Legislature(2017 - 2018)BARNES 124

04/07/2017 03:15 PM LABOR & COMMERCE

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Audio Topic
03:17:11 PM Start
03:17:50 PM HB9
04:05:35 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 9 PHARMA BD & EMPLOYEES;DRUG DIST/MANUFAC TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 124 BENEFIT CORPORATIONS TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony --
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 7, 2017                                                                                          
                           3:17 p.m.                                                                                            
                                                                                                                                
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Sam Kito, Chair                                                                                                  
Representative Adam Wool, Vice Chair                                                                                            
Representative Andy Josephson                                                                                                   
Representative Louise Stutes                                                                                                    
Representative Chris Birch                                                                                                      
Representative Gary Knopp                                                                                                       
Representative Colleen Sullivan-Leonard                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
Representative Bryce Edgmon (alternate)                                                                                         
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 9                                                                                                                
"An  Act relating  to  the  Board of  Pharmacy;  relating to  the                                                               
licensing and  inspection of  certain facilities  located outside                                                               
the state; relating  to drug supply chain  security; and creating                                                               
a  position   of  executive  administrator   for  the   Board  of                                                               
Pharmacy."                                                                                                                      
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 124                                                                                                              
"An   Act    relating   to   corporations,    including   benefit                                                               
corporations, and other entities; and providing for an effective                                                                
date."                                                                                                                          
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 9                                                                                                                    
SHORT TITLE: PHARMA BD & EMPLOYEES; DRUG DIST/MANUFAC                                                                           
SPONSOR(s): REPRESENTATIVE(s) SADDLER                                                                                           
                                                                                                                                
01/18/17       (H)       PREFILE RELEASED 1/9/17                                                                                
01/18/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/17       (H)       L&C, FIN                                                                                               
04/07/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE DAN SADDLER                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  As the sponsor introduced HB 9.                                                                          
                                                                                                                                
LEIF HOLM, PharmD, Master of Public Health (MPH)                                                                                
Chair, Board of Pharmacy                                                                                                        
North Pole, Alaska                                                                                                              
POSITION STATEMENT:  Testified in support of HB 9.                                                                            
                                                                                                                                
DIRK WHITE, Pharmacist                                                                                                          
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HB 9.                                                                            
                                                                                                                                
BARRY CHRISTENSEN, Registered Pharmacist (RPh)                                                                                  
Co-Chair, Legislative Committee                                                                                                 
Alaska Pharmacists Association                                                                                                  
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 9.                                                                            
                                                                                                                                
DELLA CUTCHINS, Pharmacist                                                                                                      
President, Alaska Pharmacists Association                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 9.                                                                            
                                                                                                                                
SCOTT WATTS, Pharmacist                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 9.                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:17:11 PM                                                                                                                    
                                                                                                                                
CHAIR  SAM KITO  called  the House  Labor  and Commerce  Standing                                                             
Committee meeting  to order at  3:17 p.m.   Representatives Kito,                                                               
Sullivan-Leonard, Stutes, Knopp, Birch,  Josephson, and Wool were                                                               
present at the call to order.                                                                                                   
                                                                                                                                
         HB 9-PHARMA BD & EMPLOYEES; DRUG DIST/MANUFAC                                                                      
                                                                                                                                
3:17:50 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that the  first order of business  would be                                                               
HOUSE BILL  NO. 9,  "An Act  relating to  the Board  of Pharmacy;                                                               
relating to  the licensing and  inspection of  certain facilities                                                               
located  outside  the  state;  relating   to  drug  supply  chain                                                               
security; and creating a position  of executive administrator for                                                               
the Board of Pharmacy."                                                                                                         
                                                                                                                                
3:18:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL  moved that the committee  adopt the proposed                                                               
committee substitute  (CS) for HB 9,  Version 30-LS0131\J, Bruce,                                                               
4/6/17,  as the  working  document.   There  being no  objection,                                                               
Version J was before the committee.                                                                                             
                                                                                                                                
