Amended  IN  Assembly  March 23, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 458

Introduced by Assembly Member Kamlager
(Coauthors: Assembly Members Bloom, Jones-Sawyer, Kalra, Nazarian, Stone, and Ting)
(Coauthor: Senator Wiener)

February 08, 2021

An act to add Chapter 11 (commencing with Section 127700) to Part 2 of Division 107 of the Health and Safety Code, relating to prescription drugs.


LEGISLATIVE COUNSEL'S DIGEST


AB 458, as amended, Kamlager. Importation of prescription drugs.
Existing law establishes the California Health and Human Services Agency (CHHSA), which includes departments charged with the administration of health, social, and other human services. Existing law requires CHHSA to enter into partnerships to increase patient access to affordable drugs and to produce or distribute generic prescription drugs and at least one form of insulin, as specified.
This bill would create the Affordable Prescription Drug Importation Program in CHHSA, under which the state would be a licensed wholesaler that imports prescription drugs, as specified, for the exclusive purpose of dispensing those drugs to state residents with a valid prescription. program participants. The bill would require CHHSA to seek federal approval for the importation program on or before June 1, 2022, and would require CHHSA to contract with at least one vendor contracted importer to provide services under the importation program within 6 months of receiving federal approval. The bill would require a vendor contracted importer to, among other things, establish a wholesale prescription drug importation list that identifies the prescription drugs that have the highest potential for cost savings to the state and identify and contract with eligible Canadian suppliers who have agreed to export prescription drugs on that list.

This bill would authorize an individual to import a prescription drug only for use by that individual or a member of that individual’s immediate family from a foreign pharmacy if specified requirements are met. The bill would prohibit an individual from, among other things, importing a prescription drug for resale or a controlled substance.

This bill would authorize a contracted importer to import a prescription drug from a Canadian supplier if specified requirements are met. The bill would authorize CHHSA to expand the importation program to authorize a manufacturer, wholesale distributor, or pharmacy in a foreign country other than Canada to export prescription drugs to California if specified requirements are met, including a change in federal law. If the importation program is expanded, the bill would authorize a contracted importer to import prescription drugs from a manufacturer, wholesale distributor, or pharmacy in a foreign country other than Canada.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares that, in all of the following:
(a) United States consumers pay some of the highest prescription drug prices in the world, and it is estimated that United States consumers pay twice as much as the amount Canadian consumers pay for patented prescription drugs and 20 percent more for generic drugs.
(b) Federal law, as codified in Section 384 of Title 21 of the United States Code, authorizes the Secretary of the United States Department of Health and Human Services to allow wholesale importation of prescription drugs from Canada if that importation is shown to be both safe and less costly for United States consumers.
(c) Many other countries have even lower prescription drug prices than Canada, as well as different supplies of specific drugs.
(d) Although importing prescription drugs would be less costly, there may be risks posed to consumer health and safety if the source, quality, and purity of prescription drugs sold by online pharmacies cannot be verified.
(e) Canada has a rigorous regulatory system to license prescription drugs, which is equivalent to the licensing system in the United States.
(f) In the United States, Title II of the federal Drug Quality and Security Act (Public Law 113-54), known as the Drug Supply Chain Security Act, has significantly improved drug security and safety through a system of pharmaceutical product track-and-trace procedures.
(g) A wholesale drug importation program for the exclusive benefit of California residents should be designed and implemented to provide California consumers access to safe and less expensive prescription drugs.
(h) By accessing additional countries’ drug supplies through a drug importation program, California could even further increase access and cost savings associated with the program.
(i) In conformity with Section 804 of the federal Food, Drug and Cosmetic Act (21 U.S.C. Sec. 301 et seq.), allowing Californians to import certain prescription drugs from Canada, in the case of wholesale importation, and additional other countries, in the case of personal importation, Canada and other countries will not pose additional or unreasonable risks to public health and will result in a significant reduction in the costs of necessary drugs for consumers in California.

SEC. 2.

 Chapter 11 (commencing with Section 127700) is added to Part 2 of Division 107 of the Health and Safety Code, to read:
CHAPTER  11. Affordable Prescription Drug Importation Program

127700.
 For purposes of this chapter:
(a) “Agency” means the California Health and Human Services Agency.

(b)“Foreign pharmacy” means a business licensed in a foreign country to sell prescription drugs at retail and authorized by federal law to import prescription drugs into the United States.

