Legislature(2017 - 2018)HOUSE FINANCE 519

02/14/2018 01:30 PM FINANCE

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Audio Topic
01:33:04 PM Start
01:34:44 PM HB279
05:00:01 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 6 INDUSTRIAL HEMP PRODUCTION TELECONFERENCED
<Bill Hearing Canceled>
+= HB 172 INDUSTRIAL HEMP PRODUCTION LICENSES TELECONFERENCED
<Bill Hearing Canceled>
+ HB 240 PHARMACY BENEFITS MANAGERS TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 279 EXTEND: REAL ESTATE COMMISSION TELECONFERENCED
Moved HB 279 Out of Committee
HOUSE BILL NO. 279                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the Real                                                                         
     Estate Commission; and providing for an effective                                                                          
     date."                                                                                                                     
                                                                                                                                
1:34:44 PM                                                                                                                    
                                                                                                                                
SARA  CHAMBERS,  ACTING   DIRECTOR,  ALCOHOL  AND  MARIJUANA                                                                    
CONTROL  OFFICE,  DEPARTMENT   OF  COMMERCE,  COMMUNITY  AND                                                                    
ECONOMIC  DEVELOPMENT, explained  the  updated fiscal  note.                                                                    
She  elaborated  that  new  fiscal   impact  note  from  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED)was updated  to correct the  previously underreported                                                                    
number of  board members from  5 to 7 and  the appropriation                                                                    
was updated to  $27.9 thousand for travel  to board meetings                                                                    
and  services that  included advertising,  training and  per                                                                    
diem.                                                                                                                           
                                                                                                                                
1:35:45 PM                                                                                                                    
                                                                                                                                
Representative Wilson  thought the  fiscal note was  only an                                                                    
approximation  due to  video conferencing  availability. She                                                                    
added  that  the  licensees paid  the  costs.  Ms.  Chambers                                                                    
agreed that  all the  21 boards  were working  diligently to                                                                    
reduce costs.  She explained that the  fiscal note reflected                                                                    
the board's  spending authority for the  fees collected from                                                                    
licensees. She expected  the amount expended to  be less due                                                                    
to the board's successful use of teleconferencing.                                                                              
                                                                                                                                
Co-Chair  Seaton MOVED  to report  HB 279  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
impact note.                                                                                                                    
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
HB  279 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation and with and with  one new fiscal impact note                                                                    
by  the  Department  of  Commerce,  Community  and  Economic                                                                    
Development.                                                                                                                    
                                                                                                                                
1:37:33 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:38:03 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
hb#240                                                                                                                          
HOUSE BILL NO. 240                                                                                                            
                                                                                                                                
     "An  Act relating  to the  registration  and duties  of                                                                    
     pharmacy  benefits  managers; relating  to  procedures,                                                                    
     guidelines,  and  enforcement mechanisms  for  pharmacy                                                                    
     audits; relating  to the  cost of  multi-source generic                                                                    
     drugs and insurance  reimbursement procedures; relating                                                                    
     to  the  duties of  the  director  of the  division  of                                                                    
     insurance; and providing for an effective date."                                                                           
                                                                                                                                
1:38:16 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster indicated he would  hear public testimony on                                                                    
the bill.                                                                                                                       
                                                                                                                                
1:38:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAVID  GUTTENBERG, SPONSOR, related  that the                                                                    
issue of  prescription drug costs  had been on his  mind for                                                                    
many  years. The  bill related  to the  relationship between                                                                    
the  pharmacy and  the Pharmacy  Benefit Managers  (PBM). He                                                                    
explained  that  PBMs  were  established  in  the  1970s  to                                                                    
negotiate prices with manufacturers  and pass the savings on                                                                    
to the  beneficiaries of  the program.  Over the  years PBMs                                                                    
evolved  into large  conglomerates and  one PBM  (CVS Health                                                                    
Corporation)  recently   purchased  the   insurance  company                                                                    
AETNA. The  pharmacists did  not have  any recourse  to take                                                                    
corrective measures from  unreasonable, unfair, or incorrect                                                                    
audit finding.  The bill  set up  a process  that designated                                                                    
the   state's   Director   of   Insurance   to   become   an                                                                    
administrative  hearing   officer  and   negotiate  disputes                                                                    
between  the  pharmacies and  the  PBMs.  He furthered  that                                                                    
pharmacies  encountered   significant  problems   with  PBMs                                                                    
without any resolution.                                                                                                         
                                                                                                                                
1:42:03 PM                                                                                                                    
                                                                                                                                
JANE  CONWAY, STAFF,  SENATOR CATHY  GIESEL, introduced  the                                                                    
PowerPoint presentation: "Pharmacy Benefit Managers:"                                                                           
                                                                                                                                
     And the need for fair and reasonable standards over                                                                        
     the practice of auditing pharmacies                                                                                        
                                                                                                                                
          HB 240 and SB 38                                                                                                      
                                                                                                                                
          Establishes Procedures & Guidelines for the                                                                           
          Auditing of Pharmacy Records                                                                                          
                                                                                                                                
          Requires Timely, Price Updates of                                                                                     
          Pricing Changes &                                                                                                     
          an Appeals Process                                                                                                    
                                                                                                                                
Ms. Conway  indicated that SB  38 was the companion  bill to                                                                    
HB 240.  She related that Senator  Giesel and Representative                                                                    
Guttenberg  "joined   forces"  to  address   the  "unchecked                                                                    
auditing  practices" the  pharmacists  faced  and bring  the                                                                    
information forward.                                                                                                            
                                                                                                                                
1:43:41 PM                                                                                                                    
                                                                                                                                
Ms. Conway  continued with  slide 2:  " PBM  101    What's a                                                                    
PBM?" She read Directly from the slide:                                                                                         
                                                                                                                                
    PBMs are multi-billion-dollar middlemen                                                                                  
    Started in1970 as claims processers, now intertwined                                                                     
     in almost every aspect of     the                                                                                          
     pharmaceutical/pharmacy supply chain                                                                                       
    Virtually unregulated, state or federal level                                                                            
     Today, the top PBMs represent some of the most                                                                             
     profitable companies in the nation                                                                                         
                                                                                                                                
1:44:56 PM                                                                                                                    
                                                                                                                                
Ms. Conway moved to slide 3:"Examples of PBM's Market                                                                           
Power/Influence." She read directly from the slide:                                                                             
                                                                                                                                
   CVS/Caremark (AK State Plan Pharmacy Benefit Manager)                                                                        
     square4 2017 - 7th most profitable U.S. company in Fortune                                                                 
        500                                                                                                                     
     square4 2017 Revenue: $177.5 Billion                                                                                       
                                                                                                                                
   Express Scripts Holding                                                                                                      
     square4 ESH generated $100.3 billion in revenue in 2017                                                                    
    Number 22 ranking                                                                                                           
                                                                                                                                
Ms. Conway advanced to slide 4: "State of Alaska Health                                                                         
Care Plan" that contained a picture of the state employees'                                                                     
AETNA health insurance cards.                                                                                                   
                                                                                                                                
1:45:49 PM                                                                                                                    
                                                                                                                                
Ms. Conway turned to slide 5: PBMs are designed to: She                                                                         
read directly from the slide:                                                                                                   
                                                                                                                                
    reduce administrative costs for insurers                                                                                 
                                                                                                                                
    validate patient eligibility                                                                                             
                                                                                                                                
    administer plan benefits                                                                                                 
                                                                                                                                
    negotiate costs between pharmacies and health plans                                                                      
                                                                                                                                
    audit pharmacies for fraud                                                                                               
                                                                                                                                
Ms. Conway continued to slide 6: "PBM's Impact on Pharmacy                                                                      
& Patients":                                                                                                                    
    PBMs develop pharmacy provider networks                                                                                  
    Pharmacies must accept a PBM contract                                                                                    
    Contracts truly are "take it or leave it."                                                                               
    PBMs influence what drugs are dispensed regardless of                                                                    
     what a physician prescribes by using a list of PBM-                                                                        
     approved drugs known as "formularies"                                                                                      
    PBMs receive rebates from drug manufacturers for                                                                         
     putting their drugs on a given formulary                                                                                   
                                                                                                                                
1:46:58 PM                                                                                                                    
                                                                                                                                
Representative Ortiz asked about  the fourth bullet point on                                                                    
slide  6. He  ssked for  clarity. Representative  Guttenberg                                                                    
responded that if a doctor  prescribed a medication that the                                                                    
PBM   did  not   cover   the  PBM   chose  a   substitution.                                                                    
Representative  Ortiz  asked  whether the  patient's  doctor                                                                    
would  be contacted  prior  to substitution.  Representative                                                                    
Guttenberg  referred the  answer to  pharmacists that  would                                                                    
testify later in the meeting.                                                                                                   
                                                                                                                                
1:48:30 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki  asked for the definition  of a PBM.                                                                    
He had  difficulty understanding what kind  of entities PBMs                                                                    
were  and how  they operated.  He wanted  to know  what PBMs                                                                    
"physically"  were.  Representative Guttenberg  was  worried                                                                    
that PBMs would become  "vertically integrated" entities. He                                                                    
explained that PBMs were standalone  companies or a division                                                                    
of  a large  corporation  with offices  and employees  where                                                                    
management negotiated discount prices  for the most commonly                                                                    
prescribed    prescription    drugs   with    pharmaceutical                                                                    
manufacturers.  The PBMs  determined  the  price they  would                                                                    
reimburse  pharmacies for  a prescribed  drug. He  suggested                                                                    
that  they operated  similarly to  an insurance  company and                                                                    
acted  as a  "middleman." Prices  were negotiated  with drug                                                                    
manufacturers  and   PBMs  did   not  use   an  "algorithm."                                                                    
Representative Kawasaki asked whether  the PMB was "attached                                                                    
to" the  insurance company  or the  pharmacy. Representative                                                                    
Guttenberg replied that  the PBM was hired  by the insurance                                                                    
company  to   negotiate  prices.  He  elaborated   that  the                                                                    
pharmacy had  a "take it or  leave it" choice to  enter into                                                                    
the contract  if they  wanted to  fill the  prescriptions of                                                                    
benefactors  of various  health  care  plans. He  summarized                                                                    
that  PBMs were  a "middleman  between the  patient and  the                                                                    
pharmacy."                                                                                                                      
                                                                                                                                
1:51:23 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki referred  to the  second bullet  on                                                                    
slide  6 and  ask  what  happened if  the  pharmacy did  not                                                                    
accept  the  contract.  Representative  Guttenberg  answered                                                                    
that  if a  pharmacy did  not  enter into  the contract  the                                                                    
patient would have to pay in cash.                                                                                              
Representative Wilson  surmised that the issue  was not with                                                                    
the pharmacy's ability  to obtain the drug,  but whether the                                                                    
insurance  company would  pay for  the drug.  Representative                                                                    
Guttenberg  indicated that  she was  correct. Representative                                                                    
Wilson   initially  thought   that   the   state  would   be                                                                    
intervening  in   contracts,  but   she  deduced   that  the                                                                    
pharmacies  and  the  PBMs were  not  engaging  in  contract                                                                    
negotiations.  She  asked  if her  statement  was  accurate.                                                                    
Representative  Guttenberg  reiterated  that  the  contracts                                                                    
were  a "take  it  or leave  it deal"  and  the audits  were                                                                    
unreasonable. He  recounted that  the number  of independent                                                                    
pharmacies in  the state had dramatically  decreased from 74                                                                    
to  14 because  of the  PBMs "dominating  the relationship."                                                                    
Representative Wilson  inferred that the problem  was not in                                                                    
the  "structure" of  a  PBM  but in  the  audit and  appeals                                                                    
process  "rather than  the contract  itself." Representative                                                                    
Guttenberg agreed with her statement.  He indicated that one                                                                    
part of  the bill  dealt with  the relationship  between the                                                                    
PBM and the  pharmacy and the audit process.  The other part                                                                    
of the bill related to  the costs for generic drugs embedded                                                                    
in  the contract  that were  hidden; the  negotiated prices,                                                                    
costs,  and rebates  between the  manufacturer  and PBM  and                                                                    
insurer,  and rates  of reimbursements  were unknown  to the                                                                    
pharmacists.  The  pharmacists,   reimbursement  rates  were                                                                    
often   changed   without   notice.   He   relayed   hearing                                                                    
pharmacists testifying that it  cost more for the pharmacist                                                                    
to fill  a certain  prescription under  a contract  than the                                                                    
reimbursement  amount. The  committee  would hear  testimony                                                                    
from pharmacist later in the meeting.                                                                                           
                                                                                                                                