3:19:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DAN SADDLER,  Alaska State  Legislature, sponsor,                                                               
explained  that HB  9  is about  strengthening  the integrity  of                                                               
Alaska's  prescription drug  supply chain.    It would  do so  by                                                               
making Alaska comply  with the federal Drug  Quality and Security                                                               
Act (DQSA) of  2013.  Alaska is  one of the last  states to adopt                                                               
this and  comply, he pointed out,  and if Alaska doesn't  do this                                                               
itself the federal government will do  it for the state.  He said                                                               
the bill would  give Alaska's Board of Pharmacy  the authority to                                                               
license  and inspect  three kinds  of facilities:   out  of state                                                               
wholesale  drug distributors;  third  party logistics  providers,                                                               
which  are  people  who coordinate  shipping  or  warehousing  of                                                               
pharmaceuticals but they  don't actually own the  drugs or direct                                                               
the sale;  and outsourcing  facilities that  ship pharmaceuticals                                                               
to  Alaska,  which  are  places that  might  compound  or  create                                                               
sterile drugs in one place for delivery to another.                                                                             
                                                                                                                                
REPRESENTATIVE SADDLER stated that  to accomplish this compliance                                                               
goal, HB 9  would create a new category of  pharmacy license that                                                               
covers all three of the  aforementioned facilities.  It is called                                                               
an  out of  state wholesale  or  distributor license.   The  bill                                                               
would require that  any out of state  wholesale drug distributor,                                                               
third party  logistics provider,  or outsourcing  facility hoping                                                               
to work  in Alaska obtain  this out of  state license.   The bill                                                               
would authorize  the Board of  Pharmacy to inspect  each facility                                                               
or  to have  an inspection  done  by somebody  designated by  the                                                               
board, he continued.   The bill would require  such facilities to                                                               
appoint an agent  in Alaska before it advertises  its services or                                                               
ships drugs  to Alaska.   He noted  that to help  implement these                                                               
changes,  HB 9  would also  authorize  the Board  of Pharmacy  to                                                               
create a  new position  of executive  administrator.   The person                                                               
holding  this position  would help  manage the  workload to  meet                                                               
this   federal   act   and    other   increasing   Federal   Drug                                                               
Administration  (FDA) regulations,  he said.   The  administrator                                                               
would also help manage the  current licensing burden and serve as                                                               
a liaison  to the  legislature, the  executive branches  of other                                                               
states, and the pharmacy boards of other states.                                                                                
                                                                                                                                
REPRESENTATIVE  SADDLER  advised that  the  risks  of failing  to                                                               
comply with  this federal act  and provide these  protections for                                                               
Alaska's drug chain are tremendous and  fatal.  The case study of                                                               
the need for  doing this, he said, is the  2012 national outbreak                                                               
of fungal  meningitis that infected  751 people in 20  states, of                                                               
which 64  people died.   The investigators after the  fact traced                                                               
the cause to  a compounding facility in  Massachusetts, which was                                                               
producing medication  in unsanitary  conditions and  shipping the                                                               
medications across the country.                                                                                                 
                                                                                                                                
REPRESENTATIVE SADDLER summarized by saying  that HB 9 would give                                                               
the  State of  Alaska  and its  Board of  Pharmacy  the tools  to                                                               
ensure  that  Alaskans   get  safe,  controlled,  non-counterfeit                                                               
medications.   The bill would  close loopholes in  the regulatory                                                               
system  and would  apply the  same  regulations that  wholesalers                                                               
shipping drugs  within the state  must follow to  those importing                                                               
drugs from out of the state.                                                                                                    
                                                                                                                                
3:22:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH  inquired whether HB  9 would apply  just to                                                               
the drugs that are behind a  pharmacy counter or would also apply                                                               
to those drugs in front of the counter.                                                                                         
                                                                                                                                
REPRESENTATIVE  SADDLER replied  it would  apply to  prescription                                                               
medications,  not over  the counter  drugs  such as  pre-packaged                                                               
ibuprofen.                                                                                                                      
                                                                                                                                
3:23:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KNOPP   asked   whether   he   is   correct   in                                                               
understanding  that HB  9 would  provide for  the inspecting  and                                                               
licensing of facilities that are out  of state.  He further asked                                                               
whether there would be anything in the state.                                                                                   
                                                                                                                                
