BILL ANALYSIS �
SB 600
Page 1
Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
SB 600 (Lieu) - As Amended: June 12, 2014
SENATE VOTE : 39-0
SUBJECT : Drugs
SUMMARY : Repeals provisions of current pharmacy law to conform
to the federal Drug Quality and Security Act (DQSA) and declares
any that foreign dangerous drug that is not approved by the
United States Food and Drug Administration (FDA) or that is
obtained outside the state-licensed supply chain is misbranded,
and that anyone who purchases that drug is guilty of a
misdemeanor and subject to a fine of not more than $10,000.
Specifically, this bill :
1)Repeals provisions of current pharmacy law to conform to the
federal DQSA.
2)Declares any foreign dangerous drug that is not approved by
the United States Food and Drug Administration (FDA) or that
is obtained outside of the licensed supply chain regulated by
the FDA, California State Board of Pharmacy (BOP), or State
Department of Public Health (DPH) to be misbranded.
3)Declares it a misdemeanor for any person to purchase a foreign
dangerous drug or medical device, illegitimate product, or
suspect product, as specified, that is not approved by the FDA
or that is obtained outside of the licensed supply chain
regulated by the FDA, BOP, or DPH. States that a person who
does this is subject to imprisonment for not more than one
year in the county jail, a fine of not more than $10,000 per
occurrence, or both the imprisonment and fine.
4)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, as specified.
EXISTING FEDERAL LAW :
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1)Establishes the FDA to protect the public health by assuring
the safety, effectiveness, quality, and security of human and
veterinary drugs, vaccines and other biological products, and
medical devices through the Food, Drug, and Cosmetic Act
(FDCA). (21 United States Code (USC) 301 et seq.)
2)Establishes the Drug Supply Chain Security Act (Act), as part
of the DQSA, which outlines steps to build an electronic,
interoperable system to identify and trace certain
prescription drugs as they are distributed in the United
States. (21 USC 351 et seq.)
3)Defines "illegitimate product" as a product for which credible
evidence shows that the product:
a) Is counterfeit, diverted, or stolen;
b) Is intentionally adulterated such that the product would
result in serious adverse health consequences or death to
humans;
c) Is the subject of a fraudulent transaction; or,
d) Appears otherwise unfit for distribution such that the
product would be reasonably likely to result in serious
adverse health consequences or death to humans. (21 USC
360eee)
4)Defines "suspect product" to mean a product for which there is
reason to believe that such product:
a) Is potentially counterfeit, diverted, or stolen;
b) Is potentially intentionally adulterated such that the
product would result in serious adverse health consequences
or death to humans;
c) Is potentially the subject of a fraudulent transaction;
or,
d) Appears otherwise unfit for distribution such that the
product would result in serious adverse health consequences
or death to humans. (21 USC 360eee)
EXISTING STATE LAW :
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1)Establishes BOP to regulate the practice of pharmacy and
pharmacists, including requirements for drug prescription
labels. (Business and Professions Code (BPC) Sections 4000 et
seq.)
2)Defines "dangerous drug" or "dangerous device" to mean any
drug or device unsafe for self-use in humans or animals, and
includes the following:
a) Any drug that bears the legend: "Caution: federal law
prohibits dispensing without prescription," "Rx only," or
words of similar import;
b) Any device that bears the statement: "Caution: federal
law restricts this device to sale by or on the order of a
____," "Rx only," or words of similar import, the blank to
be filled in with the designation of the practitioner
licensed to use or order use of the device; or,
c) Any other drug or device that by federal or state law
can be lawfully dispensed only on prescription, as
specified.
3)Establishes the "e-pedigree" law which creates a record in
electronic form containing information regarding each
transaction resulting in a change of ownership of the given
prescription drug, including returns. (BPC 4034 et seq.)
4)Establishes the Sherman Food, Drug, and Cosmetic Law,
administered by DPH, which regulates the packaging, labeling,
and advertising of drugs and devices. (Health and Safety Code
(HSC) Sections 109875 et seq.)
