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F I S C A L I M P A C T R E P O R T

SPONSOR

Heaton

ORIGINAL DATE

LAST UPDATED

1/25/07

2/19/07

HB

314/aHHGAC/aHFL

SHORT TITLE

Pharmacy Licensure Bonding and

Background Check

SB

ANALYST

C. Sanchez

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

NFI

($45.0)

($45.0)

Recurring Pharmacy

Board

(Parenthesis ( ) Indicate Revenue Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total NFI

$50

$50

$100 Recurring Pharmacy

Board

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Regulation and Licensing Department (RLD)

Office of the Attorney General (AGO)

SUMMARY

Synopsis of House Floor Amendment

The House Floor amendment to House Bill 314 changes the following:

•

Inserts on page 5, line 6, after “history", an exemption for drug manufacturers from

the criminal and financial background checks the board may conduct as part of

licensure.

•

Inserts “nonresident" before pharmacy on page 9, line 16. This changes the surety

bond requirement from all pharmacies to only non-resident pharmacies.

House Bill 314/aHHGAC/aHFL – Page

2

•

Adds paragraphs “E" and “F" on page 9, between lines 24 and 25. Paragraph “E"

exempts drug manufacturers who distribute their own products and who are licensed

by the FDA, from the surety bond requirement. This paragraph also exempts

warehouses that are only engaged in intracompany transfers of pharmaceuticals.

Paragraph “F" exempt companies, which already have one facility licensed including a surety

bond, from having to obtain surety bonds for any or all of the other facilities the company

operates and maintains.

Synopsis of HHGAC Amendment

The House Health and Government Affairs Committee amendment to House Bill 314 exempts

manufacturers distributing their own products that have been licensed or approved by the food

and drug administration from the criminal background check and financial history requirements

of the original bill.

The amendment would impose the bill’s surety bond requirements on an applicant seeking

licensure as a nonresident pharmacy or wholesale drug distributor.

The amendment would also exempt manufacturers distributing their own products that have been

licensed or approved by the food and drug administration and pharmacy warehouses that are

engaged only in intracompany transfers from the bill’s surety bond requirements.

A separate surety bond or other equivalent means of security would not be required for each

company's separate locations or for affiliated companies or groups when such separate locations

or affiliated companies or groups are required to apply for or renew their wholesale distributor

license with the Board of Pharmacy.

Synopsis of Original Bill

House Bill 314 amends Section 61-11-14 NMSA 978 and adds new provisions to the Pharmacy

Act relating to the following:

•

Reduces the license fee for wholesale drug distributors or drug manufacturers from

$5,000 to $1,000;

•

Adds a requirement for the Pharmacy Board to conduct criminal background and

financial history checks before issuing a license to operate a facility or business

identified as a pharmacy, health clinic, home care service, emergency medical

service., animal control facility, wholesaler, retailer or distributor of veterinary drug,

contact lens seller, medicinal gas seller or repackager, return drug processor or drugs

research facility;

•

Eliminates the fund created to collect funds for a prescription drug program; and

•

Allows the Pharmacy Board to require surety bonds or other equivalent means of

security to secure payment for any administrative or judicial penalties that may be

imposed by the Board.

House Bill 314/aHHGAC/aHFL – Page

3

FISCAL IMPLICATIONS

There are no fiscal implications on the Board of Pharmacy for implementing this legislation.

The amount collected from drug wholesale licensing fees will be reduced from $5,000 to $1,000.

SIGNIFICANT ISSUES

The Regulation and Licensing Department will have the ability to screen license applicants for

criminal histories or financial problems that may lead to a criminal history before allowing them

to interact or handle controlled substances.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Criminal and financial background checks cannot be conducted on licensees. Licensing fees will

not be reduced.

CS/csd