REPRESENTATIVE SADDLER  responded that  currently the  state does                                                               
inspect  the one  wholesale distributor  located in  state.   The                                                               
bill envisions  the inspecting of  some 400 facilities  that meet                                                               
those three definitions  that would be doing  business in Alaska.                                                               
As  for  the  actual  inspections  and  standards  and  what  the                                                               
inspections would  consist of,  he deferred an  answer to  one of                                                               
the experts on the Board of Pharmacy.   He noted that HB 9 has an                                                               
effective date  of 2018 for  the regulations  to take place.   He                                                               
added  that the  effective date  for the  executive administrator                                                               
would be immediate because there is  a backlog of work that needs                                                               
to be  done as well  as a fair  amount of  work that needs  to be                                                               
done in advance of these inspections.                                                                                           
                                                                                                                                
REPRESENTATIVE KNOPP  offered his understanding  that if HB  9 is                                                               
not adopted the federal government would impose regulations.                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER addressed the  question of what happens if                                                               
Alaska does not do this.   Some folks, he related, have said that                                                               
other  states  within which  a  compounding  facility is  located                                                               
might  have their  own standards  and the  State of  Alaska might                                                               
save  money   by  adhering  to  and   trusting  those  standards.                                                               
However, as seen by the  case study about meningitis, he advised,                                                               
it might not  be to the best interests of  Alaskans to trust some                                                               
other place.   He deferred to  Dr. Leif Holm, chair  of the Board                                                               
of Pharmacy, to further answer  the question regarding what would                                                               
happen if the federal government were to take over.                                                                             
                                                                                                                                
3:25:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  stated he  likes  HB  9 but  needs  to                                                               
understand it better.  Regarding  drug manufacturers in the Lower                                                               
48,  he  inquired  whether  there  are 48  states  that  send  an                                                               
investigator to  the same  factory to inspect  the facility.   He                                                               
said it seems odd that everyone would be doing this.                                                                            
                                                                                                                                
REPRESENTATIVE SADDLER  allowed that  it does seem  redundant and                                                               
he isn't sure whether that actually  is the situation.  There are                                                               
some standards  that a facility  in any location meets,  he said,                                                               
and it  would receive that  certification and that would  be good                                                               
for all the  other states.  Some facilities serve  so many states                                                               
that, yes, it is  important to do that.  He  deferred to Dr. Holm                                                               
to further answer the question.                                                                                                 
                                                                                                                                
3:26:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL  offered  his  understanding that  it  is  a                                                               
supply chain  that is being talked  about.  He said  he is unsure                                                               
how many stops a pill makes  from the time it is fabricated until                                                               
the time it is in the  pharmacy.  He surmised that the inspection                                                               
point is  what is  being questioned;  for example,  food products                                                               
are inspected by the FDA and  then distributed to many states and                                                               
he expects that  this would be the  same for a drug  product.  He                                                               
said he  is therefore confused as  to why every state  would send                                                               
an inspector to a particular facility.                                                                                          
                                                                                                                                
REPRESENTATIVE SADDLER deferred to those  who deal with the pills                                                               
to provide an answer.                                                                                                           
                                                                                                                                
3:27:42 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  inquired whether a  PowerPoint presentation  is going                                                               
to be provided by the sponsor.                                                                                                  
                                                                                                                                
REPRESENTATIVE SADDLER  replied that [six slides  in a PowerPoint                                                               
presentation,  entitled "SB  37 &  HB 9:   Why  license wholesale                                                               
drug distributors?"]  are included  in the committee  packet, but                                                               
that  he  doesn't  plan  to   provide  them  as  an  audio-visual                                                               
presentation.                                                                                                                   
                                                                                                                                
3:28:10 PM                                                                                                                    
                                                                                                                                
LEIF HOLM,  PharmD, Master of  Public Health (MPH),  Chair, Board                                                               
of Pharmacy, testified in  support of HB 9.  He  said the bill is                                                               
important on many fronts for  the board's utmost concerns for the                                                               
safety  of the  state's  patients.   Alaska is  one  of the  last                                                               
states in  the union attempting  to fill the requirements  of the                                                               
DQSA  that manage  licensing of  wholesale drug  distributors and                                                               
503B outsourcing facilities.  He  pointed out that it's important                                                               
to license out of state entities  so that Alaska, as a state, has                                                               
a better control and an  increased confidence in its drug supply.                                                               
The  control  would develop  and  maintain  standards for  Alaska                                                               
facilities  doing  business  in  the state  and  there  would  be                                                               
confidence that  medications provided to Alaskan  patients are of                                                               
the highest quality and not counterfeit medications.                                                                            
                                                                                                                                