1:56:40 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton  asked about the state  formulary for Alaska                                                                    
Care and  whether it was the  same formulary as the  PBM for                                                                    
AETNA. Representative  Guttenberg did  not know  the answer.                                                                    
Co-Chair Seaton requested more information  on how PBMs were                                                                    
paid. He indicated  that the state had a  "formulary set up"                                                                    
and published  prices. He wondered whether  the PBM received                                                                    
a percentage.  He wondered  how PBMs  made money  by denying                                                                    
coverage for  "pills that  were sold."  He inquired  how the                                                                    
process affected the state's position  and "how the PBM made                                                                    
money." Representative  Guttenberg replied that  the process                                                                    
was complex.  He detailed that  the state via AETNA  hired a                                                                    
PBM  who   negotiated  a   price  with   the  pharmaceutical                                                                    
companies. The state  did not know the  negotiated price, or                                                                    
the reimbursement  prices paid to the  pharmacies. He voiced                                                                    
that the there was a reason the  PBMs were on the top of the                                                                    
Fortune  500 list.  He detailed  that rebates  were paid  to                                                                    
PBMs  by manufacturers  for  purchasing  their product.  The                                                                    
PBMs did not  disclose how or if rebates  were factored into                                                                    
the   pharmaceutical   contracts.   The  process   was   not                                                                    
transparent  and how  costs  and  benefits were  distributed                                                                    
among the PBM's recipients were completely unknown.                                                                             
                                                                                                                                
2:01:56 PM                                                                                                                    
                                                                                                                                
Representative  Tilton mentioned  previously looking  at the                                                                    
pharmaceutical costs  within the  Pioneer Homes  and whether                                                                    
the costs could  be reduced by using generic  drugs. She was                                                                    
unaware of the generic rebate  issue and thought the lack of                                                                    
transparency  left open  the question  of whether  the state                                                                    
was getting the best  prices for the patient. Representative                                                                    
Guttenberg responded  that Medicaid and Medicare  costs were                                                                    
established under  the federal system.  He only knew  of two                                                                    
actions   the  federal   government  implemented   regarding                                                                    
prescription   drug   costs;   they   ensured   that   drugs                                                                    
distributed through the  Veteran Affairs Administration (VA)                                                                    
were the "cheapest" and drug  prices could not be negotiated                                                                    
across state  lines. He affirmed  that the rebates  were not                                                                    
transparent.                                                                                                                    
                                                                                                                                
SETH  WHITTEN,   STAFF,  REPRESENTATIVE   DAVID  GUTTENBERG,                                                                    
clarified  that the  rebates occurred  between the  PBMs and                                                                    
the plan  sponsor; the  Alaska Care Plan  and the  PBM would                                                                    
negotiate the percentages. He deferred  to the Department of                                                                    
Administration  (DOA) to  answer the  question of  where the                                                                    
rebates were going. He noted  that pharmacies do not receive                                                                    
rebates.                                                                                                                        
                                                                                                                                
Representative Ortiz asked if  PMB's were created because it                                                                    
would otherwise  be impossible  for pharmacies  to negotiate                                                                    
with  all  the  different drug  manufacturers.  Mr.  Whitten                                                                    
responded in the affirmative.                                                                                                   
                                                                                                                                
Ms. Conway advanced to slide  7: "PBM's Impact on Pharmacy &                                                                    
Patients":                                                                                                                      
                                                                                                                                
    PBMs dictate how much pharmacies will be paid for the                                                                    
     drugs they dispense regardless of the pharmacies'                                                                          
     acquisition costs                                                                                                          
                                                                                                                                
    PBMs have free reign to dictate what pharmacies are                                                                      
     permitted to do in a given network thereby driving                                                                         
     patients to particular pharmacy options                                                                                    
    PBMs operate their own mail-order pharmacies and can                                                                     
     incentivize  or  mandate  that customers  obtain  their                                                                    
     medications only through the mail-order option                                                                             
                                                                                                                                
    PBMs audit pharmacies and in most cases, there are no                                                                    
     defined  rules   or  regulations   over  what   can  be                                                                    
     considered a recoupable offense.                                                                                           
                                                                                                                                
2:08:04 PM                                                                                                                    
                                                                                                                                
Ms. Conway informed committee members  that the third bullet                                                                    
point regarding mail-order prescriptions  was a huge problem                                                                    
for  rural pharmacies  that were  prohibited under  contract                                                                    
from mailing prescriptions to patients.                                                                                         
                                                                                                                                
Ms. Conway reviewed slide 8  that described the mechanics of                                                                    
the  relationship  between  the payer,  PBM,  and  pharmacy.                                                                    
Slide 8 as follows:                                                                                                             
                                                                                                                                
    The Payer pays $100 to the PBM, the amount agreed upon                                                                   
     in their contractual plan.                                                                                                 
                                                                                                                                
    The PBM negotiates the $100 price for the drug with                                                                      
     the  pharmaceutical company  and receives  a rebate  of                                                                    
     $50 for the drug. The PBM  then pays $50 to Pharmacy to                                                                    
     dispense  the   drug,  via  their  contract   with  the                                                                    
     pharmacy. The remaining  $50 stays with the  PBM as its                                                                    
     profit. This is known as the spread.                                                                                       
                                                                                                                                
    Pharmacy buys its drugs from a drug wholesaler at best                                                                   
     price they can find, pays $60 for the drug.                                                                                
     PBM only  pays them  $50, and  then the  pharmacy loses                                                                    
     $10 on that prescription.                                                                                                  
                                                                                                                                
Representative Wilson  understood that  the pharmacy  had to                                                                    
purchase drugs at the best rate  they could find but did not                                                                    
know whether  the price was  a good  deal or not  until they                                                                    
were  reimbursed  by   the  PBM.  Representative  Guttenberg                                                                    
responded  that her  statement  was correct.  Representative                                                                    
Wilson  deduced that  the lack  of transparency  by the  PBM                                                                    
caused  the situation.  Representative Guttenberg  responded                                                                    
in the  affirmative. He  added that  she would  hear similar                                                                    
testimony  from   pharmacists.  Representative   Wilson  was                                                                    
trying to  understand the "players."  She asked  whether the                                                                    
pharmacists were  given a  list of  reimbursed prices  or if                                                                    
the prices  changed so  frequently without  notification the                                                                    
pharmacist  could  not  rely  on  the  list.  Representative                                                                    
Guttenberg in  the affirmative and added  the bill contained                                                                    
provisions mandating  when the PBM must  notify the pharmacy                                                                    
price changes.                                                                                                                  
                                                                                                                                
2:13:32 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki pointed to  a flow chart titled "The                                                                    
Role of  PBMs in the  Flow of Money and  Prescription Drugs"                                                                    
on a  separate handout (copy  on file). He deduced  that the                                                                    
pharmacy  negotiated  discounted  dispensing fees  with  the                                                                    
PBMs and  sent electronic claims  to PBMs for  the dispensed                                                                    
drugs the  pharmacy also  negotiated discounted  drug prices                                                                    
with   wholesalers    or   directly    with   pharmaceutical                                                                    
manufactures for less than the  PBM reimbursement amount. He                                                                    
asked  whether he  was correct.  Mr. Whitten  responded that                                                                    
the  pharmacy did  not purchase  drugs directly  through the                                                                    
manufacturer,   only  through   the   wholesaler.  The   PBM                                                                    
negotiated prices with the manufacturer.                                                                                        
                                                                                                                                
Representative  Guttenberg  added that  multiple  pharmacies                                                                    
organized and purchased their drugs in bulk.                                                                                    
                                                                                                                                
2:15:11 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton  was trying to  follow the flow  diagram. He                                                                    
asked how the payer benefited.  He did not find any monetary                                                                    
advantage to  the payer.  He did not  think the  system made                                                                    
sense for  the payer. Representative Guttenberg  agreed with                                                                    
the statement.                                                                                                                  
                                                                                                                                
Ms. Conway  moved to  slide 9:  "HB240/SB 38    What  Does a                                                                    
Fair Audit Bill Do?":                                                                                                           
                                                                                                                                
    Brings fairness to the unregulated and expanding                                                                         
     practice of pharmacy audits                                                                                                
                                                                                                                                
    Does not allow audits during the first seven calendar                                                                    
     days of each month because of the high patient volume,                                                                     
     unless the pharmacy and auditor agree otherwise                                                                            
                                                                                                                                
    Prevents the   targeting   of   minor   clerical   or                                                                    
     administrative errors where no fraud, patient harm, or                                                                     
     financial loss has occurred                                                                                                
                                                                                                                                
    Establishes  submission   of    data/medical   record                                                                    
     standards    to   allow    for   clarification    where                                                                    
     discrepancies are identified                                                                                               
                                                                                                                                
    Establishes a   reasonable   time   frame   for   the                                                                    
     announcement of an audit to allow proper retrieval of                                                                      
     records under review                                                                                                       
                                                                                                                                
Ms.  Conway elaborated  that an  audit could  take days  and                                                                    
significant resources for a small  pharmacy and notice of an                                                                    
impending audit was fair.                                                                                                       
                                                                                                                                
Mr.  Whitten interjected  that the  provisions  in the  bill                                                                    
were  not applicable  if there  was suspicion  of fraud.  He                                                                    
added  that PBMs  played and  "important role"  in detecting                                                                    
fraud and the bill did not impede their ability to do so.                                                                       
                                                                                                                                
2:19:09 PM                                                                                                                    
                                                                                                                                
Ms. Conway moved  to slide 10: "What Does a  Fair Audit Bill                                                                    
Do?  cont.":                                                                                                                    
                                                                                                                                
    Establishes an audit appeals process for pharmacies                                                                      
                                                                                                                                
    Establishes guidelines for PBMs to follow regarding                                                                      
     patient confidentiality                                                                                                    
                                                                                                                                
    Prohibits extrapolation in assessing fees/penalties                                                                      
                                                                                                                                
    Allows Alaska pharmacists to provide mail-order                                                                          
     service to their customers without penalization                                                                            
    Local mail-order service keeps Alaska dollars in                                                                         
     Alaska                                                                                                                     
                                                                                                                                
    Legislation does not prevent the recoupment of funds                                                                     
     where fraud, waste, and abuse exist                                                                                        
                                                                                                                                
Ms. Conway specified that extrapolation  happened when a PBM                                                                    
discovered an audit discrepancy  and extrapolated the number                                                                    
of times it occurred instead of using actual data.                                                                              
                                                                                                                                
Representative  Kawasaki  referred   to  fraud,  waste,  and                                                                    
abuse.  He asked  about a  fiscal note  from DOA,  FN2 (ADM)                                                                    
relating to the issue. He read from the analysis on page 2:                                                                     
                                                                                                                                
     The bill may  restrict the ability of  PBMs to identify                                                                    
     waste,  fraud or  abuse patterns.  This  may cause  the                                                                    
     AlaskaCare plans  to pay for unnecessary  or fraudulent                                                                    
     prescriptions.                                                                                                             
                                                                                                                                
     The bill may restrict the ability of PBMs to recoup                                                                        
     overpayments, preventing the AlaskaCare plans from                                                                         
     recovering these funds.                                                                                                    
                                                                                                                                
Representative  Kawasaki   voiced  that  the   analysis  was                                                                    
"completely contrary" to slides 9 and 10.                                                                                       
                                                                                                                                
Mr. Whitten assured that the  bill clearly stated that audit                                                                    
protections were not applicable in the case of fraud.                                                                           
                                                                                                                                
2:22:10 PM                                                                                                                    
                                                                                                                                
Ms. Conway  highlighted slide  11 titled:  What Does  a Fair                                                                    
Audit Bill Do?  cont.                                                                                                           
                                                                                                                                
    41 states have enacted fair audit legislation                                                                            
    36 states have enacted Maximum Allowable Cost (MAC)                                                                      
     transparency legislation                                                                                                   
                                                                                                                                
   Bill will also include:                                                                                                      
        o Registration of PBMs with the State of Alaska                                                                         
          Division of Insurance                                                                                                 
        o Set-up guidelines for generic drug maximum                                                                            
          allowable cost (MAC) pricing by PBMs                                                                                  
        o Establish a mechanism for a pharmacy to appeal                                                                        
          MAC pricing                                                                                                           
                                                                                                                                
      Don't audit local pharmacies out of business.                                                                          
    Their services are crucial in rural areas.                                                                                  
                                                                                                                                
Ms.  Conway  emphasized  that other  states  had  identified                                                                    
issues with PBMs and acted to mitigate the problems.                                                                            
                                                                                                                                
Co-Chair  Seaton requested  more  information regarding  MAC                                                                    
pricing. Ms. Conway deferred the answer to a future slide.                                                                      
                                                                                                                                
