicant shall provide specified information on
partners, members, or stockholders not named in the
application, or shall refer BOP to an appropriate source of
that information.
6)Requires the application to contain a statement to the effect
that the applicant or persons beneficially interested have not
been convicted of a felony and have not violated state law, as
specified. If the applicant cannot make this statement, the
application shall contain a statement of the violation, if
any, or reasons which will prevent the applicant from being
able to comply with the requirements with respect to the
statement.
7)Requires the BOP EO to issue or renew a license to operate as
a SMCDI upon approval of the application, compliance with
specified state laws, and payment of $300.
8)Requires fees received for the SMCDI license to be deposited
into the Pharmacy Board Contingent Fund.
9)Exempts government-owned or 501(c)(3) non-profit applicants
from the fee requirement.
10)Exempts SMCDI licensees from licensure as a wholesaler.
11)Requires a licensed SMCDI to keep and maintain for three
years complete records for which the intermediary facilitated
the donation of medications to, or transfer of, medications
between participating entities.
12)Defines a "donor organization" as those health and care
facilities already authorized under existing law to donate
centrally stored unused medications under a Program, as
specified.
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13)Excludes a SMCDI from criminal or civil liability for injury
caused when facilitating the donation of medications to, or
transfer of, medications in compliance with Program laws.
14)Requires a SMCDI to comply with the following:
a) It shall not take possession, custody, or control of
dangerous drugs and devices;
b) It shall ensure that notification is provided to
participating entities that a package has been shipped when
the SMCDI has knowledge of the shipment and provided
logistical support to facilitate a shipment directly from a
donor organization to a participating entity; and,
c) It shall not select, or direct a donor organization to
select, a specific participating entity to receive surplus
medications.
15)Authorizes a SMCDI to do the following:
a) Charge membership, administrative, or overhead fees
sufficient to cover the reasonable costs of the support and
services provided; and,
b) Contract directly with a county to facilitate the
donation of medications to or transfer of medications
between participating entities and provide general support
in a county's implementation of a Program.
16)Prohibits a participating entity from receiving donated
medication directly from a SMCDI.
17)States that no reimbursement is required by this act because
the only costs that may be incurred by a local agency or
school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction,
changes the penalty for a crime or infraction, or changes the
definition of a crime.
18)Declares this bill to be an urgency statute necessary for the
immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall
go into immediate effect in order to "ensure that California's
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medication donation program is allowed to continue to operate
to facilitate the distribution of medications to the indigent
population which would not otherwise have access to these
medications".
19)Makes other technical and clarifying changes.
EXISTING LAW :
1)Establishes a voluntary, county-operated Program to distribute
surplus medications to persons in need of financial assistance
to ensure access to necessary pharmaceutical therapies.
(Health and Safety Code (HSC) Section 150200, 150204)
2)Requires a county to establish written procedures for its
Program including, at a minimum, the following:
a) Establishing eligibility for medically indigent patients
who may participate in the program;
b) Ensuring that patients eligible for the program shall
not be charged for any medications provided under the
program;
c) Developing a formulary of medications appropriate for
the repository and distribution program;
d) Ensuring proper safety and management of any medications
collected by and maintained under the authority of a
participating entity; and,
e) Ensuring the privacy of individuals for whom the
medication was originally prescribed. (HSC 150204)
3)Establishes the California Board of Pharmacy (BOP) to regulate
the practice of pharmacy and enforce the Pharmacy Law.
(Business and Professions Code (BPC) Section 4001)
4)Defines a "wholesaler" as a person who acts as a wholesale
merchant, broker, jobber, customs broker, reverse distributor,
agent, or a nonresident wholesaler, who sells for resale, or
negotiates for distribution, or takes possession of, any drug
or device, as specified. Unless otherwise authorized by law,
a wholesaler may not store, warehouse, or authorize the
storage or warehousing of drugs with any person or at any
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location of drugs with any person or at any location not
licensed by BOP. (BPC 4043)
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)Purpose of this bill . This bill authorizes a third party,
licensed and regulated by BOP, to facilitate the donation and
transfer of surplus medications under an established state
surplus medication donation program. This bill is author
sponsored.
2)Author's statement . According to the author, current law
accounts for wholesale activities and the appropriate
licensing for those activities, but does not account for third
party intermediaries in the context of a county operated
Program. Third party intermediaries provide significantly
different services than a wholesaler, and therefore need a
license that reflects those services.
3)Background . The Program was created by SB 798 (Simitian,
Chapter 444, Statutes of 2005) and SB 1329 (Simitian, Chapter
709, Statutes of 2012), which authorize counties to establish
a system to facilitate the collection and distribution of
surplus unused medications to medically indigent persons.
The enabling legislation did not anticipate a third party
facilitating the transfer and donation of drugs, however.
Current law requires any entity that brokers or negotiates
drugs for distribution to obtain a wholesaler license and be
subject to numerous regulations, including posting a surety
bond, designating a representative in charge, and extensive
reporting requirements.
This bill establishes a specific license for the sole purpose
of the Program, and establishes what a SMCDI may and may not
do within the terms of licensure.
To date, two counties in California (Santa Clara and San
Mateo) have established a Program through local ordinance,
although the Santa Clara Program is the only current
operational program.
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4)Arguments in support . The Santa Clara County Board of
Supervisors writes, "SB 798 (Simitian) Chapter 444, Statues of
2005, established a voluntary drug collection and distribution
program to allow surplus medications to be shared with persons
in need of financial assistance. The County of Santa Clara
established such a program in 2008 in partnership with a
not-for-profit organization. Our program helps increase
access to necessary prescription drugs for the medically
indigent and reduces health care costs and the environmental
impact of pharmaceutical waste. Recently, however, the
activities related to the donation and distribution of
medications under the program have been considered to be
wholesaling activities and required to be licensed. This
determination puts our program at risk of closing down.
"Your AB 467 would address this issue by providing that
activities related to the donation or distribution of
medication are not wholesale activities. This would allow our
County's program and other similar efforts to continue."
5)Urgency measure . This bill contains an urgency clause "[t]o
ensure that California's medication donation program is
allowed to continue to operate to facilitate the distribution
of medications to the indigent population which would not
otherwise have access to these medications".
6)Recent amendments . This bill was substantially amended in the
Senate to address third party facilitation of surplus
medication transfers. However, when the bill was approved in
the Senate and returned to the Assembly for concurrence on
February 6, a technical error in the language was discovered.
The bill was returned to the Senate on February 10 for
correction. The Senate's actions were rescinded and the
necessary technical amendments were made on March 11. The
revised bill was passed and ordered to the Assembly on March
13.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Health Facilities
California Hospital Association
California State Board of Pharmacy
Californians Against Waste
AB 467
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California State Association of Counties
The Santa Clara County Board of Supervisors
Sirum
Opposition
None on file.
Analysis Prepared by : Sarah Huchel / B.,P. & C.P. / (916)
319-3301