DR.  HOLM  stated  that  of  equal importance  to  the  Board  of                                                               
Pharmacy is the executive administrator  position included in the                                                               
bill.  As proposed, he explained,  this position would serve as a                                                               
liaison  to  the  legislature  and   to  other  state  boards  of                                                               
pharmacy,  as well  as assisting  the current  full-time examiner                                                               
position's licensing duties.  With  the ever-increasing amount of                                                               
pharmacy issues and their complexity,  he continued, the Board of                                                               
Pharmacy  is already  falling behind  with  regard to  regulation                                                               
standards  amongst other  states  and the  board  will only  fall                                                               
farther behind  without additional  assistance.  Licensing  is on                                                               
the rise  at a rapid  pace due to  out of state  pharmacies being                                                               
licensed and having  a single licensing examiner  to oversee this                                                               
is no longer  reasonable or very effective.  This  burden is only                                                               
going to increase  with the request that [the  Board of Pharmacy]                                                               
begin  licensing   out  of  state  wholesalers   and  outsourcing                                                               
facilities.    The bill  is  much  needed  and long  overdue,  he                                                               
emphasized, and the  Board of Pharmacy is in full  support of the                                                               
current form.                                                                                                                   
                                                                                                                                
3:29:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  noted that legislators have  REAL ID on                                                               
their minds and have been told  about things that could happen to                                                               
Alaska soon  if it  doesn't pass  REAL ID.   He asked  what would                                                               
happen if Alaska didn't comply with the federal law in question.                                                                
                                                                                                                                
DR. HOLM  replied that the  federal government would come  in and                                                               
license.   An issue with  that is that  there is no  procedure in                                                               
place for the  federal government to do that, and  this is widely                                                               
understood  by the  organizations  that are  involved with  this,                                                               
such as  the National  Association of  Boards of  Pharmacy (NABP)                                                               
and the National Community Pharmacy  Association (NCPA).  He said                                                               
it is believed that the federal  government is ill equipped to do                                                               
it since  it would be a  new licensing procedure for  them.  With                                                               
most  states already  licensing  their  instate and  out-of-state                                                               
wholesalers  it is  believed that  this is  really a  back-burner                                                               
thing for the FDA and the  federal government and that they might                                                               
not in a very timely fashion  proceed with any type of licensing.                                                               
In the  meantime, he  continued, [the Board  of Pharmacy]  has no                                                               
oversight  and  even  if [facilities]  are  licensed  in  another                                                               
state, if [the  Board of Pharmacy] doesn't license  them then the                                                               
board has  no jurisdiction.   He advised that it  would basically                                                               
open the  floodgates for  [Alaska] having  no system  controls in                                                               
place and wholesalers  can work and operate in Alaska  in any way                                                               
they  want  and [the  Board  of  Pharmacy]  has no  authority  to                                                               
inspect them or  even monitor an inspection or  require that they                                                               
operate in  a certain way.   They can basically do  whatever they                                                               
want and [the  Board of Pharmacy] ends up where  it is now, which                                                               
is questioning if  there are counterfeit drugs in  Alaska and are                                                               
there drugs diverted in Alaska.   He said this is unknown because                                                               
[the board] allows them to operate without a license.                                                                           
                                                                                                                                
3:31:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KNOPP asked how many  out of state wholesalers and                                                               
facilities would  be inspected,  what would  be the  frequency of                                                               
inspections, and  whether there would be  a requirement timeframe                                                               
for frequency and quantity.                                                                                                     
                                                                                                                                
