Bill Text: CA SB1071 | 2009-2010 | Regular Session | Amended
Bill Title: Personal income tax: credit: prescription drugs:
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-06-16 - From committee with author's amendments. Read second time. Amended. Re-referred to Com. on HEALTH. Set, second hearing. Hearing canceled at the request of author. [SB1071 Detail]
Download: California-2009-SB1071-Amended.html
BILL NUMBER: SB 1071 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 16, 2010
AMENDED IN SENATE APRIL 28, 2010
AMENDED IN SENATE APRIL 27, 2010
AMENDED IN SENATE MARCH 24, 2010
INTRODUCED BY Senator DeSaulnier
FEBRUARY 17, 2010
An act to amend Section 11165 of, and to add and repeal Section
11165.05 of, the Health and Safety Code, and to add and repeal
Section 17054.8 of, and to add and repeal Part 33 (commencing with
Section 70001) of Division 2 of, the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1071, as amended, DeSaulnier. Personal income tax: credit:
prescription drugs: controlled substances tax: CURES.
The Personal Income Tax Law authorizes various credits against the
tax imposed by that law.
This bill would, on and after January 1, 2011, and before January
1, 2016, authorize a credit against that tax for a person who is 55
years of age or older in an amount equal to the amount paid or
incurred for that taxpayer's own medicines or drugs, as described,
that is not reimbursable or payable by public or private health
insurance plans or by any 3rd party.
Existing law imposes various taxes, including taxes on the
privilege of engaging in certain activities. The Fee Collection
Procedures Law, the violation of which is a crime, provides
procedures for the collection of certain fees and surcharges.
Existing law also requires the Department of Justice to maintain the
Controlled Substance Utilization Review and Evaluation System (CURES)
for the electronic monitoring of the prescribing and dispensing of
Schedule II, Schedule III, and Schedule IV controlled substances by
all practitioners authorized to prescribe or dispense these
controlled substances.
This bill would, on and after January 1, 2011, and before January
1, 2016, impose a tax at the rate of $0.0025 per pill
included in Schedule II, III, or IV upon every manufacturer and
importer of controlled substances classified as Schedule II, III, or
IV, or other person that makes the first sale in this state of a
Schedule II, III, or IV controlled substance upon
every manufacturer and importer of a controlled substance classified
as Schedule II, III, or IV upon the first sale of that substance at
the rate of $0.0025 for each pill sold .
The tax would be administered by the State Board of Equalization and
would be collected pursuant to the procedures set forth in the Fee
Collection Procedures Law.
The bill would require the board to deposit all taxes, penalties,
and interest collected, less refunds and administrative costs, in the
CURES Fund, which this bill would create. This bill would require
moneys in the fund, upon appropriation by the Legislature, to be
allocated to the Department of Justice for the cost of administration
of the CURES program, as specified.
This bill would also require a person that manufactures controlled
substances classified in Schedule II, III, or IV in this state, or
that imports controlled substances classified in Schedule II, III, or
IV into this state, to register with the Department of Justice to
enable the department to report specified information to the board
for purposes of collecting a tax on those persons. Those provisions
would remain in effect until January 1, 2016.
Because this bill would expand the application of the Fee
Collection Procedures Law, the violation of which is a crime, it
would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislatures finds and declares all of the
following:
(a) The CURES program is a valuable investigative, preventive, and
educational tool for law enforcement, regulatory boards, educational
researchers, and the health care community.
(b) Each year the CURES program responds to more than 60,000
requests from practitioners and pharmacists to (1) help identify and
deter drug abuse and diversion through accurate and rapid tracking of
Schedule II, III, and IV controlled substances, (2) help
practitioners make better prescribing decisions, and (3) cut down on
the misuse, abuse, and trafficking of prescription drugs in
California.
(c) The manufacture and importation of Schedules II, III, and IV
controlled substances have had deleterious effects on private and
public interests, including the misuse, abuse, and trafficking in
dangerous prescription medications resulting in injury and death. The
tax that is imposed by this bill on manufacturers and importers of
Schedules II, III, and IV controlled substances seeks to mitigate
these effects of the drugs by supporting the operation of the CURES
program, which has proved a cost-effective tool to help to reduce the
misuse, abuse, and trafficking of those drugs.