Ms. Conway  addressed slide 12  titled "Fair  Pharmacy Audit                                                                    
Legislation in The States" and  slide 13 titled "States with                                                                    
Generic  Drug Pricing  Transparency" that  depicted maps  of                                                                    
the  United States  with the  applicable states  highlighted                                                                    
provided by  the National Community  Pharmacists Association                                                                    
(NCPA).                                                                                                                         
Ms. Conway indicated  she would skip the next  4 slides that                                                                    
contained real life accounts  of unreasonable audits endured                                                                    
by  pharmacists  and  encouraged the  committee  members  to                                                                    
review the slides.                                                                                                              
                                                                                                                                
2:25:17 PM                                                                                                                    
                                                                                                                                
Ms.  Conway skipped  to slide  19:  "Maximum Allowable  Cost                                                                    
(MAC)":                                                                                                                         
                                                                                                                                
    A "maximum allowable cost" or "MAC" list refers to a                                                                     
     payer  or  PBM  -   generated  list  of  products  that                                                                    
     includes the upper limit or  maximum amount that a plan                                                                    
     will pay  for generic  drugs and brand-name  drugs that                                                                    
     have   generic    versions   available   ("multi-source                                                                    
     brands")                                                                                                                   
                                                                                                                                
    Essentially, no two MAC lists are alike and each PBM                                                                     
     has free  reign to pick  and choose products  for their                                                                    
     MAC lists.                                                                                                                 
                                                                                                                                
    A Formulary is a list of drugs that are covered for a                                                                    
     particular  insurance   plan.  Generally,  it   has  no                                                                    
     pricing attached to it. However,  some drugs are chosen                                                                    
     based on the  cost of the medication.  A formulary will                                                                    
     usual contain both Brand and Generic Drugs.                                                                                
    A MAC list (Maximum Allowable Cost) is a listing of                                                                      
     specific  prices for  each generically  available drug.                                                                    
     Usually a  specific insurance plan  has a  specific MAC                                                                    
     listing  issued by  the PBM.  However, a  PBM may  have                                                                    
     several  different  MAC  lists depending  on  the  plan                                                                    
     (i.e.  one plan  may  have a  different  MAC list  even                                                                    
     though they utilize the same PBM).                                                                                         
                                                                                                                                
Co-Chair Seaton referred to the  maximum amount a plan would                                                                    
pay and  asked whether  the amount was  the maximum  paid to                                                                    
the pharmacy. Ms. Conway answered in the affirmative.                                                                           
                                                                                                                                
Representative Wilson  asked who would develop  the MAC list                                                                    
or did  the bill mandate  that the PBMs must  distribute the                                                                    
MAC  list to  provide  transparency.  Mr. Whitten  mentioned                                                                    
that  page 5  of  the  bill discussed  the  MAC pricing  and                                                                    
required the PBM  to provide the list to  the pharmacies and                                                                    
list  updates  in  a timely  manner.  Representative  Wilson                                                                    
deduced that  the state  would not  monitor the  actual cost                                                                    
the PBM  paid for  the drugs  on the  MAC list  or interfere                                                                    
with   that   process.   Mr.  Whitten   responded   in   the                                                                    
affirmative. He  added that the  bill stated the  "PBM shall                                                                    
use  the most  up  to  date pricing  data  to calculate  the                                                                    
reimbursement and  for multi-source  generics that  are sold                                                                    
or marketed  in the  state for that  period." Representative                                                                    
Wilson thought the  state was mandating the  MAC pricing for                                                                    
the  PCMs via  the use  of  formula. She  declared that  she                                                                    
supported requiring  PBMS to provide  the pharmacies  with a                                                                    
list  of  MAC  pricing  but  did not  support  any  type  of                                                                    
requirement regarding what the pricing should be.                                                                               
                                                                                                                                
Representative  Guttenberg  responded  that he  agreed  with                                                                    
Representative  Wilson and  the bill  was not  attempting to                                                                    
regulate MAC pricing.                                                                                                           
                                                                                                                                
Representative  Kawasaki voiced  that  some  of the  invited                                                                    
testifiers   would  help   to   answer  committee   member's                                                                    
questions.                                                                                                                      
                                                                                                                                
Representative Wilson  asked whether public  testimony would                                                                    
be held over. Co-Chair Seaton answered in the affirmative.                                                                      
                                                                                                                                
2:31:29 PM                                                                                                                    
                                                                                                                                
MICHELE   MICHAUD,  CHIEF   HEALTH  OFFICIAL,   DIVISION  OF                                                                    
RETIREMENT  AND  BENEFITS,   DEPARTMENT  OF  ADMINISTRATION,                                                                    
provided information regarding  the state's AlaskaCare plan.                                                                    
She  indicated that  the  AlaskaCare  plan covered  slightly                                                                    
less  than  50  percent  of all  state  employees;  over  15                                                                    
thousand    individuals.   In    addition,   her    division                                                                    
administered  both  the  defined  benefit  and  the  defined                                                                    
contribution    retiree   plans    covering   86    thousand                                                                    
individuals.  She  delineated  that  the  state  plans  were                                                                    
"self-insured",  which  meant  the  claims  cost  were  paid                                                                    
directly by the plan and the  state bore the risk versus the                                                                    
insurer bearing the risk for  costs. The commissioner of DOA                                                                    
was  the plan  administrator  and the  division managed  the                                                                    
plans.  The state  contracted with  AETNA who  subcontracted                                                                    
with  CVS.  The  contract  was  reviewed  periodically,  and                                                                    
currently the  state was  in the  procurement process  for a                                                                    
PBM starting in 2019.                                                                                                           
                                                                                                                                
2:33:38 PM                                                                                                                    
                                                                                                                                
EMILY RICCI, CHIEF HEALTH  POLICY ADMINISTRATOR, DIVISION OF                                                                    
RETIREMENT  AND  BENEFITS,   DEPARTMENT  OF  ADMINISTRATION,                                                                    
added that  between the  two health  plans: the  retiree and                                                                    
employee  plans, the  plans filled  approximately 1  million                                                                    
prescriptions  and paid  $240 to  $250  million in  pharmacy                                                                    
benefits each  year. She  explained what  PBMs did  from her                                                                    
perspective.  Prescription Benefit  Managers negotiated  the                                                                    
cost of drugs with the  manufacturer and provided a point of                                                                    
sale adjudication  system, which  electronically coordinated                                                                    
the  purchase at  the pharmacy  to determine  the copayment.                                                                    
She  informed committee  members  that the  number of  state                                                                    
employees covered  under AlaskaCare  was roughly  6 thousand                                                                    
and the  remaining were covered through  health trusts; many                                                                    
contracted  with CVS  Caremark as  their PBM.  She clarified                                                                    
that the  AlaskaCare plans  maintained an  "open formulary,"                                                                    
which  was unusual  for commercial  health plans.  The state                                                                    
also received  rebates from the  PBMs. She was aware  of the                                                                    
"black box"  in the contracts  between the PBM and  the drug                                                                    
manufacturer regarding  information about the amount  of the                                                                    
rebates or negotiated prices. She  offered that the division                                                                    
negotiated the  percentage of rebates  with the PBM  and the                                                                    
money went into  the retiree plan and the  health trust. The                                                                    
state received  $28 million  in rebates  in the  prior year.                                                                    
The  state attempted  to address  concerns  when alerted  to                                                                    
problems;   and   the   AlaskaCare   plan   negotiated   the                                                                    
elimination   of   restrictions   on   pharmacists   sending                                                                    
prescriptions to patients outside  of their community within                                                                    
the state.                                                                                                                      
                                                                                                                                
Ms.  Michaud  expounded  that  the  division  negotiated  an                                                                    
aggregate rate that discounted a  percentage off the average                                                                    
wholesale costs with performance  guarantees for the rebates                                                                    
and generic  dispensing rates  and did  not negotiate  a per                                                                    
prescription  cost.  She added  that  the  contract did  not                                                                    
include  "performance guarantees  around  MAC pricing."  The                                                                    
current contract  allowed a "full  rebate pass back"  to the                                                                    
state  receiving 100  percent  of the  rebate  along with  a                                                                    
guarantee  that  stipulated  if the  rebates  fell  below  a                                                                    
certain amount the PBM would pay additional money.                                                                              
                                                                                                                                
Ms. Ricci  interjected that the  state was not privy  to the                                                                    
contracts  the PBMs  had with  the pharmacies  nor with  the                                                                    
drug manufacturers.                                                                                                             
                                                                                                                                
Co-Chair  Seaton asked  if there  was any  reason why  a new                                                                    
contract  could  not  include  the  other  contract  pricing                                                                    
information. Ms.  Ricci replied that the  division requested                                                                    
transparent  pricing and  identified  receiving the  pricing                                                                    
information  as   a  goal.   The  division   was  soliciting                                                                    
different  pricing  models  in  the new  bid  for  PBMs  and                                                                    
desired  to achieve  pricing  transparency. Co-Chair  Seaton                                                                    
confirmed  that the  division wanted  to obtain  transparent                                                                    
pricing   going  forward.   Ms.   Ricci   answered  in   the                                                                    
affirmative but added  that the division had  to balance its                                                                    
fiduciary   responsibility  to   the  plan,   therefore  the                                                                    
contract differential costs was a factor.                                                                                       
                                                                                                                                
Representative  Wilson  asked  how   the  division  knew  it                                                                    
received 100  percent of the  rebates if the amount  for the                                                                    
rebates the  PBMs received were unknown.  She responded that                                                                    
the   division    included   contractual    guarantees   and                                                                    
implemented  audits through  benefit  consultants that  were                                                                    
pharmacists who had  worked for PBMs and  were familiar with                                                                    
how the  PBMs typically  paid claims. The  division utilized                                                                    
the available tools to monitor  its contract but the pricing                                                                    
between  the PBM  and  drug  manufacturer remained  unknown.                                                                    
Representative  Wilson ascertained  that  without the  total                                                                    
pricing information  it was impossible  to know  whether the                                                                    
state received 100  percent of the rebates  and deduced that                                                                    
the  audit was  based on  random data.  Ms. Ricci  corrected                                                                    
that  the  contract  required that  the  state  receive  100                                                                    
percent of the  rebates and the division  utilized the tools                                                                    
it had  to do the  "best" it  could to ensure  full payment.                                                                    
She    offered    to   provide    additional    information.                                                                    
Representative Wilson  did not  know "if  the PBM  was being                                                                    
honest or not."                                                                                                                 
                                                                                                                                
Representative Kawasaki referenced hearing  that the PBM was                                                                    
the subcontractor  through AETNA and  that the state  was in                                                                    
the   procurement   process   for  a   PBN.   He   requested                                                                    
clarification. Ms.  Ricci answered  that one of  the changes                                                                    
the state recently made was  to "carve out" PBM services and                                                                    
would not be subcontracting the service out moving forward.                                                                     
                                                                                                                                
2:40:56 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki  asked  for verification  that  the                                                                    
state would  maintain a  separate bid  for the  insurer. Ms.                                                                    
Ricci  replied in  the affirmative.  She  detailed that  the                                                                    
division would require the insurer  to work with the state's                                                                    
PBM. Representative  Kawasaki wondered whether  the division                                                                    
had information  regarding the  other state  employee health                                                                    
trusts  contracts  with  PBMs and  how  they  compared  with                                                                    
AlaskaCare's. Ms.  Ricci responded that she  could not speak                                                                    
to   the    health   trust's    contractual   relationships.                                                                    
Representative Kawasaki  asked if legislation  was necessary                                                                    
for the division to directly  contract with PBMs and enforce                                                                    
the  terms   of  the  contract   or  whether  it   could  be                                                                    
accomplished  contractually  through the  procurement  code.                                                                    
Ms.  Ricci  answered that  the  department  did not  take  a                                                                    
position  on the  bill  and would  utilize  the contract  to                                                                    
protect the state's interest.                                                                                                   
                                                                                                                                