DR. HOLM  responded that  there is  a misunderstanding  that [the                                                               
Board of  Pharmacy] is going  to inspect these  facilities, which                                                               
is an  option, but not  a requirement.   The intent is  that [the                                                               
board] would require that they  be inspected.  There are national                                                               
third-party inspectors where they  can become certified through a                                                               
verified  wholesale inspection  through the  NABP.   It is  quite                                                               
expensive  for  these  states  to  do, he  said,  but  once  they                                                               
complete it, most  states recognize that as an  inspection and as                                                               
a  quality  inspection and  that  they  are a  quality  operating                                                               
facility.   So, he reiterated,  [the Board of  Pharmacy] wouldn't                                                               
necessarily  be  inspecting all  the  facilities,  the number  of                                                               
which  he  believes  to  be   just  fewer  than  1,200  wholesale                                                               
distributors licensed  in each individual  state.  [The  Board of                                                               
Pharmacy] would not physically fly  someone down to inspect 1,200                                                               
different wholesale distributors.   The board would be monitoring                                                               
them as a  board as they came in through  a licensing application                                                               
and  monitoring whether  they did  an  appropriate inspection  or                                                               
what the  board deems  is an appropriate  inspection.   The board                                                               
would then have  access to monitor and look at  the inspection to                                                               
see if it is acceptable by the state and the state's standards.                                                                 
                                                                                                                                
3:33:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL  allowed that he  is unfamiliar with  how the                                                               
pharmaceutical industry works.   He inquired as to  what point in                                                               
the supply chain would the Board  of Pharmacy be inspecting.  For                                                               
example, whether  it would be where  the drugs are being  made or                                                               
the  wholesale distribution.    He further  inquired  as to  what                                                               
exactly  would  be inspected  given  Mr.  Holm is  talking  about                                                               
inspecting licenses.   He surmised the  thrust of the bill  is to                                                               
prevent  counterfeit drugs  from coming  into Alaska  or improper                                                               
compounding.    He  requested  Mr. Holm  to  walk  the  committee                                                               
through the supply  line of a pharmaceutical; for  example, if it                                                               
is  produced  overseas  whether  it  comes  to  a  wholesaler  or                                                               
distributor or pharmacy in the U.S.                                                                                             
                                                                                                                                
DR.  HOLM  answered  that  a   manufacturer  sells  to  wholesale                                                               
distributors, and  most of the  major wholesale  distributors are                                                               
large corporations that do a  large percentage of the medications                                                               
that are brought into every  state.  However, he continued, there                                                               
are a  lot of secondary  wholesalers and pharmacies  that operate                                                               
under less than  good standards in what is called  a grey market.                                                               
They  purchase large  amounts of  medication through  wholesalers                                                               
that  are   outside  of   a  normal   supply  chain   and  [these                                                               
wholesalers]  procure  the  drug  through  an  illegal  means  or                                                               
produce  the  drug  in  a  counterfeit  form.    These  secondary                                                               
wholesalers  purchase these  medications  from these  counterfeit                                                               
manufacturers and sell them to  pharmacies that don't necessarily                                                               
know  where the  origin of  the drug  came from.   The  licensing                                                               
procedure  under  HB  9  would  require  a  transaction  history.                                                               
Currently a  transaction history is  not required, so  [the Board                                                               
of Pharmacy] has  no authority to look at where  a drug came from                                                               
each step of the way.                                                                                                           
                                                                                                                                
DR.  HOLM added  that  it  is a  very  confusing procedure  where                                                               
someone gets these  medications.  [The Board  of Pharmacy] cannot                                                               
inspect  the  facility, so  it  could  be  that a  wholesaler  is                                                               
operating out of  his or her house and could  be procuring common                                                               
drugs through  a diverted means.   There is  counterfeiting going                                                               
on with  Medicaid, he  noted.  Patients  will get  numerous drugs                                                               
under  Medicaid and  when they  don't  need the  drugs they  will                                                               
resell them  to wholesalers who  will then  hold on to  the drugs                                                               
until they can  find a very high-priced market for  them and then                                                               
release them  into the supply chain.   That would be  a diversion                                                               
tactic.                                                                                                                         
                                                                                                                                
