Program Review and Investigations Committee




<MeetMDY1> January 13, 2011


Call to Order and Roll Call

The<MeetNo2> Program Review and Investigations Committee met on<Day> Thursday,<MeetMDY2> January 13, 2011, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Greg Hager, Committee Staff Administrator, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Jimmy Higdon, Co-Chair; Representative Fitz Steele, Co-Chair; Senators Vernie McGaha, R.J. Palmer II, John Schickel, Dan "Malano" Seum, Brandon Smith, and Katie Kratz Stine; Representatives Dwight D. Butler, Leslie Combs, Terry Mills, David Osborne, Ruth Ann Palumbo, Rick Rand, and Arnold Simpson.


Legislative Guest: Representative Linda Belcher.


Guests: Van Ingram, Executive Director, Kentucky Office of Drug Control Policy; Major Joe Williams, Special Enforcement Troop, Kentucky State Police; Mandy N. Hagan, Director of State Government Relations, Consumer Healthcare Products Association; Kim Greenidge, Kentucky Department for Environmental Protection’s Division of Waste Management; Jim Acquisto, Director of Government Relations, Appriss, Inc.; Mitchel Denham, Executive Director, Office of Medicaid Fraud and Abuse Control, Office of the Attorney General.


LRC Staff: Greg Hager, Committee Staff Administrator; Rick Graycarek, Christopher Hall, Colleen Kennedy, Van Knowles, Lora Littleton, Jean Ann Myatt, Sarah Harp, Cindy Upton, and Stella Mountain, Committee Assistant.


Election of Senate Co-chair

Upon nomination by Senator Schickel and second by Senator Seum, Senator Higdon was nominated for the position of Senate Co-chair.


Upon motion by Senator McGaha and second by Senator Stine that nominations cease, Senator Higdon was elected Senate Co-chair by acclamation, without objection.


Election of House Co-chair

Upon nomination by Representative Combs and second by Representative Rand, Representative Steele was nominated for the position of House Co-chair.


Upon motion by Representative Palumbo and second by Representative Rand that nominations cease, Representative Steele was elected House Co-chair by acclamation, without objection.


Senator Higdon offered condolences to Representative Osborne in recognition of his father’s passing as well as to the families in Arizona for the tragedy there.


Approve Minutes for November 4, 2010

Upon motion by Representative Combs and second by Senator Schickel, the minutes of the November 4, 2010 meeting were approved by voice vote, without objection.


Selection of Study Topics for 2011

Senator Higdon said that he and Representative Steele recommend four study topics for adoption by the committee: 1) expenditures by the Kentucky Community and Technical College System for marketing, lobbying, and administrative costs, 2) 911 services and funding, 3) the horse breeding industry, and 4) school renovation and employment. Upon motion by Representative Combs and second by Senator Schickel, the four study topics were approved by roll call vote.


Consideration of Three Previously Presented Reports

Upon motion by Senator Seum and second by Representative Mills, three reports presented previously--Air Service at Kentucky’s Commercial Airports; Transparency and Accountability of Quasi-governmental Entities; and The Impact of Industrial Revenue Bonds on Property Taxes and School Funding--were approved by roll call vote.


Staff Report: Controlling Access to Methamphetamine Precursors in Kentucky

Greg Hager presented the report. Methamphetamine is a Schedule II controlled substance that can be a legitimate prescription drug, but it can also be an illegal, highly addictive recreational drug. In Kentucky, methamphetamine is typically made in toxic labs small enough to be located in residences or vehicles. Labs and dumpsites are dangerous to users’ families and the community, law enforcement, and workers who clean up the sites.


 Pseudoephedrine and ephedrine are ingredients in over-the-counter products commonly used to treat the symptoms of colds and allergies. They are also necessary precursor drugs used to make the most common form of illegal methamphetamine.


It is unknown how many labs and dumpsites there really are in Kentucky. Labs and dumpsites reported by law enforcement increased to around 600 in 2004 and 2005. Law mandated in 2005 that precursors be sold behind the counter. Reported labs and dumpsites declined by about half after 2005 but began increasing in 2007. More than 700 labs and dumpsites were reported in 2009, the 3rd highest in the U.S. The final number for 2010 is expected to be more than 1,000. One half of the 704 reported labs and dumpsites in 2009 were located in six counties. Overall, methamphetamine labs and dumpsites are more prevalent in some counties than others, but reported labs and dumpsites are widespread in the state.