2:42:51 PM                                                                                                                    
                                                                                                                                
Representative Ortiz understood  that the administration did                                                                    
not take a position on the  bill. He related that [read from                                                                    
a  statement} the  administration  previously "indicated  if                                                                    
MAC  pricing  repeal legislation  was  passed  the price  of                                                                    
generically  available  medications   would  go  up  because                                                                    
wholesalers serving  Alaskan pharmacies  would automatically                                                                    
increase prices.  This would assume  that there is  or would                                                                    
be  collusion between  the wholesale  drug industry  if they                                                                    
all  raised  prices." He  asked  whether  the statement  was                                                                    
fair. Ms. Ricci stated that  her fiscal note or analysis had                                                                    
never used  the word collusion. She  indicated that division                                                                    
attempted  to  determine  any  possible  fiscal  impacts  by                                                                    
reviewing other  state's fiscal notes and  provisions in the                                                                    
bill. In addition, the division  asked the state's actuaries                                                                    
to  perform  an analysis  to  better  understand what  other                                                                    
states had experienced relative  to adopting similar type of                                                                    
legislation.  She  expected  the  completed  analysis  soon.                                                                    
Representative Ortiz  thought that some of  the pharmacist's                                                                    
support for  HB 240  was motivated  by not  being reimbursed                                                                    
for at least the cost  of some medications. He asked whether                                                                    
she  agreed  with the  statement  and  felt that  pharmacist                                                                    
should  be fully  reimbursed. Ms.  Ricci  answered that  the                                                                    
division wanted  to ensure that  the plan  reimbursed fairly                                                                    
and was  efficient and effective  with state  dollars, which                                                                    
"sometimes  required  striking   a  delicate  balance."  She                                                                    
reported  that  the  division engaged  in  discussions  with                                                                    
independent  pharmacists since  November 2017,  specifically                                                                    
related to  MAC pricing  and were working  with the  PBMs to                                                                    
identify where  the pricing  was low  and what  the recourse                                                                    
was for claims paid before  November. She noted that the PBM                                                                    
adjusted  prices  on  January  10,  2018  in  response.  The                                                                    
division  also  wanted  to  figure   out  how  to  reimburse                                                                    
pharmacies  more directly.  She  related  that entering  the                                                                    
"pharmaceutical   reimbursement   negotiation   space"   was                                                                    
"difficult"  at   the  division  level.  The   division  was                                                                    
pursuing pilot projects to find  a way to directly reimburse                                                                    
pharmacists  in recognition  of their  "unique value  to the                                                                    
plan" and to benefit the  plan's members. She qualified that                                                                    
the later approach would take time.                                                                                             
                                                                                                                                
2:47:24 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg referenced  an earlier question by                                                                    
Co-Chair Seaton.  He asked  for clarification  regarding the                                                                    
state  formulary  and  wondered   what  plans  applied.  Ms.                                                                    
Michaud  responded that  each PBM  had multiple  formularies                                                                    
depending  on the  plan and  the  state's plan  had an  open                                                                    
formulary, which meant  the there was no  restriction on the                                                                    
drugs  covered.   She  could  not  speak   to  other  plan's                                                                    
formularies.  Representative  Guttenberg   asked  about  the                                                                    
formulary for  the Department of Health  and Social Services                                                                    
(DHSS).  Ms. Ricci  responded that  the formulary  DHSS used                                                                    
was different.                                                                                                                  
                                                                                                                                
Representative Ortiz asked that  whether the impact would be                                                                    
different for  the state versus  the Alaska  State Employees                                                                    
Association  Local  52  (ASEA)  Health  Trust  if  the  bill                                                                    
passed. Ms. Ricci indicated that  it would vary depending on                                                                    
the plan,  negotiated prices and several  other factors. She                                                                    
hesitated to speak to other plans.                                                                                              
                                                                                                                                
2:50:30 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster opened the discussion to invited testimony.                                                                     
                                                                                                                                
2:50:51 PM                                                                                                                    
                                                                                                                                
BARRY    CHRISTENSEN,   ALASKA    PHARMACISTS   ASSOCIATION,                                                                    
ANCHORAGE  (via teleconference),  thanked  the sponsors  for                                                                    
their help in  moving the bill forward. He  spoke in support                                                                    
of  the bill.  He relayed  that his  father had  started the                                                                    
pharmacy  in  Ketchikan  44 years  ago,  had  state  license                                                                    
number  67,  and was  still  working  and his  daughter  was                                                                    
attending pharmacy  school. He relayed  that he was  the Co-                                                                    
Chair  of  the  Alaska Pharmacists  Association  (ACPA)  and                                                                    
mentioned  that HB  240 was  the  associations priority.  He                                                                    
began by refuting some arguments  that PBMs frequently held.                                                                    
The PBMs  contended that they  were not  insurers therefore,                                                                    
should not be  regulated. He maintained that  they were part                                                                    
of  the  insurance  system  and   should  be  regulated  and                                                                    
registered. He referenced the take  it or leave it nature of                                                                    
the contract between  the pharmacies and the  PBMs. He noted                                                                    
that there  were roughly 100  PBMs, which was why  the state                                                                    
needed to establish universal  "sidebars and guidelines" for                                                                    
PBMs to follow.  He agreed that the bill did  not limit PBMs                                                                    
authority  to detect  fraud, waste,  and  abuse. He  related                                                                    
that  he received  30-day notice  from the  Internal Revenue                                                                    
Service (IRS)  of an impending  audit and felt that  the 10-                                                                    
day notice the  bill provided was the  barely sufficient. He                                                                    
reported the  PBMs complained that MAC  pricing transparency                                                                    
would increase  costs and cited  a letter from  the National                                                                    
Community  Pharmacists  Association  (NCPA) (copy  on  file)                                                                    
that  refuted  the  narrative.   He  reminded  members  that                                                                    
community  pharmacists  were  "real  Alaskans"  involved  in                                                                    
their communities and were "serving Alaskans.                                                                                   
                                                                                                                                
2:55:32 PM                                                                                                                    
                                                                                                                                
Representative Ortiz  asked whether  independent pharmacists                                                                    
viewed passage  of HB 240  as essential for the  survival of                                                                    
their businesses into the  future. Dr. Christensen responded                                                                    
affirmatively. He  emphasized that  passage of the  bill was                                                                    
the associations top legislative priority.                                                                                      
                                                                                                                                
Representative Wilson thought  Dr. Christensen had mentioned                                                                    
regulating and registering  PBMs. She did not  view the bill                                                                    
as regulating  PBMs. She  wondered whether  he meant  to say                                                                    
registering and if the bill  did regulate PBMs in any manner                                                                    
she wanted  to know how.  Dr. Christensen responded  that he                                                                    
meant registering  and did not  advocate for  the regulation                                                                    
of   PBMs  but   wanted  set   guidelines  for   audits  and                                                                    
transparency for generic drug pricing.                                                                                          
                                                                                                                                
Representative   Ortiz   mentioned   that  the   number   of                                                                    
independent  pharmacists were  declining.  He asked  whether                                                                    
the  potential   negative  impacts   of  losing   access  to                                                                    
pharmacies in  rural Alaska would  be greater than  in urban                                                                    
areas.  Dr.  Christensen  replied  in  the  affirmative  and                                                                    
stressed that in rural areas  pharmacists were relied on for                                                                    
healthcare advice and services like flu shots.                                                                                  
                                                                                                                                
2:59:01 PM                                                                                                                    
                                                                                                                                
SCOTT  WATTS, RON'S  APOTHECARY, JUNEAU,  spoke in  favor of                                                                    
the legislation.  He agreed with  the previous  speaker that                                                                    
the  bill  was  a  top priority  for  independent  community                                                                    
pharmacies   around   the   state.  The   bill   established                                                                    
sideboards to  help the pharmacist "survive."  He brought up                                                                    
the mail  order provision and  the fact that  many contracts                                                                    
prohibited community  pharmacist from  sending prescriptions                                                                    
within the  state via  mail or  small commuter  airlines. He                                                                    
applauded  the state  for allowing  the  practice but  noted                                                                    
that  hundreds of  other contracts  prohibited shipping  and                                                                    
the  bill standardized  allowing the  practice. He  moved to                                                                    
the MAC  pricing issue and  voiced that the  pharmacies were                                                                    
being   reimbursed   below   the   purchase   price,   which                                                                    
represented  a  straight  loss to  the  small  pharmacy.  He                                                                    
alerted  that   in  October   2017,  Caremark   PBM  severly                                                                    
decreased  its maximum  allowable  costs, which  represented                                                                    
most of the pharmacies business  and resulted in the loss of                                                                    
thousands of dollars  in revenue each month.  He shared that                                                                    
the  administration  heard  their   request  for  help,  but                                                                    
corrective action moved slowly,  and pharmacies continued to                                                                    
lose money. He  pointed out that PBMs  lacked an appropriate                                                                    
appeals  process for  pharmacies  to  dispute incorrect  MAC                                                                    
prices  and   obtain  proper   payment.  He   reported  that                                                                    
effective  January  10,  2018  CVS  instituted  major  price                                                                    
increases   on  1,590   generic  product   identifiers  that                                                                    
reflected   their  current   understanding  of   the  market                                                                    
conditions but  currently, there was no  appeals process for                                                                    
the  four months  of reduced  pricing and  reimbursement. He                                                                    
added that  the pharmacists  did not  know they  were losing                                                                    
money on a prescription due to  the point of sale system and                                                                    
only had  two options  to either  fill the  prescription and                                                                    
lose money  or turn the  patient away. HB 240  would provide                                                                    
an appeals process. He offered  that he had followed up with                                                                    
the PBM and  sent 500 hundred appeals.  Currently only three                                                                    
price   adjustments  were   made.  The   PBM  representative                                                                    
informed   Mr.  Watt's   that  the   adjustments  were   not                                                                    
retroactive.  He requested  information on  how to  purchase                                                                    
the  drugs  with the  new  pricing  and  was told  that  the                                                                    
information was only given to  pharmacies in states that had                                                                    
a  law  requiring  pricing information  distribution,  which                                                                    
precluded  Alaska. He  believed  that if  the PBMs  operated                                                                    
fairly the laws would be  unnecessary. He argued for a level                                                                    
playing  field  and  voiced  that  pharmacists  needed  fair                                                                    
standards. He thanked the committee for its support.                                                                            
                                                                                                                                
Representative  Wilson   did  not  understand   the  appeals                                                                    
process.  She  asked  if the  appeals  process  would  award                                                                    
adjustments  if   the  pharmacist  could  prove   they  were                                                                    
underpaid.  Dr.  Watts  answered   in  the  affirmative.  He                                                                    
offered that  the appeals process allowed  the pharmacist to                                                                    
show that they  could not purchase the  medication below the                                                                    
maximum allowable cost,  but if the PBM  had data countering                                                                    
that  the drug  was available  in  the state  under the  MAC                                                                    
price then  the price stood,  and the pharmacist  would need                                                                    
to  find  out how  to  obtain  the  drug  at a  lower  cost.                                                                    
Representative  Wilson asked  if a  third party  adjudicated                                                                    
the appeals process. Mr. Watt  responded that if the initial                                                                    
appeals  process   was  rejected   the  third   party  would                                                                    
adjudicate.                                                                                                                     
                                                                                                                                
Representative Kawasaki referred to  page 6, subsection (a),                                                                    
subsection  (b),  and  subsection   (C)  of  the  bill  that                                                                    
described  the multi-source  drug appeals  process. He  read                                                                    
directly from page 6, line 22, subsection (c) of the bill:                                                                      
                                                                                                                                
     (c) A  pharmacy benefits manager shall  grant a network                                                                    
     pharmacy's   appeal  if   an  equivalent   multi-source                                                                    
     generic drug  is not available  at a price at  or below                                                                    
     the  pharmacy benefits  manager's  list  price from  at                                                                    
     least   one  of   the  network   pharmacy's  contracted                                                                    
     wholesalers who operate  in the state. If  an appeal is                                                                    
     granted,  the pharmacy  benefits  manager shall  adjust                                                                    
     the reimbursement of the network  pharmacy to equal the                                                                    
     pharmacy acquisition cost for  each paid claim included                                                                    
     in the appeal.                                                                                                             
                                                                                                                                
Representative  Kawasaki asked  who  the network  pharmacy's                                                                    
contracted wholesalers  in the state were.  He surmised that                                                                    
the  word  shall  mandated  an   appeal  regardless  of  the                                                                    
circumstances. He asked for Mr.  Watts to comment. Dr. Watts                                                                    
answered that a contracted  wholesaler was a drug wholesaler                                                                    
with  the  ability  to  sell within  the  state  of  Alaska.                                                                    
Representative   Kawasaki   asked   if   there   were   many                                                                    
wholesalers in the state. Mr.  Watts responded that only one                                                                    
major  wholesaler  operating  within  the  state  and  other                                                                    
wholesalers resided outside the state.                                                                                          
                                                                                                                                
3:10:40 PM                                                                                                                    
                                                                                                                                
Representative  Kawasaki  asked  for  further  clarification                                                                    
about  the word  shall. Dr.  Watts provided  an example.  He                                                                    
related that  he had dispensed  a medication with  an $88.00                                                                    
loss. He  submitted the appeal  to the PBM stating  that the                                                                    
MAC price  was set too  low for  the Alaskan market.  If the                                                                    
PBM determined that the drug  was available in Alaska for at                                                                    
or  below  the  MAC  price   he  was  not  entitled  to  the                                                                    
adjustment.   Representative    Kawasaki   asked    how   an                                                                    
independent pharmacy  made money. Mr. Watts  relayed that if                                                                    
he  didn't have  a pharmacy  license  he would  not want  to                                                                    
currently own a pharmacy. He stated  that "it was not a good                                                                    
business  model at  this time."  He hoped  that he  would be                                                                    
able to sell the medication above his purchase price.                                                                           
                                                                                                                                