3:37:26 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
3:38:45 PM                                                                                                                    
                                                                                                                                
DR. HOLM addressed the PowerPoint  slides in the committee packet                                                               
to further continue  his answer to Representative Wool.   He drew                                                               
attention  to the  fifth slide  entitled,  "Trail of  Counterfeit                                                               
Avastin," and said it provides  a good representation of what the                                                               
Board of Pharmacy  is trying to get  at with HB 9.   He explained                                                               
that  the  trail  begins  when  clinics  order  a  medication,  a                                                               
middleman procures  the medication from an  unknown supplier, and                                                               
that  supplier  then  supplies  the  medication  to  the  various                                                               
clinics  that have  ordered it.   Most  affected are  physicians'                                                               
offices  that don't  order  from the  larger  and more  reputable                                                               
wholesaler  manufacturers and  instead  order  from the  cheapest                                                               
place they can  find.  There are a lot  of secondary wholesalers,                                                               
he continued,  1,200 that  are licensed within  the states.   So,                                                               
physicians are  ordering from all sorts  of places and it  is not                                                               
known where those  drugs are coming from.  He  pointed out on the                                                               
slide  that the  counterfeit Avastin  ended up  in numerous  U.S.                                                               
clinics where medications were needed for cancer.                                                                               
                                                                                                                                
REPRESENTATIVE  SADDLER added  that  while people  might have  in                                                               
mind the  idea that  there is a  manufacturer, a  wholesaler, the                                                               
retail seller,  and then the  customer, slide 5 shows  that drugs                                                               
may go through  a convoluted chain of custody, and  over time and                                                               
the course of many transactions the  trail can be lost so that it                                                               
is unknown where a drug came  from and whether it is a legitimate                                                               
original drug.  Under HB 9,  he said, the licensing would require                                                               
a chain of custody so that each  time a drug was shipped from one                                                               
place to another there would  be documentation, thereby providing                                                               
a chain of accountability all the way back to the manufacturer.                                                                 
                                                                                                                                
3:41:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SULLIVAN-LEONARD requested  an  overview of  what                                                               
the sponsor foresees as the  duties and oversight of the proposed                                                               
executive administrator position.                                                                                               
                                                                                                                                
REPRESENTATIVE SADDLER  replied that  HB 9 proposes  a high-level                                                               
position at  range 23.   The  position would be  paid for  out of                                                               
increasing the  license fees that  would be assessed to  the out-                                                               
of-state  wholesalers, he  emphasized.   The administrator  would                                                               
assist  the  Board  of  Pharmacy  in  ensuring  that  whoever  is                                                               
providing  drugs  will  have  that  licensure  in  effect.    The                                                               
administrator  would coordinate  with  other state  legislatures,                                                               
executive agencies,  and pharmacy  boards to  verify inspections.                                                               
The administrator  would process  the applications  for licensure                                                               
that  are received  by  the Board  of  Pharmacy.   Representative                                                               
Saddler  estimated that  about 400  facilities would  be applying                                                               
for  this  licensure,  which  would  require  a  fair  amount  of                                                               
paperwork and coordination.  As it  stands now with the amount of                                                               
work required under the  different [federal] healthcare mandates,                                                               
the current staff person to  the Board of Pharmacy is overwhelmed                                                               
and  the workload  is  weeks  and months  behind  schedule.   The                                                               
executive administrator would  primarily help with implementation                                                               
of HB 9, he said, but would also help with other things.                                                                        
                                                                                                                                
3:43:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON offered  his  understanding  that HB  9                                                               
would only affect prescriptions, not over the counter drugs.                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER responded correct.                                                                                       
                                                                                                                                
REPRESENTATIVE JOSEPHSON  surmised that  a drug  store pharmacist                                                               
would be  able to say from  what location the drug  was obtained,                                                               
but that going any farther back would run into a brick wall.                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER answered  that in  essence, it  would get                                                               
foggy  - where  a  person  might assume  good  will but  couldn't                                                               
verify it.   Unless  dealing with  a very  short chain,  a person                                                               
doesn't know how many transactions have happened.                                                                               
                                                                                                                                
3:44:00 PM                                                                                                                    
                                                                                                                                
CHAIR  KITO  returned  to  the   PowerPoint  slides  and  brought                                                               
attention  to the  fourth slide  entitled,  "What Do  Counterfeit                                                               
Drugs Look Like?  They are hard  to detect!"  He pointed out that                                                               
the photograph  compares an authentic versus  counterfeit [tablet                                                               
of Tamiflu].                                                                                                                    
                                                                                                                                