Statutes and regulations establish standards and procedures for the Department for Environmental Protection to use for cleanup or decontamination of inhabitable properties that have been used as methamphetamine labs or dumpsites. When it is suspected that methamphetamine has been manufactured in a property that is inhabitable, law enforcement agents remove any bulk waste, remove any children from the site, secure the area, and notify the local health department. People may still live in the property as long as they have notice of the methamphetamine problem. The owner must decontaminate the site before the property can be released from its official contaminated status and from the necessity for the posting of a notice of contamination.


An individual can purchase more than the lawful limited amounts by using fake IDs. This evasion of legal limits is referred to as smurfing. Smurfing can also be done by a group of individuals buying up to their limits and selling or giving the products to the person organizing the purchases.


 The amount of precursor drugs diverted to make illegal methamphetamine is unknown. For labs and dumpsites that are found, it can often be estimated by law enforcement what the capacity of a lab would be to produce a single batch of methamphetamine. For just the 491 labs for which there was an estimated single-batch capacity in 2009, Program Review staff estimated that approximately 2.2 percent of precursor drugs sold that year would have had to be diverted to make one batch of methamphetamine each in those labs.


Appriss, the Louisville-based company that created the tracking system NPLEx, provided resources for the pilot program for electronic tracking. Once it was no longer a pilot program, electronic tracking was funded by government. Total government funding was $990,000. The Consumer Healthcare Products Association’s members include makers of over-the-counter medicines, including pseudoephedrine and ephedrine. The association now provides funding through the National Association of Drug Diversion Investigators for states to use NPLEx for free. Kentucky’s free use began January 2010. To get and maintain funding from the association, a state must have enabling legislation that requires a mandatory, stop-sale system for all pharmacies.


At least 42 states have laws controlling at least the sale of pseudoephedrine. Nineteen states have laws allowing or calling for electronic tracking of precursors. Some states have implemented registries of offenders, which are listings or access to listings of those who have been convicted of specified controlled substance offenses. Kentucky Senate Bill 211, introduced last year, would have blocked sales of methamphetamine precursors to those convicted under specified statutes, primarily KRS Chapter 218A, the controlled substances statutes. Based on a sample of those convicted under KRS Chapter 218A, Program Review staff estimated that more than 5,400 individuals convicted in 2008 would have been blocked from buying methamphetamine precursor drugs.


Two states have classified products containing the precursor drugs as Schedule III, prescription-only drugs. Oregon did so in 2006. Reported labs and dumpsites were already declining in Oregon. They declined even more after the prescription law went into effect: going from an average of 9 per month to 1.5 per month. Mississippi became the second prescription state as of July 2010. On average, there were 77 reported labs and dumpsites per month in the 12 months prior to the prescription law. From July to December 2010, there were 23 reported labs and dumpsites per month.


If precursor drugs were to be made prescription only, a factor to consider is whether to make the drugs controlled substances or legend drugs. Making a precursor drug a controlled substance under a specified schedule means that it would be subject to the same restrictions as other drugs in that schedule. As a controlled substance, a precursor drug would be tracked in KASPER, the state’s prescription drug monitoring system. A legend drug is prescription only but is not a scheduled, controlled substance. The legal provisions for a legend drug can be specific to that drug.


In response to a question from Senator Higdon, Mr. Hager responded that some Kentuckians buy pseudoephedrine out of state, but the exact number is not known.


In response to questions from Senator Stine, Mr. Hager replied that if multiple two-liter bottles are found at a single location, it would be reported as one lab. Staff did not look closely at all states with decreases in labs and dumpsites but did look at some. Minnesota was one state with a large decrease in dumpsites. The number of labs has decreased significantly, but there have been large increases in the amount of imported methamphetamine seized by law enforcement. He clarified that the pilot pseudoephedrine tracking system was funded by Appriss. Then, it was funded by the government. As of January 2010, it was funded at no cost to the state by the Consumer Healthcare Products Association. There are specific requirements put in place by the association. If there were changes to the relevant laws, the system would no longer be provided for free.


Representative Belcher pointed out that House Bill 15, which she sponsored, would make the methamphetamine precursors scheduled prescription drugs.