(d) It is the nature of these Schedule II, III, and IV controlled
substances that their addictive qualities and the ever present market
for their misuse and abuse pose inherent risks to public health that
must be systematically addressed, as by the CURES program. Once
these products are present in California, ad hoc enforcement of
conditions on distribution and criminal and civil sanctions on
downstream actors in the distribution system are extraordinarily
costly, ineffective, and inefficient means to attempt to control the
misuse, abuse, and trafficking of these substances. It is therefore
appropriate for manufacturers and importers, which benefit from the
commercial markets for these inherently dangerous products with
knowledge of their potential for misuse and abuse absent systematic
tracking and monitoring, to pay for the cost-effective CURES program.
SEC. 2. Section 11165 of the Health and Safety Code is amended to
read:
11165. (a) To assist law enforcement and regulatory agencies in
their efforts to control the diversion and resultant abuse of
Schedule II, Schedule III, and Schedule IV controlled substances, and
for statistical analysis, education, and research, the Department of
Justice shall, contingent upon the availability of adequate funds
from the CURES Fund and from the Contingent Fund of the Medical Board
of California, the Pharmacy Board Contingent Fund, the State
Dentistry Fund, the Board of Registered Nursing Fund, and the
Osteopathic Medical Board of California Contingent Fund, maintain the
Controlled Substance Utilization Review and Evaluation System
(CURES) for the electronic monitoring of the prescribing and
dispensing of Schedule II, Schedule III, and Schedule IV controlled
substances by all practitioners authorized to prescribe or dispense
these controlled substances.
(b) The reporting of Schedule III and Schedule IV controlled
substance prescriptions to CURES shall be contingent upon the
availability of adequate funds from the Department of Justice. The
Department of Justice may seek and use grant funds to pay the costs
incurred from the reporting of controlled substance prescriptions to
CURES. Funds shall not be appropriated from the Contingent Fund of
the Medical Board of California, the Pharmacy Board Contingent Fund,
the State Dentistry Fund, the Board of Registered Nursing Fund, the
Naturopathic Doctor's Fund, or the Osteopathic Medical Board of
California Contingent Fund to pay the costs of reporting Schedule III
and Schedule IV controlled substance prescriptions to CURES.
(c) CURES shall operate under existing provisions of law to
safeguard the privacy and confidentiality of patients. Data obtained
from CURES shall only be provided to appropriate state, local, and
federal persons or public agencies for disciplinary, civil, or
criminal purposes and to other agencies or entities, as determined by
the Department of Justice, for the purpose of educating
practitioners and others in lieu of disciplinary, civil, or criminal
actions. Data may be provided to public or private entities, as
approved by the Department of Justice, for educational, peer review,
statistical, or research purposes, provided that patient information,
including any information that may identify the patient, is not
compromised. Further, data disclosed to any individual or agency as
described in this subdivision shall not be disclosed, sold, or
transferred to any third party.
(d) For each prescription for a Schedule II, Schedule III, or
Schedule IV controlled substance, the dispensing pharmacy or clinic
shall provide the following information to the Department of Justice
on a weekly basis and in a format specified by the Department of
Justice:
(1) The full name, address, and telephone number of the ultimate
user or research subject, or contact information as determined by the
Secretary of the United States Department of Health and Human
Services, and the gender and date of birth of the ultimate user.
(2) The prescriber's category of licensure and license number;
federal controlled substance registration number; and the state
medical license number of any prescriber using the federal controlled
substance registration number of a government-exempt facility.
(3) Pharmacy prescription number, license number, and federal
controlled substance registration number.
(4) NDC (National Drug Code) number of the controlled substance
dispensed.
(5) Quantity of the controlled substance dispensed.
(6) ICD-9 (diagnosis code), if available.
(7) Number of refills ordered.
(8) Whether the drug was dispensed as a refill of a prescription
or as a first-time request.
(9) Date of origin of the prescription.
(10) Date of dispensing of the prescription.
SEC. 3. Section 11165.05 is added to the Health and Safety Code,
to read:
11165.05. (a) A person that manufactures controlled substances
classified in Schedule II, III, or IV in this state, or that imports
controlled substances classified in Schedule II, III, or IV into this
state, shall register with the Department of Justice to enable the
department to report to the State Board of Equalization the persons
subject to the tax imposed pursuant to Part 33 (commencing with
Section 70001) of Division 2 of the Revenue and Taxation Code.