DR.  HOLM  explained  that he  owns  independent  pharmacies  and                                                               
through day-to-day business his  pharmacies are constantly on the                                                               
lookout for  positive reimbursement in  medications.  He  said he                                                               
deals with  6-10 secondary  wholesalers daily  that he  is fairly                                                               
certain  are operating  under good  circumstances.   However,  he                                                               
doesn't know that  for sure because they are not  licensed by the                                                               
state  of Alaska  and so  he tries  to use  them as  minimally as                                                               
possible.   For  the  times  that he  needs  to  use a  secondary                                                               
wholesaler, he  continued, he would  like to know that  Alaska is                                                               
being responsible in  licensing them and knowing  as a pharmacist                                                               
that in  day-to-day business  any wholesaler  that he  might come                                                               
across within his state has been  vetted by his state.  But right                                                               
now, he reiterated, he does not know that.                                                                                      
                                                                                                                                
3:45:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON inquired  whether the  counterfeits are                                                               
normally benign placebos or are harmful.                                                                                        
                                                                                                                                
DR. HOLM offered his understanding  that they are generally sugar                                                               
and are  non-harmful, non-medicated,  and no active  drugs within                                                               
them.  He related that  about 150 countries manufacture the drugs                                                               
coming into  the U.S.;  40 percent  of the  total drug  supply is                                                               
manufactured out  of country;  and 80 percent  of all  the active                                                               
ingredients are manufactured out of country.                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER added  that the  motivation for  fraud is                                                               
tremendous.  Everyone  has heard horror stories of  $500 per pill                                                               
or $40,000 a month for  injectable cancer treatments.  Bad actors                                                               
receive inexpensive placebos or  contaminated drugs and pass them                                                               
on  to end-user  pharmacy clients,  pocketing the  money and  not                                                               
caring  that  the results  could  be  fatal  or damaging  to  the                                                               
patient.    Every country  has  bad  actors  and given  how  many                                                               
trillions  of  dollars  the pharmaceutical  business  represents,                                                               
there  is powerful  motivation to  take advantage  of weaknesses.                                                               
If  Alaska  is  the  last  state that  has  this  protection,  he                                                               
advised, then  those bad  actors are going  to migrate  to Alaska                                                               
and take advantage of the state's low threshold of safety.                                                                      
                                                                                                                                
3:47:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH asked whether the  supply chain is looked at                                                               
through  such  things  as radio-frequency  identification  (RFID)                                                               
tags.    He  surmised  there  would  be  some  sort  of  tracking                                                               
mechanism for some drugs more than others.                                                                                      
                                                                                                                                
REPRESENTATIVE SADDLER replied  that there might be  such, but he                                                               
is unsure.  He deferred to Dr. Holm to provide an answer.                                                                       
                                                                                                                                
DR. HOLM stated he is unfamiliar with RFIDs.                                                                                    
                                                                                                                                
CHAIR KITO explained that it  is a radio-frequency tag associated                                                               
or affiliated with a batch that was manufactured.                                                                               
                                                                                                                                
DR.  HOLM responded  that the  [2013] federal  Drug Supply  Chain                                                               
Security  Act (DSCSA)  intends  that  by the  year  2023 a  Quick                                                               
Response  Code (QR  Code) be  placed on  medication bottles.   By                                                               
scanning  this code,  he explained,  the entire  history of  that                                                               
bottle of medication will be seen  from start to finish, but that                                                               
currently there is no capability to do this.                                                                                    
                                                                                                                                
3:49:50 PM                                                                                                                    
                                                                                                                                
DIRK WHITE, Pharmacist,  testified in support of HB 9.   He noted                                                               
he  is the  Past President  of the  Board of  Pharmacy, and  Past                                                               
President of the Alaska Pharmacists  Association, and stated that                                                               
Dr.  Holm's  father  was  on   the  Board  of  Pharmacy  when  it                                                               
originally started  working on this  issue about five  years ago.                                                               
He  urged that  HB  9 be  passed  for the  health  and safety  of                                                               
Alaska's citizens.   Had such a bill been passed,  he advised, it                                                               
is  possible  that  the New  England  Compounding  Center,  which                                                               
produced the  contaminated injectable  steroid that  killed about                                                               
300 people  and maimed 1,000 more,  would have been caught.   Had                                                               
the center  been inspected on  a regular basis, he  continued, it                                                               
would have been caught and would  have prevented the loss of life                                                               
and loss of quality of life.                                                                                                    
                                                                                                                                