In response to a question from Senator Seum, Mr. Hager noted that Oklahoma’s law places pseudoephedrine behind the counter. He also noted that its electronic tracking system might show a pharmacist if someone is blocked from purchasing pseudoephedrine due to conviction for a drug offense.


Senator Seum commented that he was concerned about criminalizing pharmacists or turning them into policing entities.


In response to a question from Representative Palumbo, Mr. Hager noted that the owner of a contaminated, inhabitable property is responsible for covering the cost of decontamination, but there is an administrative cost. Ms. Greenidge responded that the Kentucky Department for Environmental Protection’s (KYDEP) administrative costs related to decontamination of properties is approximately $75,000 per year. On average, one third of such properties receive decontamination services and two thirds remain contaminated with the placard remaining on the door. Adults can live there, but not children.


In response to questions from Senator Stine, Major Williams stated that since Oregon switched to prescription only for pseudoephedrine, Medicaid costs increased by approximately $7,700 per year. Mr. Hager noted that it should not be assumed that everyone who would originally have purchased pseudoephedrine as an over-the-counter drug would attempt to get a prescription for it if it were made prescription only.


In response to a question from Representative Osborne, Mr. Hager replied that stop sales are recorded in the NPLEx system and law enforcement has access to the information in the system. He also noted that over the first two years of the system’s operation in Kentucky, two percent of attempted purchases were stopped. He further said that there is no penalty for persons blocked from purchase other than that they cannot make the purchase.


Senator McGaha commented that there was a noted decrease in Oregon before it became prescription only and that alcohol is the most highly abused drug in Kentucky.


In response to questions from Senator McGaha, Mr. Hager responded that staff did not get information on how many individuals seeking medical assistance at hospitals were Medicaid recipients. Major Williams replied that if law enforcement no longer had access to NPLEx, it would not impact law enforcement’s ability to locate methamphetamine labs. If pseudoephedrine were to be tracked in KASPER, then law enforcement could use the system only after a case has been opened on an individual.


In response to a question from Representative Mills, Major Williams responded that the amount of methamphetamine produced from a given amount of pseudoephedrine would depend on factors such as the experience of the person making the methamphetamine.


In response to a question from Representative Butler, Major Williams noted that the average cost to law enforcement for rendering a lab or dumpsite scene safe is $2,100 per lab. He also noted that the cost to decontaminate the property is the responsibility of the property owner. Ms. Greenidge stated that the cost to the property owner could range from $1,000 to $25,000, depending on the amount of cleanup required and the property. Insurance coverage would depend on the terms of the policy.


In response to questions from Senator Stine, Mr. Hager replied that he was not aware of any changes in the way labs are reported by law enforcement over time. He said that staff did not have information on whether NPLEx was used differently in other states.


Mr. Ingram commented on the thoroughness of the report presented by staff and encouraged everyone to read it in order to understand the complexity of the subject.


Major Williams noted that it was a comprehensive report but that the estimated 2.19 percent of pseudoephedrine for the specified number of labs was based on incomplete information. He has staff who will research this issue.


Mandy Hagan from the Consumer Healthcare Products Association (CHPA) said that CHPA is a non-profit 129-year-old trade association representing major manufacturers of United States non-prescription drugs and has been involved in the debate on controls for pseudoephedrine for several years. CHPA supports a comprehensive approach to balance the legitimate access for consumers with the legitimate law enforcement concerns about preventing illegal sales. The costs to the state in terms of sales tax revenue, potential increase in insurance cost to state employees, as well as cost to private individuals of taking time off work to see a doctor, should be balanced with the concerns that law enforcement has raised. She commended Program Review staff for the excellent report. To add a more national perspective and numbers that are not in the report, she said the non-prescription drug industry in the U.S. is about a $22 billion a year industry. Of that, the cough and cold category, which includes pseudoephedrine, is a $4.6 billion per year category. Pseudoephedrine sales in the U.S. are about $550 million a year, not including Wal-Mart sales.