5)Declares it unlawful for any person to manufacture, sell,
deliver, hold, or offer for sale any drug or device that is
misbranded. (HSC 111440)
6)Declares any drug or device to be misbranded if its labeling
is false or misleading in any particular. (HSC 111330)
7)Declares any drug or device to be misbranded unless it bears a
label containing all of the following information:
a) The name and place of business of the manufacturer,
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packer, or distributor; and,
b) An accurate statement of the quantity of the contents in
terms of weight, measure, or numerical count. (HSC 111340)
8)Declares any drug to be misbranded unless its label bears, to
the exclusion of any other nonproprietary name except the
applicable, systematic chemical name or the chemical formula,
all of the following information:
a) The established name of the drug, if any;
b) If it is fabricated from two or more ingredients, the
established name and quantity of each active ingredient,
including the kind and quantity or proportion of any
alcohol, and also including, whether active or not, the
established name and quantity or proportion of any
bromides, ether, chloroform, acetanilide, acetophenetidin,
antipyrine, atropine, hyoscine, hyoscyamine, codeine,
arsenic, digitalis, digitalis glycosides, mercury, ouabain,
strophanthin, strychnine, barbituric acid, or any
derivative or preparation of any substances contained
therein;
c) For nonprescription drugs, the quantity or proportion of
each active ingredient and the established name of each
inactive ingredient, as specified; and,
d) The requirement for stating the quantity of the active
ingredients of any drug, including the quantity or
proportion of any alcohol, and also including, whether
active or not, the quantity or proportion of any bromides,
ether, chloroform, acetanilide, acetophenetidin,
antipyrine, atropine, hyoscine, hyoscyamine, codeine,
arsenic, digitalis, digitalis glycosides, mercury, ouabain,
strophanthin, strychnine, barbituric acid, or any
derivative or preparation of any substances contained
therein, shall apply to all drugs, including prescription
drugs and nonprescription drugs. For any prescription drug
the established name of the drug or ingredient, as the case
may be, on the label and on any labeling on which a name
for the drug or ingredient is used shall be printed
prominently and in type at least half as large as that used
thereon for any proprietary name or designation for the
drug or ingredient. (HSC 111355)
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9)States that any person who violates any provision of the
Sherman Food, Drug, and Cosmetic Law, if convicted, is subject
to imprisonment for not more than one year in the county jail
or a fine of not more than $1,000, or both the imprisonment
and fine. (HSC 111825)
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of this bill . This bill repeals provisions of current
pharmacy law to conform to federal law and also declares that
anyone who purchases a foreign dangerous drug that is not
approved by the FDA or that is obtained outside the state
licensed supply chain is guilty of a misdemeanor. This bill
is intended to reduce circumvention of approved purchasing
channels by punishing the purchase of drugs that are not
regulated by the state or federal government. This bill is
author-sponsored.
2)Author's statement . According to the author's office,
"Patients may be treated with drugs and devices that are
represented as FDA-approved but are often of unknown origin
and quality which can result in significant harm to these
patients.
"When a drug is illegally imported, there is no guarantee as
to the active ingredients in the drug or the potency of the
drug. Imported drugs may contain too little active
ingredient, in which case therapeutic effects will be
minimized. Alternatively, these products may contain too much
active ingredient, which can result in harm to consumers and
negative interactions with other medications. Manufacturing,
storage, packaging and transportation of imported drugs are
not regulated by the FDA. This can lead to degradation of the
product and harm to consumers. Some imported medicines - even
those that bear the name of a U.S.-approved product - may, in
fact, be counterfeit versions that are unsafe or even
completely ineffective. Some imported medicines and their
ingredients, although legal in foreign countries, may not have
been evaluated for safety and effectiveness in the United
States. These products may be addictive or may contain other
dangerous substances. Imported drugs may be labeled in
languages that American consumers do not understand and may
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make medical claims or suggest specific uses that have not
been adequately evaluated for safety and effectiveness.
Additionally, imported drugs may lack information about side
effects caused by the medicine."
3)California's e-Pedigree Law and DQSA . E-pedigree was
California's statutory program to prevent counterfeit medicine
from entering the legitimate supply chain. E-pedigree was
created by SB 1307 (Figueroa), Chapter 857, Statutes of 2004,
and began implementation the following year, with full
operability anticipated by 2015.
The "pedigree" was a chain of custody record in electronic
form containing information regarding each transaction
resulting in a change of ownership of a prescription drug.
The goal of the program was for any owner or possessor of a
prescription drug located at a licensed wholesaler,
repackager, reverse distributor, or pharmacy in California to
be able to show the lineage of the drug from the manufacturer
through the drug distribution channel. The e-pedigree was
required to contain specific information required by the
statute, and had to be made and passed through an electronic
track and trace system based on unique identification numbers
affixed at the point of manufacture.
The federal Drug Quality and Security Act was signed into law
by President Obama on November 27, 2013. This bill was
prompted by the fungal meningitis outbreak in 2012 linked to
unsanitary conditions at a Massachusetts compounding pharmacy,
as well as concerns regarding increases in counterfeit,
falsified, substandard and dangerous prescription medications.
DQSA contained two parts - the Compounding Quality Act and
the Drug Supply Chain Security Act.
The Compounding Quality Act created a voluntary compliance
regime where compounding pharmacies that voluntarily register
as "outsourcing facilities" will be subject to oversight by
the FDA in much of the same way that traditional
pharmaceutical manufacturers are monitored.
The Drug Supply Chain Security Act built upon California's
e-pedigree efforts to create a national electronic track and
trace system for prescription drugs. The Act will replace the
patchwork system adopted by individual states and create a
unified national program. In doing this, the Act explicitly
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preempted any state's requirements for tracing products
through the distribution system that are inconsistent with,
more stringent than, or in addition to any of the requirements
under the Act. Thus, California's e-pedigree system is
currently invalid by operation of law. This law repeals those
invalid sections.