(b) A person required to register with the department shall file
an annual report with the department. The annual report shall be due
on or before January 1, 2011, and on or before January 1 each year
thereafter, and shall provide the name, address, and telephone number
of the person required to register.
(c) A person required to register with the department shall also
file a quarterly report with the department. The quarterly report
shall be due on the last day of the month following each quarterly
period and shall provide all of the following information:
(1) The number of Schedule II, III, or IV pills the registrant has
sold in this state during that quarterly reporting period.
(2) The number of Schedule II, III, or IV pills the registrant has
imported into this state during that quarterly reporting period.
(3) The number of Schedule II, III, or IV pills the registrant has
sold, transferred, or otherwise furnished to other persons in this
state during that quarterly reporting period.
(4) Any other information the department deems necessary for the
purpose of administering this section.
(d) Each registrant that is required to provide the information
required by this section may be subject to audit by the department.
(e) On the last day of each month following the due date for
filing a quarterly report pursuant to subdivision (d), the department
shall send to the State Board of Equalization a report containing
all of the following information:
(1) The name, address, and telephone number of each person
required to register with the department pursuant to this section,
and the necessary information regarding who owes the tax imposed
pursuant to Part 33 (commencing with Section 70001) of Division 2 of
the Revenue and Taxation Code on each Schedule II, III, or IV pill
sold in this state in the amount of $0.0025 per pill for the previous
quarterly period.
(2) The number of Schedule II, III, or IV pills each registrant
manufactured in this state or imported into this state.
(f) This section shall remain in effect until January 1, 2016, and
as of that date is repealed.
SEC. 4. Section 17054.8 is added to the Revenue and Taxation Code,
to read:
17054.8. (a) For each taxable year beginning on or after January
1, 2011, and before January 1, 2016, there shall be allowed to a
taxpayer who is 55 years of age or older as a credit against the "net
tax," as defined in Section 17039, an amount equal to that amount
paid or incurred by the taxpayer during the taxable year for that
taxpayer's own medicine or drugs, as described in Section 213(b) of
the Internal Revenue Code, that was not reimbursable or payable by
public or private health insurance plans or by any third party.
(b) The taxpayer shall claim the credit on a timely filed original
return.
(c) The Franchise Tax Board may prescribe rules, guidelines, or
procedures necessary or appropriate to carry out the purposes of this
section. Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code shall not apply to any
rule, guideline, or procedure prescribed by the Franchise Tax Board
pursuant to this section.
(d) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
for the following year, and the succeeding seven years, until the
credit is exhausted.
(e) (1) The total amount of credits that may be allowed pursuant
to this section shall not exceed the total amount of taxes collected
pursuant to Part 33 (commencing with Section 70001) of Division 2 for
any taxable year.
(2) The intent of paragraph (1) is to ensure that the act adding
this section does not produce a net revenue gain in state taxes, and
the board and the Franchise Tax Board shall cooperate in exchanging
information for this purpose.
(f) This section shall remain in effect only until December 1,
2016, and as of that date is repealed.
SEC. 5. Part 33 (commencing with Section 70001) is added to
Division 2 of the Revenue and Taxation Code, to read:
PART 33. Controlled Substances Tax Law
70001. This part shall be known and may be cited as the
Controlled Substances Tax Law.
70002. For purposes of this part:
(a) "CURES program" means the Controlled Substance Utilization
Review and Evaluation System program described in Section 11165 of
the Health and Safety Code.
(b) "Importer" means a person that imports into this state
controlled substances classified in Schedule II, III, or IV
into this state pursuant to Chapter 2
(commencing with Section 11053) of Division 10 of the
Health and Safety Code , for sale or distribution in this state
, including, but not limited to, a distributor, retailer, or
wholesaler .
(c) "Manufacturer" means a person that manufactures controlled
substances classified in Schedule II, III, or IV sold in this state,
either directly or indirectly.