CHPA has not found any correlation with pseudoephedrine sales in a particular state and the number of methamphetamine labs found in that state. Nationwide about 50 million packages of pseudoephedrine are sold in the U.S. each year and there are about 10,000 methamphetamine lab incidents in the whole country, indicating that the number of incidents of pseudoephedrine being diverted for methamphetamine production is probably small. More importantly, the states where the most pseudoephedrine is sold are not the states that have the highest numbers of methamphetamine lab incidents. The states with the highest methamphetamine production - Indiana, Missouri, Kentucky, and Tennessee - are not the bigger markets for pseudoephedrine. Pseudoephedrine sales are closely correlated with population, the highest sales being in California, Florida, Texas, and New York. In Kentucky, about 500,000 people each year buy pseudoephedrine. NPLEx has not only kept those people buying it within legal limits, but has shown that they are buying well within legal limits. In the last year there were only 9 people in the entire state that bought more than 100 grams, the maximum amount per year.


Ms. Hagan said CHPA’s commitment in the U.S. is to provide NPLEx to other states. Since 2008, legislators from other states have approached CHPA to adopt NPLEx in their states. CHPA has agreed to expand NPLEx into other states because of the results the system offers.


Kentucky’s increase in labs coincides with the increase in the one-pot method, and of the seven neighboring states, only two have tracking systems comparable to Kentucky’s. Indiana, Tennessee and Ohio, states with high numbers of methamphetamine lab incidents, have no electronic tracking systems in place and there is no way for a pharmacist to know that a person is buying illegally. CHPA is committed to passing laws in Indiana, Tennessee, and Ohio in 2011 to bring NPLEx to those states which will intertwine seamlessly with NPLEx in Kentucky.


CHPA has supported the tracking system used in Oklahoma which blocks anybody convicted of a drug-related offense from purchasing pseudoephedrine. Other states should also look at doing that.


In response to questions from Representative Belcher, Ms. Hagan responded that she was unaware of any reliable estimates for the amount of pseudoephedrine purchased by smurfers. Major Williams described a pharmacy with exceptionally high sales of pseudoephedrine. After law enforcement monitored activity and confronted buyers at the pharmacy, sales decreased by 78 percent.


In response to a question from Senator Stine, Ms. Hagan responded that NPLEx does its job by blocking sales and provides valuable information for law enforcement. Many law enforcement agents use the system. Mr. Ingram noted that compliance with the system by pharmacies is very good. The Office of Drug Control Policy monitors compliance. Pharmacies’ use of the information system is reviewed by the Board of Pharmacy.


In response to a question from Representative Rand, Major Williams said that his main concern with the report was the 2.19 percent figure and that he could supply further information on that.


Representative Combs said that the issue merits further study. Senator Higdon stated that no vote would be taken on the report at the meeting.


In response to a question from Representative Belcher, Mr. Ingram responded that he did not know the specific cost for Kentucky to combat methamphetamine labs. He was aware of an estimate of $350,000 in societal costs per lab.


Jim Acquisto from Appriss, Inc. said that 25,000 pharmacies use the NPLEx system. He described the procedure for buying pseudoephedrine. NPLEx blocks sales of 10,000 grams of pseudoephedrine per month in Kentucky. Illinois, Missouri, Kansas, Iowa, Florida, Alabama, Washington, South Carolina, and Louisiana have enacted appropriate legislation and joined the NPLEx system in 2010. The system is real-time and is able to block an illegal sale immediately. Purchasers can be tracked across state lines in any of the states using the system. The system is valuable for showing patterns of purchases. The sales of pseudoephedrine in Kentucky are more tightly controlled by NPLEx than prescription drugs could be by KASPER. Enforcing the law as in Oklahoma, by preventing a convicted criminal from purchasing any amount of pseudoephedrine, is a great idea. Senate Bill 211, which was introduced last session and almost passed, would have blocked 5,400 people from purchasing pseudoephedrine in Kentucky last year.


In response to a question from Representative Belcher, Mr. Acquisto responded that if House Bill 15 were passed, making pseudoephedrine prescription only, the law would then have to be amended to make possible duplicate entries into NPLEx and KASPER, since NPLEx tracks only non-prescription medications.


In response to a question from Representative Osborne, Mr. Acquisto replied that the number of reported labs has gone up, but sales of pseudoephedrine have been fairly low. In his opinion, the main reason for the dramatic increase in methamphetamine labs is the one-pot method where one can make methamphetamine with a single box of cold medicine.


Senator Higdon noted that the Medicaid report would not be taken up at the meeting.


The meeting was adjourned at 11:50 a.m.