1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 APRIL 28, 2015 10 11 12 13 14 15 F PUBLIC HEARING 16 F2 PROPOSED ADOPTION OF AMENDMENTS TO 17 REGULATION 1591, MEDICINES AND MEDICAL DEVICES 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 5 Sen. George Runner (Ret.) Vice Chairman 6 7 Fiona Ma, CPA Member 8 9 Diane L. Harkey Member 10 11 Yvette Stowers Appearing for Betty T. 12 Yee, State Controller (per Government Code 13 Section 7.9) 14 Joann Richmond 15 Chief Board Proceedings 16 Division 17 For Staff: Bradley Heller Tax Counsel IV 18 Legal Department 19 20 ---oOo--- 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 APRIL 28, 2015 4 ---oOo--- 5 MR. HORTON: Ms. Richmond, what's our next 6 matter, please? 7 MS. RICHMOND: Our next public hearing is 8 item F2, Proposed Adoption of Amendments to 9 Regulation 1591, Medicines and Medical Devices. 10 MR. HORTON: As Mr. Heller settles in, we 11 would ask that he commence his presentation once 12 he's settled. 13 I understand there are no witnesses? 14 MS. RICHMOND: Correct. 15 MR. HELLER: Thank you, Chairman Horton, 16 Members of the Board. 17 I'm Bradley Heller from the Board's Legal 18 Department. And I'm here to request that the Board 19 vote to adopt the proposed amendments to Regulation 20 1591, Medicines and Medical Devices. The proposed 21 amendments clarify the meaning of "approved by the 22 United States Food and Drug Administration" and 23 include medical devices implanted in the human body 24 to mark the location of a medical condition, such as 25 breast tissue markers, in the definition of 26 medicines. 27 MR. HORTON: Thank you very much. 28 Discussion, Members? 3 1 Member Runner. 2 MR. RUNNER: Yeah, just a couple of quick 3 observations. 4 One of the issues, the rest -- the rest of 5 the -- the -- the motion that was made in regards to 6 this was also to deal with the -- the Audit Manual. 7 And, you know, one of the issues that concerns me a 8 little bit is that, you know -- and I gue -- well, I 9 think we're going to end up addressing this again in 10 some appeals because I just -- I'm afraid -- I think 11 we went -- I think we ended up being too narrow in 12 regards to what I think the direction of the Board 13 was. But I'm not too worried about that because I 14 think we'll end up addressing it. 15 But I know, for instance, in -- we were -- 16 a couple of us were over in Houston for the opening 17 of the office down there. And specifically talking 18 with auditors there, two different auditors had 19 issues in regards to clarity in regards to this reg. 20 And particularly that I'm concerned about, in 21 regards to the -- the Audit Manual and the direction 22 that we give in clarity in the Audit Manual. 23 So, I'm going to make -- I guess I would 24 like to make sure that, just as a reminder, and I 25 think Member Harkey was there and heard some of this 26 discussion, too, is that we work with the Business 27 Taxes Committee to clarify on that -- on those -- on 28 those issues that have been brought forward to us 4 1 and see if we can get enough clarity in the Audit 2 Manual so we don't have to go back to the reg., I 3 guess would be my concern. 4 Just my comment. 5 MR. HORTON: Member Harkey. 6 MS. HARKEY: I -- I concur. And I believe 7 we are beginning to proceed a little bit in that 8 direction. We were -- like Mr. Runner said, we were 9 in -- in Houston and we met with the Chicago, New 10 York, as well as the Houston staff and supervisor 11 levels from the out-of-state. 12 And there was generally a concern over this 13 regulation and -- and different parts of it. And 14 they just -- the auditors want clarity. They want 15 to know what to do and in what instances. And I 16 think right now it's pretty subjective. 17 And so we will be coming back to this and 18 we will be taking their advice on areas where we 19 need to clarify, that would make their job easier 20 and also have some -- a little more certainty for 21 the business community. 22 Thank you. 23 MR. HORTON: Thank you very much. 24 Members, this process has been helpful in 25 that there may be some -- may also be a need for 26 legislative change. And to the extent that it does, 27 possibly, with the permission of Madam Chair of the 28 Legislative Committee, we could consider convening a 5 1 public hearing with all of the folks in the industry 2 to discuss potential legislative change, over the -- 3 over the summer, over -- whatever's convenient for 4 your schedule. 5 Be a nice opportunity to bring all of 6 the -- all of the companies who are impacted by this 7 together and discuss legislation that may be able to 8 address their concerns. 9 MS. MA: Okay. 10 MR. HORTON: Further discussion, Members? 11 Member -- 12 Mr. Heller, thank you so very much for your 13 presentation. 14 Madam -- 15 MS. RICHMOND: We need a motion. 16 MR. HORTON: I mean -- 17 MR. RUNNER: Move to adoption. 18 MR. HORTON: Strike that. 19 Motion by Member Runner. 20 MS. HARKEY: Second. 21 MR. HORTON: Second by Member Harkey. 22 Without objection, Members, to adopt staff 23 recommendations, such will be the order. 24 ---oOo--- 25 26 27 28 6 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on April 28, 2015 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 6 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: May 4, 2015 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL 22 Hearing Reporter 23 24 25 26 27 28 7