(b) “Canadian supplier” means a manufacturer, wholesale distributor, or pharmacy that is appropriately licensed or permitted under Canadian federal and provincial laws and regulations to manufacture, distribute, or dispense prescription drugs.
(c) “Contracted importer” means a wholesaler or vendor that contracts with the agency to oversee the importation program and to ensure the safety of prescription drugs being imported.

(c)

(d) “Importation program” means the Affordable Prescription Drug Importation Program created pursuant to Section 127701.

(d)

(e) “Prescription drug” means an outpatient prescription drug self-administered by the patient and approved by the federal Food and Drug Administration for sale to the public, or a foreign version of a self-administered drug approved by the federal Food and Drug Administration. “Prescription drug” does not include a prescription drug administered by a health care practitioner or in a health facility.
(f) “Program participant” means one of the following entities, which may voluntarily participate in the importation program to obtain imported prescription drugs from a contracted importer:
(1) A pharmacy or wholesaler under contract with a Medi-Cal pharmacy for dispensing to the pharmacy’s Medi-Cal recipients.
(2) A pharmacy or wholesaler under contract with the Department of Corrections and Rehabilitation for dispensing to individuals in the custody of the department.
(3) A health care service plan or health insurer.
(4) A licensed California pharmacy or wholesaler approved by the agency.
(5) An individual with a valid prescription from a United States prescriber, if federal legislation authorizes personal importation.

127701.
 (a) The Affordable Prescription Drug Importation Program is hereby created in the California Health and Human Services Agency.
(b) Under the importation program, the state shall be a licensed wholesaler that imports prescription drugs from a licensed, regulated foreign supplier, solely for distribution to voluntarily participating, state-licensed, in-state pharmacies and administering providers for the exclusive purpose of dispensing those drugs to state residents with a valid prescription. program participants. The importation program shall comply with Section 384 of Title 21 of the United States Code, Part 251 of Title 21 of the Code of Federal Regulations, and other applicable federal rules.
(c) (1) On or before June 1, 2022, the agency shall seek approval of the importation program from the United States Secretary of Health and Human Services.
(2) The agency may expend money upon appropriation by the Legislature for the purpose of requesting approval of the importation program, but shall not expend any other money to implement the importation program until the department receives federal approval of the importation program.
(d) No later than six months after receiving federal approval of the importation program, the agency shall begin operating the importation program. To do so, the agency shall contract with at least one vendor contracted importer to provide services under the importation program, pursuant to Section 127702.
(e) The agency may add a markup to the prescription drugs dispensed to program participants to fund the importation program, but shall ensure the imported drugs provide a cost savings to consumers.

(e)

(f) No later than one year after beginning operation of the importation program, and annually on or before January 1 thereafter, the agency shall submit to the Legislature a report regarding the importation program. The report shall be submitted in compliance with Section 9795 of the Government Code and shall be posted on the agency’s internet website.

127702.
 (a) A vendor, contracted importer, in consultation with the agency and any other contracting vendors, contracted importers, shall establish a wholesale prescription drug importation list that identifies the prescription drugs that have the highest potential for cost savings to the state, including high-cost, low-utilization specialty drugs.
(1) A vendor contracted importer shall review its wholesale prescription drug importation list at least annually and at the direction of the agency.
(2) The agency shall review a vendor’s contracted importer’s wholesale prescription drug importation list at least every three months to ensure the list continues to meet the requirements of the importation program. The agency may direct a vendor contracted importer to revise its list as necessary.
(b) A vendor contracted importer shall do all of the following:
(1) Identify, in consultation with the agency, Canadian suppliers who are in full compliance with relevant federal and provincial laws and regulations and who have agreed to export prescription drugs identified on the vendor’s contracted importer’s importation list.
(2) Verify that a Canadian supplier meets the requirements of the importation program and shall export prescription drugs at prices that provide cost savings to the state.
(3) Contract with Canadian suppliers eligible pursuant to paragraphs (1) and (2), or facilitate contracts between eligible importers and international suppliers, contract with a manufacturer, wholesale distributor, or pharmacy in a foreign country pursuant to Section 127710, to import prescription drugs under the importation program.
(4) Assist the agency to develop and administer a distribution program within the importation program.
(5) Assist the agency to prepare its annual report required pursuant to subdivision (e) of Section 127701 and provide requested information to the agency for the annual report.
(6) Ensure the safety and quality of prescription drugs imported under the importation program.
(7) Maintain a list of all eligible contracted importers that participate in the importation program.
(8) Ensure compliance with the federal Drug Quality and Security Act (Public Law 113-54) by all international Canadian suppliers, eligible manufacturers, wholesale distributors, and pharmacies in a foreign country, contracted importers, distributors, and other participants in the importation program.
(9) Provide an annual financial audit of its operations to the agency.
(10) Provide to the agency quarterly financial reports specific to the importation program. The reports shall include information concerning the performance of the vendor’s contracted importer’s subcontractors and vendors.