Representative  Guttenberg asked  what other  audit findings                                                                    
cost pharmacists  money besides drug price  differences. Dr.                                                                    
Watts responded  that findings related  to the  correct days                                                                    
supply and  clerical issues causing  the PBM to  "take back"                                                                    
the entire amount  paid for the prescription  when the error                                                                    
only related to one day.                                                                                                        
                                                                                                                                
3:14:34 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  asked   for  clarification.  Mr.                                                                    
Watts  answered   that  the  PBM  initially   paid  for  the                                                                    
prescription, but the audit result  called for recoupment of                                                                    
some of the  funds, but the entire cost  of the prescription                                                                    
was taken.                                                                                                                      
                                                                                                                                
In response  to a  question by,  Co-Chair Seaton,  Mr. Watts                                                                    
restated the  scenario that caused the  recoupment of funds.                                                                    
He  relayed that  payment was  made  to the  pharmacy for  a                                                                    
filled  prescription  and after  the  audit,  the money  was                                                                    
recouped back  to the PBM, but  he did not know  whether the                                                                    
money was  returned to the  plan. Co-Chair Seaton  wanted to                                                                    
determine whether the  PBM was acting as  if no prescription                                                                    
was filled because  they recouped the entire  amount and the                                                                    
PBM "did not pay for the  drug at all." He wondered what the                                                                    
PBM did with the funds and  whether they repaid the plan and                                                                    
made any profit from the scenario.                                                                                              
                                                                                                                                
3:18:05 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:18:44 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
WILL WHITEHEAD,  FOODLAND PHARMACY,  JUNEAU, spoke  in favor                                                                    
of  the bill.  He  stated that  HB 240  was  not only  about                                                                    
protecting  Alaskan pharmacies  but also  shed light  on how                                                                    
PBMs  operated so  the  health care  plans  could make  well                                                                    
informed  decisions. He  voiced that  PBMs had  no oversight                                                                    
and  had a  "conflict of  interest" because  they owned  the                                                                    
mail order  service; the PBM  was administering  and filling                                                                    
prescriptions  under the  plan. He  provided an  example. He                                                                    
had recently filled a prescription  for a generic medication                                                                    
for an  AlaskaCare member.  The patient  had a  $45.02 copay                                                                    
that represented 20 percent of  what AlaskaCare paid for the                                                                    
prescription  that   totaled  $225.10.  The   pharmacy  only                                                                    
received  the  copay  amount   and  no  other  reimbursement                                                                    
amount.  The pharmacy  paid $35.07,  therefore the  PBM made                                                                    
$180.08 and the pharmacy made  $9.95. He emphasized that the                                                                    
MAC  price was  set  by the  PBM and  they  could change  or                                                                    
adjust it at  any time. He stated that  the PBMs manipulated                                                                    
the price to overcharge plans.  He shared that he had filled                                                                    
the exact same  prescription in the same day  for one active                                                                    
state  employee and  one state  retiree. The  PBM "increased                                                                    
the MAC  price on the  active employee  in order to  get the                                                                    
copay amount up to the minimum  level so they [PBM] could do                                                                    
this upcharge and spread."                                                                                                      
                                                                                                                                
Representative Pruitt asked why  PBMs existed. Mr. Whitehead                                                                    
replied that the PBMs served  an important role in a complex                                                                    
system. He  expounded that the  PBM negotiated  rebates from                                                                    
the manufacturers for pharmacy  networks because it would be                                                                    
difficult   for  insurance   companies  to   negotiate  with                                                                    
pharmacies individually.                                                                                                        
                                                                                                                                
3:22:35 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt referred  to  an  article [no  source                                                                    
stated]  that  concluded  that   PBMs  no  longer  served  a                                                                    
purpose. He asked whether Mr.  Whitehead felt PBMs still had                                                                    
a purpose. Mr. Whitehead  indicated that PBMs were necessary                                                                    
for  contracting  purposes.  Representative  Pruitt  related                                                                    
that  a similar  situation existed  in other  industries. He                                                                    
felt that the  legislature was placed "in the  middle of two                                                                    
separate   entities  that   had   almost   a  feud   amongst                                                                    
themselves?"  He asked  whether  there were  aspects of  the                                                                    
bill  both sides  agreed  on. Mr.  Whitehead  was unable  to                                                                    
answer  for the  PBMs. Representative  Pruitt asked  whether                                                                    
there had been an attempt  to get the issue resolved without                                                                    
legislative  intervention.  Mr.  Whitehead stated  that  the                                                                    
PBMs  did   not  respond   to  requests   for  negotiations.                                                                    
Representative Pruitt  maintained that he was  not an expert                                                                    
on the  issue and  was expected  to mediate  the issue  as a                                                                    
legislator.  He  wanted the  two  parties  to work  out  the                                                                    
issues amongst themselves.                                                                                                      
                                                                                                                                
3:24:57 PM                                                                                                                    
                                                                                                                                
LEIF HOLM,  PHARMACY OWNER, CHAIR, BOARD  OF PHARMACY, NORTH                                                                    
POLE  (via   teleconference),  spoke   in  support   of  the                                                                    
legislation. He  relayed that  he owned  a pharmacy  and was                                                                    
the chair  of the Board  of Pharmacy in Alaska.  He reported                                                                    
that he owned  three pharmacies in Fairbanks  and North Pole                                                                    
and expanded  as a "telepharmacy"  in a rural  community. He                                                                    
voiced  that he  was testifying  from two  positions: as  an                                                                    
independent  community pharmacy  owner and  board chair.  He                                                                    
hoped  that the  telepharmacy  model  would extend  pharmacy                                                                    
services to underserved  rural communities. However, current                                                                    
PBM  practices   threatened  the  model  and   the  existing                                                                    
community  pharmacies  all over  Alaska.  He  felt that  the                                                                    
legislation was  not complex but  how PBMs operated  and its                                                                    
affect on pharmacies was complicated.  He recounted that the                                                                    
bill provided  for fair  audit practices  and took  steps in                                                                    
creating a  pricing structure that was  more transparent and                                                                    
favorable to  the pharmacists'  purchase price.  He believed                                                                    
that  the  bill  would  curb  negative  reimbursements  that                                                                    
devastated  community  pharmacies.  In  addition,  the  bill                                                                    
created a  fairer reimbursement process  that called  for an                                                                    
independent  third-party review.  He turned  to his  role as                                                                    
the  pharmacy  board  chair. He  relayed  that  the  board's                                                                    
mission was to provide for  the safety of Alaskans regarding                                                                    
medications.  The  PBM's  activities  threatened  access  to                                                                    
patient  care  if  community pharmacies  could  not  sustain                                                                    
themselves due to  the control the PBMs exert  over them. He                                                                    
was uncertain that his telepharmacy  could remain open for a                                                                    
year.  He addressed  previous comments  he had  heard during                                                                    
the  meeting. He  emphasized that  there was  no opportunity                                                                    
for contract negotiations with  PBMS, appeals were typically                                                                    
99  percent  denied,  and pricing  lacked  transparency.  He                                                                    
dealt with many  reputable wholesalers and could  not find a                                                                    
price  that  met the  reimbursable  amount,  which was  time                                                                    
consuming.  He reiterated  that the  bill did  not interfere                                                                    
with finding  fraud. He reported  that the state  spent $250                                                                    
million on medications  and included the costs  for the mail                                                                    
order pharmacy prescriptions owned  by the PBMs. He stressed                                                                    
that most of the millions paid  to the PBMs were located out                                                                    
of state. He  commented that he still  had many difficulties                                                                    
with the  state's plan. He  declared that no  other business                                                                    
was expected  to sell  products at the  same price  paid for                                                                    
it. He related  a situation where he  purchased a medication                                                                    
for $29,000  made $50  on the  transaction and  waited weeks                                                                    
for    payment.    He     mentioned    receiving    negative                                                                    
reimbursements.  He  believed  the   model  was  flawed  and                                                                    
"completely  unsustainable." He  thanked  members for  their                                                                    
support of the bill.                                                                                                            
                                                                                                                                
Representative Wilson  asked whether  PBMs were  always able                                                                    
to fill prescriptions or if  the practice evolved over time.                                                                    
Dr.  Holm  reported that  the  practice  evolved over  time.                                                                    
Representative Wilson  asked whether the pharmacy  board had                                                                    
reached out  to the PBMs  within in the  parameters allowed.                                                                    
Dr.  Holm   responded  in  the   negative  and   added  that                                                                    
reimbursements  were   not  addressed   by  the   board.  He                                                                    
communicated  the board  was concerned  over patient  access                                                                    
impacts related to PBM practices.                                                                                               
                                                                                                                                
3:32:54 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton  queried  whether posting  the  MAC  prices                                                                    
daily would  mitigate some issues.  Dr. Holm  responded that                                                                    
the listing  would be beneficial.  He reported  that generic                                                                    
drug prices  often took dramatic  swings overnight  and that                                                                    
"any  transparency   would  help."  Co-Chair   Seaton  asked                                                                    
whether prohibiting PBMs from  the mail order business would                                                                    
alleviate the pricing problems.  Dr. Holm thought that would                                                                    
be difficult  to legislate because  PBM mail  order business                                                                    
had  become  a  "juggernaut".   He  noted  that  mail  order                                                                    
pharmacies  do  not  work  well   in  Alaska.  Many  of  his                                                                    
customers  were either  getting too  much or  not enough  of                                                                    
their medication  and it  lacked responsiveness  to patients                                                                    
needs. He shared that many  of his customers would prefer to                                                                    
deal  with   the  community  pharmacy,  but   the  insurance                                                                    
companies  prohibited   the  pharmacies  from   sending  out                                                                    
prescriptions.                                                                                                                  
                                                                                                                                
3:35:58 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster OPENED Public Testimony.                                                                                        
                                                                                                                                
3:36:05 PM                                                                                                                    
                                                                                                                                
ALLIEJO  SHIPMAN, National  Community Pharmacy  Association,                                                                    
WASHINGTON DC  (via teleconference), stated  the association                                                                    
strongly  supported   the  legislation.  She  read   from  a                                                                    
prepared statement:                                                                                                             
                                                                                                                                
     Good  afternoon   Mr.  Chairman  and  members   of  the                                                                    
     committee.                                                                                                                 
                                                                                                                                
     My  name is  Allie Jo  Shipman,  and I  am speaking  on                                                                    
     behalf   of   the    National   Community   Pharmacists                                                                    
     Association in  strong support of House  Bill 240. NCPA                                                                    
     represents   the  interests   of  America's   community                                                                    
     pharmacists, including  the owners of more  than 22,000                                                                    
     independent  community  pharmacies  across  the  United                                                                    
     States  and in  Alaska.  NCPA has  long championed  the                                                                    
     need  for   greater  oversight  of   pharmacy  benefits                                                                    
     managers   (PBMs)  and   many  of   their  questionable                                                                    
     business practices due to the  problems our members and                                                                    
     their patients encounter.                                                                                                  
                                                                                                                                
     While there is a wealth  of information I could provide                                                                    
     in  support of  the provisions  included in  House Bill                                                                    
     240,  my  testimony  today will  focus  on  information                                                                    
     related to the fiscal impact of the bill on the state.                                                                     
                                                                                                                                
     The  PBM industry  continues  to  claim that  requiring                                                                    
     greater  transparency  and  reporting of  generic  drug                                                                    
     prices will result in increased  costs to the state and                                                                    
     the  overall  healthcare   system.  NCPA  asserts  that                                                                    
     reporting  of  such   information  would  not  increase                                                                    
     costs,  and we  offer  the  following information  from                                                                    
     independent and reputable sources as support:                                                                              
     The U.S. Center for  Medicare and Medicaid Services, or                                                                    
     CMS, has said the  following about generic drug pricing                                                                    
     transparency:                                                                                                              
     ? "Updating maximum allowable cost  prices for drugs at                                                                    
     least  every 7  days generally  should have  a downward                                                                    
     pressure on overall drug costs."                                                                                           
     ? "We [CMS]  do not agree with the  commenters that the                                                                    
     requirement will necessarily increase costs"                                                                               
     Consumers Union has said the following:                                                                                    
     ? "Audits  and industry  analysts have found  some PBMs                                                                    
     pocketing 50  percent or more  of the  price difference                                                                    
     between  what  the PBM  actually  pays  a pharmacy  for                                                                    
     prescriptions and what they charge  their clients   the                                                                    
     employer and consumer."                                                                                                    
     ?  "?today's complex  and opaque  contract arrangements                                                                    
     and  pricing spreads  increase costs  to employers  and                                                                    
     health  plan  enrollees  and   can  lead  to  formulary                                                                    
     designs  that   inappropriately  incentivize  consumers                                                                    
     toward or away from certain medication choices."                                                                           
                                                                                                                                
