BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2605
                                                                  Page  1

          Date of Hearing:   May 14, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                    AB 2605 (Bonilla) - As Amended:  May 5, 2014 

          Policy Committee:                              Business and  
          Professions  Vote:                            11-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill creates a separate license for third party logistics  
          providers (3PL) and nonresident 3PL providers, who are currently  
          regulated by the Board of Pharmacy (BOP) as wholesalers.  

          It also applies existing fee structures for wholesalers to 3PLs  
          and modifies the language related to these fees, to increase  
          fees to the maximum within their current allowable range while  
          allowing for a decrease to the minimum of the range.

           FISCAL EFFECT  

          1)One-time costs of $20,000 to add a new license type to the  
            Department of Consumer Affairs' licensing and enforcement  
            system information technology system.

          2)Minor revenue loss to the Controlled Substance Utilization  
            Review and Evaluation System (CURES) Fund.  Currently,  
            wholesalers are assessed a $6 per year fee on each license or  
            at renewal.  The new 3PL licensees, who were previously  
            licensed as wholesalers, would not be subject to this fee. 

          3)Oversight workload should remain at a similar level; the bill  
            simply designates approximately 450 currently regulated  
            entities as 3PL providers, but does not add new regulatory  
            duties.  In spite of the language changes related to fees,  
            fees will remain at current levels, as most fees are already  
            set at statutory maximums.

           COMMENTS  









                                                                  AB 2605
                                                                  Page  2

           Purpose  . This bill, sponsored by BOP, will establish a 3PL and  
          nonresident 3PL license to align with recent federal law  
          changes.  According to the BOP, the 2013 federal Drug Supply  
          Chain Security Act preempted portions of the current state  
          regulatory structure related to entities within the drug supply  
          chain.  One federal change prohibited states from regulating  
          3PLs as wholesale distributors, which California currently does.  
             
             
          Federal law defines a 3PL provider as an entity that provides or  
          coordinates warehousing, or other logistics services, of a  
          product on behalf of a manufacturer, wholesale distributor, or  
          disperser of a product, but does not take ownership of the  
          product, nor have responsibility to direct the sale or  
          disposition of the product.

           Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081