BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de Le�n, Chair


          AB 2605 (Bonilla) - Pharmacy: third-party logistics providers.
          
          Amended: June 17, 2014          Policy Vote: B&P 8-0
          Urgency: No                     Mandate: Yes
          Hearing Date: August 4, 2014                            
          Consultant: Brendan McCarthy    
          
          This bill does not meet the criteria for referral to the  
          Suspense File.
          
          
          Bill Summary: AB 2605 would require third-party logistics  
          providers who perform specified activities related to  
          pharmaceuticals to be licensed by the Board of Pharmacy.

          Fiscal Impact (as proposed to be amended): 
              One-time costs of about $100,000 to revise existing  
              regulations and make information technology upgrades to the  
              system used for licensing (Pharmacy Board Contingent Fund).

              No significant ongoing licensing or enforcement costs are  
              anticipated, as third-party logistics providers are already  
              licensed under current state law. This bill would revise the  
              licensing requirement to conform to federal law but would  
              not substantially change the responsibilities of the Board  
              of Pharmacy.

          Background: Under current law, the Board of Pharmacy licenses  
          pharmacists, pharmacies, and wholesalers of dangerous drugs and  
          devices. Third-party logistics providers are companies that  
          contract with manufacturers to warehouse and distribute drugs or  
          devices, but do not ever take ownership of those items. Under  
          current state law, third-party logistics providers must be  
          licensed as wholesalers by the Board of Pharmacy.

          A recent federal law made a variety of changes to the drug  
          distribution system. One of the new provisions of federal law  
          preempts states from requiring third-party logistics providers  
          to be licensed as wholesalers

          Proposed Law: AB 2605 would require third-party logistics  
          providers who perform specified activities related to  








          AB 2605 (Bonilla)
          Page 1


          pharmaceuticals to be licensed by the Board of Pharmacy. (Under  
          a new license category, as opposed to licensure as wholesalers.)

          The bill impose a variety of regulatory requirements on licensed  
          third-party logistics providers to ensure safe and secure  
          handling of dangerous drugs. (These requirements are  
          substantially similar to the existing licensing requirements for  
          third-party logistics providers licensed as wholesalers.)

          Staff Comments: The bill amends sections of current law relating  
          to licensing fees assessed on wholesalers and which would now  
          apply to third-party logistics providers. These changes set the  
          fees at the maximum level currently allowed in law. Because the  
          Board of Pharmacy has already set fees at this level, this  
          change in statute will not increase fee revenues.

          Staff Comments: The only costs that may be incurred under a  
          local agency relate to crimes and infractions. Under the  
          California Constitution, such costs are not reimbursable by the  
          state.
          
          Proposed Author Amendments: Would require third-party logistics  
          providers to pay the $6 annual fee assessed on other entities  
          licensed by the Board of Pharmacy to support the CURES system  
          and would make clarifying changes.