     The  U.S.  Department  of Health  and  Human  Services,                                                                    
     Centers  for Disease  Control and  Prevention, National                                                                    
   Center of Health Statistics, has said the following:                                                                         
     ?  "Approximately 10  percent  of  our nation's  health                                                                    
     spending  is  for  outpatient  prescription  drugs  and                                                                    
     clear,    transparent   information    about   clinical                                                                    
     effectiveness  and pricing  are  paramount in  ensuring                                                                    
     that  we spend  this  money wisely.  But  ? the  opaque                                                                    
     business  practices that  are  commonplace  in the  PBM                                                                    
     industry  can  result  in unfair  arrangements  between                                                                    
     employers and  PBMs. Lacking a  ready ability  to audit                                                                    
     these  business practices,  the arrangements  can drive                                                                    
     up costs for  both employers and consumers  and has the                                                                    
     potential  to put  the  wrong  prescription drugs  into                                                                    
     consumers' hands."                                                                                                         
     None of  these comments are pharmacy  funded or biased,                                                                    
     yet  all  conclude  that  increasing  transparency  for                                                                    
     generic drug  pricing or  contracting would  NOT result                                                                    
     in a cost  increase, but instead that  the current non-                                                                    
     transparent system is resulting  in millions of dollars                                                                    
     blindly going to PBMs.                                                                                                     
     Also,  to our  knowledge, none  of the  34 states  that                                                                    
     have already enacted  similar legislation have reported                                                                    
     a negative  fiscal impact  or repealed  the law  due to                                                                    
     costs. In  fact, several of  those states  have decided                                                                    
     to  STRENGTHEN  provisions  in the  laws  they  already                                                                    
     have.                                                                                                                      
     In  conclusion, we  believe House  Bill  240 would  not                                                                    
     drive  up costs  for  the state.  We  believe it  would                                                                    
     simply allow  for a  reasonable degree  of transparency                                                                    
     and reporting  so that  Alaska's small  business owners                                                                    
     and health care providers  have access to pricing lists                                                                    
     that accurately reflect current marketplace figures.                                                                       
                                                                                                                                
     Thank you.                                                                                                                 
                                                                                                                                
Representative  Pruitt   restated  his   question  regarding                                                                    
whether there  were provisions in  the legislation  that the                                                                    
association  and  the  PBMs  could  agree  on.  Ms.  Shipman                                                                    
related  that  the  drastic price  reductions  that  Alaskan                                                                    
pharmacist had previously alluded  to happened in most other                                                                    
states. When  the association attempted to  contact the PBMs                                                                    
in response to the price incident  or any other they did not                                                                    
receive a  response. She reported  that the  association had                                                                    
worked  with the  Centers for  Medicare &  Medicaid Services                                                                    
(CMS); who  required a MAC  pricing update every  seven days                                                                    
for Medicare. She  commented that it was  often difficult to                                                                    
reach  PBMs on  a  national  level but  stated  that it  was                                                                    
sometimes possible on a state to state level.                                                                                   
                                                                                                                                
3:42:11 PM                                                                                                                    
                                                                                                                                
Representative Pruitt  deemed that  the bill was  before the                                                                    
committee  because of  unreconcilable differences.  He asked                                                                    
whether PBMs  would come  to an  agreement or  compromise on                                                                    
issues  addressed in  the bill  now that  the problems  were                                                                    
being  discussed  in  the  legislative  arena.  Ms.  Shipman                                                                    
answered  that  she  could not  speak  to  conversations  or                                                                    
negotiations  between   Alaska  pharmacies  and   PDMs.  She                                                                    
believed the question would be  better directed to ACPA. She                                                                    
had not  been part  of the conversation  in Alaska.  She was                                                                    
aware that  her experience in  other states was that  once a                                                                    
bill  was   introduced  PBMs  were  more   willing  to  find                                                                    
negotiated compromises.                                                                                                         
                                                                                                                                
Representative  Wilson  asked  whether the  association  was                                                                    
more concerned  that PDMs were  making too much money  or if                                                                    
the  issue was  transparency. Ms.  Shipman replied  that the                                                                    
issue  related to  fairness.  She  offered that  pharmacists                                                                    
engaged in  good business practices  by purchasing  drugs at                                                                    
the  lowest  possible  cost.  The  inadequate  reimbursement                                                                    
practices  led  to  an   unsustainable  business  model  for                                                                    
pharmacists.  She   concluded  that  the  issue   was  about                                                                    
transparency, fairness,  and creating a level  playing field                                                                    
for  pharmacists. Representative  Wilson  surmised that  Ms.                                                                    
Shipman accepted the PBMs making  huge profits providing the                                                                    
pharmacist  knew   the  reimbursement  costs   and  recouped                                                                    
profit.  She asked  if a  pricing list  was published  and a                                                                    
fair  audit and  appeals  process was  established, the  two                                                                    
requirements  would be  "game changers."  Ms. Shipmen  could                                                                    
not  speak to  the  level  of profits  that  PBMs made.  She                                                                    
communicated that  she wanted to ensure  that the provisions                                                                    
in  the  bill  resulted  in the  pharmacies  receiving  fair                                                                    
treatment.                                                                                                                      
                                                                                                                                
3:46:45 PM                                                                                                                    
                                                                                                                                
RICHARD  PONESSE,   SENIOR  DIRECTOR,  FINANCE   GROUP,  CVS                                                                    
CAREMARK,  PHOENIX (via  teleconference),  related that  had                                                                    
been in  the business  for over 25  years. He  asserted that                                                                    
PBMs  were an  "important  part of  the healthcare  delivery                                                                    
system," lowered  net plan  costs, assisted  private, state,                                                                    
and federal  employer's affordable healthcare,  and provided                                                                    
coverage for  as many people  as possible. He  believed that                                                                    
PBMs  delivered "the  lowest net  plan costs  with the  best                                                                    
health outcomes."  He argued that PBM's  played an important                                                                    
aspect  in the  delivery of  drugs through  drug utilization                                                                    
review   programs.  He   contended   that  the   independent                                                                    
pharmacies   were  critical   to  PBMs   by  adding   enough                                                                    
pharmacies to the  network to provide services  to the plans                                                                    
members. He  indicated that  he oversaw  the entire  CVS MAC                                                                    
team  and was  not afraid  of fair  MAC laws  that addressed                                                                    
some of  the issues.  He purported that  some PBMs  "did not                                                                    
always play by the rules."  He was concerned when there were                                                                    
certain provisions  in MAC bills that  would increase costs.                                                                    
He  was not  in  favor  of third  party  involvement in  the                                                                    
appeals process  or granting  an award  if a  pharmacist can                                                                    
prove the  reimbursement price was lower  than an obtainable                                                                    
purchase  price. He  had heard  from pharmacists  that there                                                                    
was only  one major wholesaler  in Alaska, He  believed that                                                                    
such a law  would drive up wholesale drug  prices across the                                                                    
board. He shared that  major wholesalers frequently operated                                                                    
using   several  different   wholesaler   price  lists.   He                                                                    
maintained that  it was  "impossible" for  PBMs to  know all                                                                    
the  wholesale prices.  He used  his industry  knowledge and                                                                    
information provided by  wholesalers to set MAC  prices at a                                                                    
reasonable  reimbursement rate  to  provide  the lowest  net                                                                    
plan cost  and a  profit for  pharmacies. He  explained that                                                                    
MAC  Lists  existed because  when  a  drug's patent  expired                                                                    
multiple  manufacturers  entered   the  market  and  charged                                                                    
different  prices  for  the  same   drug.  The  MAC  pricing                                                                    
structure  was   created  to   establish  the   best  buying                                                                    
practices  across the  industry. He  averred that  he should                                                                    
not be  forced to raise reimbursement  rates, impacting plan                                                                    
costs because one pharmacist was  not able to purchase drugs                                                                    
"as aggressively" as possible. He  agreed that PBMs were not                                                                    
without fault.  He did not  disagree with every MAC  law. He                                                                    
reiterated that  he supported fair  MAC laws and  was always                                                                    
in compliance  with the laws. He  opposed certain provisions                                                                    
that  increased reimbursement  rates  based on  pharmacists'                                                                    
drug  invoices.  He   maintained  that  pharmacist  received                                                                    
rebates  from wholesalers.  He  relayed that  manufacturers'                                                                    
pricing varied  with pharmacies pricing  method preferences.                                                                    
He  announced that  there was  not a  monolithic price  list                                                                    
that  showed  what  everyone  paid for  a  drug  within  the                                                                    
industry. He was  aware the industry was complex  and no one                                                                    
law  could   address  the  issue.  He   contended  that  the                                                                    
provision would increase costs.                                                                                                 
                                                                                                                                
3:54:22 PM                                                                                                                    
                                                                                                                                
Representative Wilson  was glad Mr. Ponesse  was prepared to                                                                    
work with pharmacists. She inferred  from his testimony that                                                                    
he  would  willingly  provide  a   drug  list.  Mr.  Ponesse                                                                    
responded  that  he already  provided  the  MAC list  via  a                                                                    
portal  that  any  pharmacist  could  access  and  find  the                                                                    
reimbursement rates. Representative  Wilson assumed that the                                                                    
list  was kept  current daily.  Mr. Ponesse  replied in  the                                                                    
affirmative and stated that he  changed his MAC list weekly.                                                                    
He   also   had   a  portal   for   the   appeals   process.                                                                    
Representative  Wilson asked  whether the  "audit procedures                                                                    
and penalty  matrix" was  the same  for every  pharmacy. Mr.                                                                    
Ponesse was  not an  expert on audits  and could  not answer                                                                    
the question.  Representative Wilson asked for  follow up on                                                                    
the  question. She  requested information  on the  number of                                                                    
appeals  received and  how many  were  granted. Mr.  Ponesse                                                                    
agreed to provide the answers.                                                                                                  
                                                                                                                                
3:56:18 PM                                                                                                                    
                                                                                                                                
Representative Ortiz referred to  Mr. Ponesse's testimony in                                                                    
support of  independent pharmacies. He cited  testimony that                                                                    
reported the significant  decrease in independent pharmacies                                                                    
and  noted that  the  pharmacists supported  the  bill as  a                                                                    
partial  anecdote  to  the  decline.  He  asked  whether  he                                                                    
disagreed  that   the  bill  could  mitigate   some  of  the                                                                    
pharmacist's problems or  was he aware of  other reasons for                                                                    
the decline  in independent pharmacies. Mr.  Ponesse was not                                                                    
familiar with the  data and did not know  if the information                                                                    
regarding the  decrease in pharmacies  was accurate.  He had                                                                    
current  data   that  showed  an  increase   in  independent                                                                    
pharmacies in  his network over  the last 7 years  and other                                                                    
data to  suggest that the  number of  independent pharmacies                                                                    
had grown  in other  states. Representative Ortiz  asked Mr.                                                                    
Ponesse to point  out the specific points  he disagreed with                                                                    
in HB 240. Mr. Ponesse  responded that he disagreed with the                                                                    
provisions relating  to the appeals  process and  setting up                                                                    
an independent board that overruled  the appeal denial based                                                                    
on  a pharmacist's  invoice  that  showed insufficient  cost                                                                    
recovery.  He believed  that the  provisions increased  plan                                                                    
costs and incentivized wholesalers to increase their costs.                                                                     
                                                                                                                                