(c) (1) "Manufacturer" means and includes every person who
prepares, derives, produces, compounds, or repackages controlled
substances classified in Schedule II, III, or IV pursuant to Chapter
2 (commencing with Section 11053) of Division 10 of the Health and
Safety Code, except a pharmacy that manufactures on the immediate
premises where the controlled substance is sold to the ultimate
consumer.
(2) Notwithstanding paragraph (1), "manufacturer" shall not mean
the following:
(A) A pharmacy compounding a drug for parental therapy, pursuant
to a prescription, for delivery to another pharmacy for the purpose
of delivering or administering the drug to the patient or patients
named in the prescription, provided that neither the components for
the drug nor the drug are compounded, fabricated, packaged, or
otherwise prepared prior to receipt of the prescription.
(B) A pharmacy that, at a patient's request, repackages a drug
previously dispensed to a patient, or to the patient's agent,
pursuant to a prescription.
(d) "Quarterly report" means the report that a registrant is
required to file with the Department of Justice pursuant to Section
11165.05 of the Health and Safety Code.
(e) "Registrant" means a manufacturer or importer of controlled
substances classified in Schedule II, III, or IV that is required to
annually register and report certain information to the Department of
Justice pursuant to Section 11165.05 of the Health and Safety Code.
70003. On and after January 1, 2011, a tax is hereby imposed at
the rate of $0.0025 per pill included in Schedule II, III, or IV upon
every manufacturer and importer of controlled substances classified
as Schedule II, III, or IV, or other person that makes the first sale
in this state of a Schedule II, III, or IV controlled substance. The
tax imposed by this part is for the purpose of reimbursing the
Department of Justice for the cost of administering the CURES
program, which provides for the electronic monitoring of the
prescribing and dispensing of controlled substances classified in
Schedule II, III, or IV.
70003. (a) On and after January 1, 2011, every manufacturer and
every importer shall pay a tax upon the first sale in this state of
controlled substances classified as Schedule II, III, or IV pursuant
to Chapter 2 (commencing with Section 11053) of Division 10 of the
Health and Safety Code at the rate of one-quarter of one cent
($0.0025) for each pill sold.
(b) The purpose of the tax imposed by this part is to reimburse
the Department of Justice for the cost of administering the CURES
program, which provides for the electronic monitoring of the
prescribing and dispensing of controlled substances classified in
Schedule II, III, or IV.
70004. The board shall administer and collect the tax imposed by
this part pursuant to the Fee Collection Procedures Law (Part 30
(commencing with Section 55001)). For purposes of this part, the
references in the Fee Collection Procedures Law to "fee" shall
include the tax imposed by this part and references to "feepayer"
shall include a person required to pay the tax imposed by this part.
70005. Each person required to pay the tax shall prepare and file
with the board a return in the form prescribed by the board
containing information as the board deems necessary or appropriate
for the proper administration of this part. The return shall be filed
on or before the last day of the calendar month following the
calendar quarter to which it relates, together with a remittance
payable to the board for the amount of tax due for that period.
70006. The board may prescribe those forms and reporting
requirements as are necessary to implement the tax, including, but
not limited to, information regarding the total amount of tax due.
70007. (a) (1) The CURES Fund is hereby created in the State
Treasury. The CURES Fund shall consist of all taxes, interest,
penalties, and other amounts collected pursuant to this part, less
refunds and reimbursement to the board for expenses incurred in the
administration and collection of the tax.
(2) Money in the CURES Fund shall, upon appropriation by the
Legislature, be used to reimburse the Franchise Tax Board for
administrative costs related to Section 17054.8.
(b) All moneys in the CURES Fund less refunds and reimbursement
pursuant to subdivision (a), shall, upon appropriation by the
Legislature, be allocated to the Department of Justice for the
following , with particular priority given to paragraph (3)
:
(1) The cost of the administration of the CURES program as
required by this section and Section 11165.05 of the Health and
Safety Code.
(2) The cost of the maintenance of, and any improvements to, the
CURES program.
(3) The cost of education and outreach relating to the CURES
program and increasing the real-time access to the Prescription
Drug Monitoring Program (PDMP) system within the CURES program
.
(4) The cost of the investigation of abuses of the CURES program.
70008. This part shall remain in effect only until January 1,
2016, and as of that date is repealed.
SEC. 6. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution 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, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
SEC. 7. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.
