On Saturday, September 22, 2012, Governor Brown signed SB 1095, which clarifies ambulatory surgery center (“ASC”) pharmacy licensure eligibility. This is great news for ASCs which have struggled since a controversial 2007 court decision had unintended consequences that effected the ability of ASCs to obtain pharmacy licenses.

In September 2007, in Capen v. Shewry, the California Court of Appeals held that ASCs that are owned by a physician or group of physicians are excluded from licensure by the California Department of Public Health (“CDPH”). Based on the ruling, CDPH stopped regulating ASCs, and refrained from issuing new licenses or renewing licenses if such surgery clinics had any degree of physician-ownership. This created problems for ASCs because California law currently states that an ASC must be licensed by CDPH in order for the California Board of Pharmacy (“Pharmacy Board”) to issue it a pharmacy license. In response, ASCs began to utilizing the “medical director work around,” which allowed an ASC to maintain a common stock of drugs by using the personal medical license of their medical director to purchase all medications for the surgery center. However, this created administrative headaches and additional liability for the medical directors. Then in 2010, the Pharmacy Board questioned the legality of the medical director work around and began requiring each doctor who practiced in an ASC to hold a personal pharmacy permit to order and manage their own drugs for their own patients. This position was untenable for many busy ASCs.

The passage of SB 1095 is a huge relief for ASCs. Starting January 1, 2013, the bill expands the Pharmacy Board’s ability to grant licenses, by allowing an accredited outpatient setting or Medicare certified ASC to obtain a limited pharmacy license from the Board.