3:58:52 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt  wanted   to  better  understand  Mr.                                                                    
Ponesse's  testimony. He  reiterated his  question regarding                                                                    
both  sides  finding agreement  on  some  provisions in  the                                                                    
bill.  He surmised  that Mr.  Ponesse  thought that  certain                                                                    
aspects of  the bill went  "too far." Mr.  Ponesse responded                                                                    
in the  affirmative. He supported legislation  that required                                                                    
PBMs  to   operate  on  a   level  playing   field,  allowed                                                                    
pharmacists to  see pricing before a  claim was adjudicated,                                                                    
and  to respond  to an  appeal  within a  certain number  of                                                                    
days.  He  opposed  provisions that  he  was  certain  would                                                                    
increase costs.  Representative Pruitt asked whether  he had                                                                    
spoken  with a  representative for  the independent  Alaskan                                                                    
pharmacists and discussed the  issues. Mr. Ponesse responded                                                                    
in  the negative.  Representative Pruitt  thought there  was                                                                    
still  an  opportunity  for  the   parties  to  come  to  an                                                                    
agreement.   He  was   concerned   about  the   pharmacists'                                                                    
testimony regarding  a lack of appeals  process. He wondered                                                                    
if  he or  someone  else  from CVS  could  help address  and                                                                    
remedy the appeals issue. Mr.  Ponesse agreed to ask the CVS                                                                    
retail  network   staff  and  auditors  to   talk  with  the                                                                    
independent  pharmacists to  access  the issues  and try  to                                                                    
address the  audit provisions  in a  manner that  worked for                                                                    
both parties.                                                                                                                   
                                                                                                                                
4:02:32 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  had heard  pharmacist  testimony                                                                    
relating that  PBMs did not  offer phone  representatives to                                                                    
help  address the  pharmacists'  concerns. He  asked if  Mr.                                                                    
Ponesse was aware of the  issue. Mr. Ponesse answered in the                                                                    
affirmative and added that CVS  could not address the issues                                                                    
in  such   a  manner  nor   handle  the  volume   of  calls.                                                                    
Representative Guttenberg asked  whether Mr. Ponesse thought                                                                    
that  offering  phone  assistance   might  have  solved  the                                                                    
problems. Mr. Ponesse responded in the negative.                                                                                
                                                                                                                                
Representative Ortiz  referred to slide 12  that highlighted                                                                    
states  that adopted  fair  pharmacy  audit legislation  and                                                                    
reported  that  most  of the  states  were  represented.  He                                                                    
suggested  that  HB 240  was  similar  to legislation  other                                                                    
states  had  adopted.  He wondered  whether  PBMs  had  been                                                                    
negatively  impacted by  the  legislation  adopted in  other                                                                    
states. Mr. Ponesse was unable to answer the question.                                                                          
                                                                                                                                
4:05:34 PM                                                                                                                    
                                                                                                                                
JUSTIN   RUFFRIDGE,    PHARMACIST,   SOLDOTNA   PROFESSIONAL                                                                    
PHARMACY,  SOLDOTNA  (via   teleconference),  supported  the                                                                    
legislation. He stated that he  owned a pharmacy in Soldotna                                                                    
and the  Juneau Drug Company.  He wanted to respond  to some                                                                    
of  the testimony  that he  had heard  from Mr.  Ponesse. He                                                                    
compared  the   process  of  pharmacists  calling   PBMs  to                                                                    
patients trying  to find problem resolution  via phone calls                                                                    
to  their  health  insurance  company  but  occurring  daily                                                                    
multiple times  each day. He declared  that pharmacists were                                                                    
not  offered access  to  the PBMs.  He  emphasized that  the                                                                    
issues were "not a disagreement  between equal parties." The                                                                    
small  pharmacists   were  "in  a   take  it  or   leave  it                                                                    
agreements"  with  the PBMs.  He  stressed  that the  issues                                                                    
would  not   exist  today  nor   would  the   necessity  for                                                                    
legislation  if  the  parties were  equal  and  issues  were                                                                    
addressed by the  PBMs. He voiced that "in so  many ways the                                                                    
pharmacists  have  become  the subservient  parties  in  the                                                                    
negotiations."  He  referred   to  Mr.  Ponesse's  statement                                                                    
regarding  PBMs  reviewing  clinical outcomes  and  he  "had                                                                    
never  seen  that  happen."  He  declared  that  pharmacists                                                                    
addressed clinical  outcomes every day. He  reported that he                                                                    
helped people  daily with  a variety  of health  issues from                                                                    
hospice care to asthma. He  only wanted fair and transparent                                                                    
cooperation  with  PBMs.  He   stated  that  costs  did  not                                                                    
increase in  other states  that enacted  similar legislation                                                                    
and wondered  why legislation was necessary  to access price                                                                    
information.  He  believed  that competition  created  lower                                                                    
prices  and  not  artificially   created  MAC  pricing  that                                                                    
completely  controlled  the  system.  He did  not  feel  the                                                                    
situation was  the proper  way to  provide medicine  for the                                                                    
country. He  turned to his prepared  testimony. He currently                                                                    
had worked in  the state for 10 years  after graduating from                                                                    
college  and returning  home. He  believed that  independent                                                                    
pharmacists were unique  and "wanted to be  an integral part                                                                    
of  their   communities."  He  listed   all  the   ways  the                                                                    
pharmacists  serve  their  communities  in  their  jobs  and                                                                    
through  volunteer efforts.  He  voiced  that "pharmacy  had                                                                    
always  been  about  community."  However,  the  independent                                                                    
pharmacists "new  normal" was spending  more time  on audits                                                                    
and  "worrying  whether they  could  stay  in business."  He                                                                    
relayed  that  the  PBMs   "incessantly"  send  notices  and                                                                    
requests to pharmacies and in  the current week, he had sent                                                                    
60  pages of  audits  to three  PBMs.  He acknowledged  that                                                                    
audits  played an  important role  in discovering  fraud and                                                                    
that  there   were  bad  actors.  He   emphasized  that  the                                                                    
pharmacists  that testified  were  not  the ones  committing                                                                    
fraud   and  abuse.   The   pharmacists   were  asking   for                                                                    
transparency  and  fairness  in  the  process.  Audits  were                                                                    
necessary  and  a structure  for  how,  why, and  when  they                                                                    
occurred was  also imperative. He  reported that  PBMs often                                                                    
used  audits to  question "high  dollar claims."  He relayed                                                                    
from  his experience  receiving an  audit request  that went                                                                    
back 3 years. The PBM  flagged 20 prescriptions out of 1,000                                                                    
and  all were  claims for  medications costing  greater than                                                                    
$1,500. He thought the incident  exemplified that the audits                                                                    
were not  "fair or  random." He shared  that the  CVS portal                                                                    
for MAC pricing  required a lot of  information input before                                                                    
the price was  revealed. He emphasized that  despite the MAC                                                                    
price he  dispensed the medicine  because he wanted  to help                                                                    
people.   He   commented   that  the   legislation   allowed                                                                    
pharmacies   to  appeal   prices  that   were  below   their                                                                    
acquisition  prices  and created  a  method  to balance  the                                                                    
scale. No  one knew  how the MAC  prices were  generated and                                                                    
they  were not  "based  on reality."  He  believed the  PBMs                                                                    
applied "pressure"  on the independent pharmacists  and used                                                                    
MAC pricing as a tool.  Most PBMs currently offer nationwide                                                                    
prescription  distribution in  the form  of large  centrally                                                                    
located mail order pharmacies. However,  the service was not                                                                    
comparable to the service  community pharmacies provided. He                                                                    
stressed  that  losing  local pharmacies  was  bad  for  the                                                                    
state's  economy and  the communities  they serve.  He urged                                                                    
members to  put the  legislation in  place to  protect local                                                                    
pharmacies,  encourage fair  and just  audit practices,  and                                                                    
enforce transparency in the pricing of medication.                                                                              
                                                                                                                                
4:14:04 PM                                                                                                                    
                                                                                                                                
Representative Wilson deduced that  the larger issue was the                                                                    
pharmacy not being  reimbursed for at least the  cost of the                                                                    
medication  due  to lack  of  access  to lower  prices.  Dr.                                                                    
Ruffridge responded  in the affirmative. He  offered that it                                                                    
would  be  "absurd" for  pharmacists  to  purchase drugs  at                                                                    
their highest  price; they always sought  the lowest prices.                                                                    
He  commented  that  when  he  used the  portal  to  find  a                                                                    
reimbursement cost and it was  lower than his purchase price                                                                    
he still  dispensed the medication  and "he did it  all day,                                                                    
every day." He  reported that 19 percent  of the medications                                                                    
he dispensed  did not return  his costs. He  reiterated that                                                                    
his  appeals   were  left  completely  unanswered.   He  was                                                                    
discouraged by  the situation. In response  to Mr. Ponesse's                                                                    
testimony he  pointed out that  the bill was not  about just                                                                    
producing one  invoice and demanding more  reimbursement. He                                                                    
interpreted the  provision as gaining  information regarding                                                                    
where  he could  purchase  the  drugs at  a  lower cost.  He                                                                    
emphasized that pharmacists  did not want to  raise the cost                                                                    
of  health care.  He reiterated  that it  was impossible  to                                                                    
determine where the MAC pricing came from.                                                                                      
                                                                                                                                
4:16:38 PM                                                                                                                    
                                                                                                                                
Representative Wilson was trying  to understand if PBMs were                                                                    
able  to  get  prescriptions  to  Alaskans  at  lower  costs                                                                    
through mail  order. Dr. Ruffridge  answered that it  was an                                                                    
excellent  question.  He  characterized drug  pricing  as  a                                                                    
"mess." In some cases, PBMs  that operated a large centrally                                                                    
located  mail order  pharmacy  would  "in appearance"  offer                                                                    
medications at  a lower cost  to incentivize the use  of the                                                                    
mail  order pharmacy;  PBMs charged  a higher  copay if  the                                                                    
patient used  a retail  pharmacy. However,  the cost  of the                                                                    
medication did  not change because they  were purchased from                                                                    
wholesalers  of   PBMs  that   had  shareholder   stakes  in                                                                    
wholesaler companies with a  few exceptions. The acquisition                                                                    
of drugs came  from wholesalers who might offer  a large PBM                                                                    
a  slightly lower  rate  but  would not  offer  the rate  to                                                                    
smaller pharmacies.  The PBM's  profit margin came  from the                                                                    
discount  rates.  He referenced  articles  in  the New  York                                                                    
Times, Washington  Post, and  other outlets  that delineated                                                                    
how PBMs profited.                                                                                                              
                                                                                                                                
4:19:42 PM                                                                                                                    
                                                                                                                                
DIRK  WHITE, PHARMACIST,  SITKA (via  teleconference), spoke                                                                    
in support of the bill. He  shared that he and his wife were                                                                    
both  pharmacists in  Sitka and  employed 30  people between                                                                    
two pharmacies. He previously served  two terms on the Board                                                                    
of Pharmacy,  one as  Chairman. Their  son was  currently in                                                                    
pharmacy  school. He  relayed that  many  states had  passed                                                                    
similar  legislation  and  subsequently "tightened  up"  the                                                                    
statue.  He surmised  that if  there had  been increases  in                                                                    
health  and  prescription  costs the  legislation  would  be                                                                    
modified  instead   of  tightened.  He  mentioned   the  MAC                                                                    
reimbursement  rate. Alaska  was unique  because pharmacists                                                                    
paid   air  freight   for  their   drug  deliveries   versus                                                                    
pharmacies in  the contiguous states that  received same day                                                                    
ground deliver.  The Alaskan  pharmacists were carrying more                                                                    
inventory and  paying more freight  costs not  factored into                                                                    
their reimbursement  costs. He  spoke to member's  calls for                                                                    
negotiations.  He  relayed that  in  a  prior year  numerous                                                                    
lengthy teleconference  discussions took place  between PBMs                                                                    
and pharmacists  related to an  audit bill.  The pharmacists                                                                    
thought agreement  had been reached but  ultimately, none of                                                                    
the PBMs  had changed  their position on  the bill  and they                                                                    
were   all   against   it.  The   conversations   had   been                                                                    
unproductive.                                                                                                                   
                                                                                                                                
Mr.  White continued  that the  pharmacies were  required to                                                                    
reimburse proscriptions that were not  picked up. He put the                                                                    
inventory back on the shelf  and the payment was reimbursed.                                                                    
He shared that  three weeks earlier he  received a statement                                                                    
from the  PBM where they had  taken back the copay  from the                                                                    
returned  inventory,  which  the  patient  never  paid.  The                                                                    
pharmacy  technician spent  6 hours  on  the phoned  dealing                                                                    
with   the  PBM   over  the   issue.   He  emphasized   that                                                                    
registration,  standardized  rules, transparency,  and  fair                                                                    
reimbursement  practices were  necessary to  create a  level                                                                    
playing  field, so  he can  remain in  business and  pay his                                                                    
employees. He shared that he  paid $12 thousand per month to                                                                    
provide health care benefits for  his employees. He spoke in                                                                    
support for  the Division of  Insurance to be an  arbiter so                                                                    
the pharmacist  "had someone  to turn to  that could  be our                                                                    
ombudsman"  when dealing  with  the "nebulous"  corporations                                                                    
that "turn a deaf ear" to the pharmacists needs.                                                                                
                                                                                                                                