127705.

(a)An individual may import a prescription drug only for use by that individual or a member of that individual’s immediate family from a foreign pharmacy if all of the following requirements are met:

(1)The prescription drug is for personal use.

(2)The prescription drug does not present an unreasonable risk to the user.

(3)The individual is not importing more than a 90-day supply of the prescription drug during a 90-day period.

(4)The user for whom the drug is intended possesses a valid prescription for the imported drug issued by a health care practitioner licensed pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, and provides that prescription to the foreign pharmacy before the prescription drug is dispensed.

(5)The prescription drug is dispensed by or ordered over the internet from a foreign pharmacy, the export of which does not violate the laws governing the foreign pharmacy.

(b)(1)An individual shall not import a prescription drug if the federal Food and Drug Administration has issued a public notice stating that any of the following are true:

(A)The prescription drug lacks evidence of effectiveness.

(B)The prescription drug is a health fraud drug product.

(C)The prescription drug presents a direct challenge to the federal Food and Drug Administration’s new drug application and over-the-counter monograph processes.

(D)The prescription drug has been reformulated by the manufacturer or exporter to evade an existing federal Food and Drug Administration enforcement action.

(2)An individual shall not import a controlled substance. For purposes of this paragraph, “controlled substance” means a substance listed in Sections 11053 to 11058, inclusive, of this code or Section 812 or 813 of Title 21 of the United States Code.

(3)An individual shall not import a prescription drug for sale or resale.

127705.
 A contracted importer may import a prescription drug from a Canadian supplier if all of the following requirements are met:
(a) The prescription drug meets the federal Food and Drug Administration’s standards related to safety, effectiveness, misbranding, and adulteration.
(b) Importing the prescription drug would not violate federal patent laws.
(c) Importing the prescription drug is expected to generate cost savings.
(d) The prescription drug is not any of the following:
(1) A controlled substance, as defined in Section 802 of Title 21 of the United States Code.
(2) A biological product, as defined in Section 262 of Title 42 of the United States Code.
(3) An infused drug.
(4) An intravenously injected drug.
(5) A drug that is inhaled during surgery.
(6) A parenteral drug.

127710.
 (a) The agency, in compliance with federal law, may expand the importation program to allow a manufacturer, wholesale distributor, or pharmacy in a foreign country other than Canada to export prescription drugs to California if all of the following requirements are met:
(1) The United States Congress enacts legislation to amend Section 384 of Title 21 of the United States Code or to authorize states, including California, to import prescription drugs from a foreign country other than Canada.
(2) A contracted importer, in consultation with the agency, has identified the foreign manufacturer, wholesale distributor, or pharmacy as a supplier that satisfies the requirements of the importation program and that will export prescription drugs at prices that will provide cost savings to the state.
(3) The foreign manufacturer, wholesale distributor, or pharmacy is appropriately licensed or permitted under its country’s laws and regulations governing the manufacturing, distribution, or dispensing of prescription drugs.
(4) The foreign manufacturer, wholesale distributor, or pharmacy is located in a country that is approved to export prescription drugs to California by the Secretary of the United States Department of Health and Human Services or another authority designated for that purpose by federal law.
(5) The agency submits a report to the Legislature comparing the exporting country’s regulatory system for prescription drugs to the regulatory system for prescription drugs administered by the federal Food and Drug Administration and showing evidence that the exporting country’s regulatory system for prescription drugs is as stringent as the system in the United States or that the system otherwise ensures the safety, purity, and potency of the prescription drugs from the exporting country.
(A) The report shall compare the regulations of the exporting country and the United States regarding all of the following:
(i) Securing the supply chain for prescription drugs.
(ii) Prescription drug manufacturing.
(iii) Prescription drug labeling.
(iv) Prescription drug tracking and tracing.
(B) The report shall be submitted in compliance with Section 9795 of the Government Code.
(b) If the agency expands the importation program pursuant to this section, the secretary shall notify the Legislature at least 30 days before the program is expanded. The notice may include recommendations to the Legislature for statutory changes to reflect the program’s expansion.
(c) If the agency expands the importation program pursuant to this section, a contracted importer may import a prescription drug from a manufacturer, wholesale distributor, or pharmacy in a foreign country other than Canada if the drug is a prescription drug as defined in Section 384 (a)(3) of Title 21 of the United States Code.