4)Counterfeit drugs . Counterfeit and unapproved drugs pose a
serious threat to consumers. Efforts to combat the use of
counterfeit and unapproved drugs have become increasingly
challenging, as supply chains have become more complex and
global. According to the FDA, nearly 40% of the drugs
Americans take are made elsewhere, and about 80% of
manufacturing sites of active pharmaceutical ingredients used
in drugs manufactured inside the United States are located in
more than 150 countries.
Counterfeit drugs falsely represent a product's identity
through unauthorized representation of a legitimate trademark,
trade name, or other likenesses. Counterfeiting can apply to
both branded and generic products, and counterfeit drugs may
fail to meet the quality and safety standards established by
national and state regulatory authorities, and may contain
dangerous substances, incorrect dosages, or no active
ingredient.
According to a 2013 report from the Brookings Institution,
Although data associated with counterfeit and
unapproved drugs are limited due to the clandestine
nature of counterfeiting, certain trends have emerged
which may indicate that a wide spectrum of counterfeit
drugs are being manufactured and distributed. While
reports of counterfeit and unapproved drugs were
initially associated with "lifestyle drugs" (e.g.,
those for erectile dysfunction, weight loss),
counterfeiters have expanded into more profitable and
specialty markets, including drugs for chronic and
life threatening diseases. Investigations and seizures
have revealed counterfeit and unapproved versions of
HIV/AIDS drugs, pain drugs, antibiotics, insulin,
cholesterol drugs, hormone replacement therapy, flu
drugs, cancer drugs, anti-arthritic drugs, cardiac
drugs, anti-parasitic drugs, and antihistamines.
Research has indicated that in 2011, cancer drugs
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represented the eighth most commonly counterfeited
medical product worldwide.
In recent years, unscrupulous distributors have expanded
their tactics to target clinical settings for the sale of
counterfeit and unapproved drugs. Medical offices are often
contacted through mass advertising campaigns via "blast
faxes", phone calls, direct email, and online marketing.
These distributors often target clinics and hospitals for
sale of physician-administered drugs, including a variety
of injectable drugs.
The report notes that most of the nationwide efforts to combat
counterfeit and unapproved products have focused on the major
players in the drug supply chain, such as drug manufacturers
and distributors. However, there have been fewer inroads in
targeting the purchasing of drugs by patients and health care
professionals, who may be lured by significantly lower prices
from drugs available outside the nationwide supply.
This bill targets this practice by clarifying in state law
that a drug that is not approved by the FDA or obtained
outside of the federal and state licensed supply chain is a
"misbranded drug," and that purchasing a misbranded drug is a
misdemeanor. This bill also increases the fine for violations
from $1,000 to $10,000.
5)Questions for the Committee . This bill establishes that a
drug not approved by the FDA or obtained outside the US and
California supply chain is deemed "misbranded." It is likely
that nearly all drugs purchased outside the nationwide supply
chain that are not intended for the California market are
already misbranded for failure to meet FDA, BOP, or Sherman
Act labeling standards. As noted above, existing law already
makes it unlawful for any person to manufacture, sell,
deliver, hold, or offer for sale any drug or device that is
misbranded, and subjects the violator to a penalty of one year
in jail, $1,000 fine, or both.
However, this bill goes significantly farther than the current
fine and expressly states that the penalty for purchasing a
drug obtained outside the US supply chain, or if the drug is
suspected to be fraudulent, is $10,000. The Committee may
wish to ask whether such a dramatic escalation of the fine
accurately reflects the level of danger to public safety
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hazard that it purports to combat. It is also unclear how
penalties would be assessed, leaving it open to question
whether an individual violation is accounted by the unit dose
(per pill), by the prescription, or by the transaction.
6)Suggested technical amendment . On page 7, line 3, replace
"that" with "than"
7)Related legislation . AB 2605 (Bonilla) of 2014 requires third
party logistic providers who provide pharmaceutical storage,
handling, or distribution services to be licensed by the
California Board of Pharmacy. This bill is pending in the
Senate Business, Professions, and Economic Development
Committee.
8)Previous legislation . SB 1307 (Figueroa), Chapter 857,
Statutes of 2004, created California's e-Pedigree program,
which made comprehensive changes to the drug distribution
system to protect the integrity of the pharmaceutical supply
chain.
SB1476 (Figueroa), Chapter 658, Statutes of 2006, delayed the
implementation date for the E-pedigree component to January 1,
2009 and granted the Board the authority to extend the
deadline an additional two years to allow the industry
additional time to implement technologies necessary for
electronic pedigrees.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Sarah Huchel / B.,P. & C.P. / (916)
319-3301