4:25:53 PM                                                                                                                    
                                                                                                                                
JERRY  BROWN,  SELF,  FAIRBANKS  (via  teleconference),  was                                                                    
speaking on behalf of his  wife, Nancy Brown. He shared that                                                                    
they owned the Medical Center  Pharmacy in Fairbanks and had                                                                    
been in  the industry for 40  years. He relayed that  in the                                                                    
1970's   only  about   30   percent   of  insurers   covered                                                                    
prescription  drugs and  currently 95  percent of  insurance                                                                    
provided   coverage.  He   voiced  that   drug  costs   were                                                                    
approximately 10  percent of the  total health  care dollars                                                                    
spent and last  year total drug costs  totaled $260 million.                                                                    
He  reported that  the plan  sponsor only  received a  small                                                                    
percent  of  the rebate  and  the  PBMs kept  the  remainder                                                                    
possibly up  to 35 percent  or more  of the total  cost. The                                                                    
bill  aimed at  bringing transparency  to the  situation. He                                                                    
shared that his pharmacy lost  over $33 thousand in negative                                                                    
reimbursements or  25.5 percent of all  claims he submitted.                                                                    
He reported that the chain  pharmacies were experiencing the                                                                    
same  issues  but sold  large  volumes  of other  items.  He                                                                    
stated  that the  issue was  vital  to the  survival of  his                                                                    
small  pharmacy.  He  received  between  $0.25  and  $1.  in                                                                    
dispensing  fees. His  business was  barely keeping  up with                                                                    
the costs of  medication. He commented that if he  went to a                                                                    
bank with financials showing that  25 percent of the time he                                                                    
made  no profit  or had  negative reimbursements  the banker                                                                    
would asked,  "Why be  in business?" The  PBMs were  some of                                                                    
the top  corporations in the  nation. They were  not hurting                                                                    
for profit. He  quoted that PBMs paid their  CEOs $9 million                                                                    
to $66  million in  bonuses in 2017.  He suggested  that the                                                                    
profit came from  rebates that operated in a  Blackbox and a                                                                    
"pay  to   play"  scenario  for   the  drug   companies  for                                                                    
preferential treatment.  He found the  system "fundamentally                                                                    
wrong" and  that drugs  should be chosen  because it  was in                                                                    
the best interest  of the patient not the PBM.  He cited Mr.                                                                    
Ponesse's   testimony  regarding   lowering  costs   to  the                                                                    
sponsor. He argued that PBMs  had a conflict: they owned the                                                                    
mail order  pharmacies. He  informed committee  members that                                                                    
many  state employee  plans included  a provision  that only                                                                    
allowed  two Alaskan  pharmacy visits,  after that  the plan                                                                    
would not reimburse or cover  the medication from an Alaskan                                                                    
pharmacy. The  beneficiary must use the  mail order pharmacy                                                                    
to obtain coverage.  He noted several states  where the mail                                                                    
order companies  were located who profited  from the Alaskan                                                                    
plans.  He characterized  the PBMs  mail order  business and                                                                    
contract  provision  as  "double dipping"  and  unfair.  The                                                                    
issue was not address in the current bill.                                                                                      
                                                                                                                                
Mr.  Brown continued  by  relating  contract issues  between                                                                    
pharmacies  an PBMs.  He  communicated  that previously  the                                                                    
contracts   were  long   detailed  documents.   He  recently                                                                    
received   a  contract   that  was   "boiled  down   to  one                                                                    
paragraph." He paraphrased that  the pharmacist was asked to                                                                    
disregard previous  contracts and included  language stating                                                                    
that   the   insurer   established  the   rules,   set   the                                                                    
reimbursement  prices, and  the prices  could change  at any                                                                    
time without  notification. He agreed that  the contract was                                                                    
a take  it or  leave it  contract. He  wondered how  the MAC                                                                    
prices were established and speculated  they were using data                                                                    
from the lowest priced drugs  in the country; VA pharmacies,                                                                    
the federal Department of  Defense, chain pharmacies, Indian                                                                    
Health, etc. The  MAC prices he received  were anywhere from                                                                    
ten  cents to  fifty cents  on  the dollar  of his  purchase                                                                    
price. He delineated  that if his cost was $100  the MAC was                                                                    
$50. He  countered that he  never saw  a MAC price  list and                                                                    
was never told how they  developed the prices. He emphasized                                                                    
that the PBMs  were not held accountable  for an explanation                                                                    
on  how  they derived  the  MAC  pricing. His  appeals  were                                                                    
answered by a  terse statement that he  read: "Price remains                                                                    
on CVS health review of  current market price range." He had                                                                    
submitted over 240  appeals in the last four  months, and he                                                                    
had not  received one change  resulting from  those appeals;                                                                    
the  adjustment still  resulted  in a  negative balance.  He                                                                    
noted  the  difficulty in  recouping  the  lost revenue  and                                                                    
expressed much dissatisfaction with  MAC pricing and lack of                                                                    
transparency. He  referred to the updated  MAC list released                                                                    
on January 10,  2018 that was actually  released in February                                                                    
with only two  adjusted prices and more  recent MAC pricing,                                                                    
which only reverted  to the June 2017 level,  before the MAC                                                                    
pricing  took a  dramatic drop  for four  months. He  wanted                                                                    
transparency  in the  process.  He  maintained that  Alaskan                                                                    
retail  pharmacies  were  subsidizing   the  PBMs  who  were                                                                    
extremely profitable.  He reported  that his pharmacy  had a                                                                    
loss for every 1 in 4 prescriptions.                                                                                            
                                                                                                                                
Co-Chair  Foster   invited  testifiers  to   submit  written                                                                    
testimony.                                                                                                                      
                                                                                                                                
4:42:30 PM                                                                                                                    
                                                                                                                                
BILL  HEAD,  PHARMACEUTICAL   CARE  MANAGEMENT  ASSOCIATION,                                                                    
WASHINGTON DC (via teleconference),  wanted to clarify "what                                                                    
PBMs do."  He maintained that  PBMs do not  purchase, store,                                                                    
or  distribute drugs  nor set  drug prices.  He voiced  that                                                                    
PBMs serviced health plans  that included employers, unions,                                                                    
government  plans, and  Medicare Part  B. He  explained that                                                                    
the  health   plan  determined  the  benefit   package.  The                                                                    
contract   between  the   health  plan   and  the   PBM  was                                                                    
"completely transparent"  to the  plan. The PBM  was audited                                                                    
by  the plan  to determine  whether  it was  abiding by  the                                                                    
terms  of the  contract. The  terms of  the contract  always                                                                    
required  PBMS  to conduct  audits.  He  indicated that  the                                                                    
current  state  RPF  (request for  proposal)  called  for  a                                                                    
"robust  fraud  and abuse  program."  The  rebates from  the                                                                    
manufacturer and  savings from  fraud detection went  to the                                                                    
employer resulting in lower premiums  and copays. He pointed                                                                    
out  that   the  cost  of   prescription  drugs   had  risen                                                                    
dramatically since 2007;  a 6 percent to  8 percent increase                                                                    
per year.  The PBMs had  limited the increase for  the plans                                                                    
by  2  percent  to  4  percent.  He  expressed  interest  in                                                                    
participating in negotiations  between the stakeholders. The                                                                    
association  had  negotiated  MAC  and  audit  bills  in  40                                                                    
states. The  Alaska bill was  unique. He argued that  it was                                                                    
disingenuous to  say that  the bill  had guidelines  and not                                                                    
regulations.  There  had  not been  an  audit  program  that                                                                    
placed the  arbiter position in  the Division  of Insurance.                                                                    
He  believed that  legitimate  concerns  were expressed.  He                                                                    
countered  that transparency  lead  to  collusion and  anti-                                                                    
competitive  behavior. He  relayed  that  the Federal  Trade                                                                    
Commission   (FTC)   concluded  that   transparency   risked                                                                    
increasing costs for health plans.                                                                                              
                                                                                                                                
4:48:50 PM                                                                                                                    
                                                                                                                                
Representative   Wilson  asked   if   the  incentives   were                                                                    
reimbursed to  the insurance  companies. Mr.  Head responded                                                                    
that what was done with the  money was decided by the health                                                                    
plan that audited the PBM; the  money could not be hidden or                                                                    
misdirected. Representative Wilson asked  why they would not                                                                    
want  100  percent  refunded.  Mr.  Head  replied  that  the                                                                    
reasons  varied  by  plan and  often  benefitted  the  plans                                                                    
health premium.  Representative Wilson  asked if  he thought                                                                    
the  Alaskan pharmacists  "had concerns  over nothing."  Mr.                                                                    
Head  apologized   if  he  implied  that.   He  stated  that                                                                    
regarding  MAC pricing  "you can't  just pay  every pharmacy                                                                    
what they would  like to get reimbursed? PBMs  were just the                                                                    
servicer  for the  client?" and  indicated that  plans costs                                                                    
would increase.  He reiterated that  CVS issued a  MAC price                                                                    
list  every 7  days. He  restated that  PBMs needed  Alaskan                                                                    
pharmacies in the network.  Representative Wilson thought it                                                                    
was   "pretty   disrespectful"   to   state   that   Alaskan                                                                    
pharmacists "would  take as much  as they wanted"  when they                                                                    
were merely  asking for fair reimbursement.  She favored his                                                                    
willingness  to negotiate.  She  requested  that he  forward                                                                    
information detailing what provisions  he favored or opposed                                                                    
in the bill.                                                                                                                    
                                                                                                                                
4:52:50 PM                                                                                                                    
                                                                                                                                
TOM  WADSWORTH,  SELF,  EAGLE  RIVER  (via  teleconference),                                                                    
spoke in  favor of the  legislation. He relayed that  he was                                                                    
the assistant  dean for the  University of  Alaska Anchorage                                                                    
(UAA) Doctor of Pharmacy program  and emphasized that he was                                                                    
speaking on  his own  behalf. He  thought similar  bills had                                                                    
come before  the legislature  at least 4  times prior  to HB                                                                    
240.  He  agreed with  all  the  concerns expressed  by  the                                                                    
previous pharmacist's  testimony. He  knew all  the previous                                                                    
testifiers  and shared  that they  were  stellar members  of                                                                    
their communities  and "ran competent and  caring" community                                                                    
pharmacies. He reported that UAA's  pharmacy program was new                                                                    
and  in 2020  the first  graduating class  of 5  pharmacists                                                                    
would be  the first  Alaskan pharmacist raised  and educated                                                                    
in the  state. He  wanted to  graduate competent  and caring                                                                    
Alaskan pharmacist  that would  serve rural  and underserved                                                                    
communities  in  the state.  He  stressed  that due  to  the                                                                    
current reimbursement  policies independent  pharmacies were                                                                    
breathing  their  "last gasps"  and  would  be extinct  very                                                                    
soon. He referred to Mr.  Ponesse's testimony and speculated                                                                    
that  CVS was  hoping the  legislature would  "kick the  can                                                                    
down  the  road" for  another  year  and was  not  genuinely                                                                    
interested in  transparency. He believed that  PBMs do serve                                                                    
a purpose, but "it was not  hard to see? who was getting fat                                                                    
and  who  was  starving?"  He believed  the  bill  was  long                                                                    
overdue. He reiterated his support of the legislation.                                                                          
                                                                                                                                
4:57:34 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster indicated  he would  keep public  testimony                                                                    
open.  He relayed  that the  committee was  waiting for  the                                                                    
actuarial analysis  from DOA  and its  fiscal note  would be                                                                    
updated.                                                                                                                        
                                                                                                                                
4:58:37 PM                                                                                                                    
                                                                                                                                
HB 240 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Foster reviewed the agenda for the following day.                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB240 Sectional Analysis ver A 2.6.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Documents-Fair Pharmacy Audit Legislation Map 2.6.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Sponsor Statement 2.6.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Documents-PBM Business Model Flow Chart 2.6.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Documents-Storybook 2.6.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Documents-Time To Lift the Curtain On PBM Wheeling and Dealing 2.6.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Documents-Letters of Support 2.12.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Document Fair Audit Presentation 2.12.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Documents-Letters of Opposition 2.12.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Documents-NCPA Support Letter 2.14.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB240 Supporting Documents-NCPA Fiscal Impact Letter 2.14.18.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB 279 Brollini testimony.pdf HFIN 2/14/2018 1:30:00 PM
HB 279
HB 79 CS version R.pdf HFIN 2/14/2018 1:30:00 PM
HB 79
HB240 What are MAC prices.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB 240 PCMA Supporting Documents.pdf HFIN 2/14/2018 1:30:00 PM
HB 240
HB 240 AkPhA Comments on PCMA Ltr (3).pdf HFIN 2/14/2018 1:30:00 PM
HB 240