MR.  WHITE   addressed  the  question   about  the   pedigree  of                                                               
medications and  chain of custody.   He pointed out  that without                                                               
that  pedigree on  a medication  and  the chain  of custody  that                                                               
comes  with it,  he becomes  liable  for anything  that might  go                                                               
wrong.   [Alaska]  doesn't  have anything  that  verifies that  a                                                               
wholesaler, from  which [pharmacies] are buying,  is qualified to                                                               
provide  the medications.   He  pointed out  that parameters  are                                                               
associated with  medications, such as  the need  to be kept  at a                                                               
certain  temperature   and  humidity   while  stored   for  large                                                               
quantities  of  time.    Parameters  that are  looked  at  in  an                                                               
inspection include  whether a medication needs  refrigeration and                                                               
remains   constantly  refrigerated   throughout  its   life  from                                                               
manufacturer to  wholesaler to secondary wholesaler  to pharmacy.                                                               
The  pedigree  includes  whether   a  medication  has  been  kept                                                               
correctly, shipped  correctly, or  diverted somehow,  and without                                                               
that pedigree none of this is known, he said.                                                                                   
                                                                                                                                
MR. WHITE  noted that RFID tracking  was looked at years  ago for                                                               
putting the  tags all the way  down to the tablets.   However, no                                                               
one was able to  come up with a tag that  was compatible with the                                                               
FDA requirement,  he advised,  so [the  FDA] will  probably stick                                                               
with the  QR Code,  which can be  scanned to pop  up much  of the                                                               
pedigree.  He urged that HB 9 be passed.                                                                                        
                                                                                                                                
3:53:31 PM                                                                                                                    
                                                                                                                                
BARRY   CHRISTENSEN,  Registered   Pharmacist  (RPh),   Co-Chair,                                                               
Legislative Committee, Alaska  Pharmacists Association, testified                                                               
in support of HB 9.   He said moving this legislation forward has                                                               
been  the number  one priority  for his  association for  several                                                               
years.  He stated  he won't repeat what was said  by Dr. Holm and                                                               
Mr.  White but  added that  pharmacists like  himself need  to be                                                               
able  to go  to the  Alaska statewide  website and  see that  the                                                               
medications they  are buying or  contemplating to buy  are coming                                                               
from a verified source.  There  is a need to create the executive                                                               
administrator  position,  he continued,  to  help  the board  and                                                               
ensure  it can  do  its current  job as  well  as the  additional                                                               
strains of this  legislation as well as several other  bills.  He                                                               
urged the passage of HB 9.                                                                                                      
                                                                                                                                
3:55:04 PM                                                                                                                    
                                                                                                                                
CHAIR KITO opened public testimony on HB 9.                                                                                     
                                                                                                                                
3:55:22 PM                                                                                                                    
                                                                                                                                
DELLA   CUTCHINS,  Pharmacist,   President,  Alaska   Pharmacists                                                               
Association, testified in support of HB  9.  She said the bill is                                                               
vital   to  bring   the  state   into  compliance   with  federal                                                               
requirements  that  all   wholesalers  distributing  prescription                                                               
drugs in Alaska be licensed.   The Alaska Pharmacists Association                                                               
represents  over  250  pharmacists and  pharmacy  technicians  in                                                               
Alaska, she  noted.   The association's  mission is  to preserve,                                                               
promote, and lead the profession of  pharmacy in Alaska, and HB 9                                                               
strongly aligns with that mission,  as it will ensure that Alaska                                                               
is  in   line  with  the   FDA  mandate.    She   reiterated  the                                                               
association's support of HB 9.                                                                                                  
                                                                                                                                
3:56:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL  recalled it  being mentioned that  if Alaska                                                               
doesn't  do anything  the  federal government  will  come in  and                                                               
regulate.  He asked if that has happened in any other state.                                                                    
                                                                                                                                
MS. CUTCHINS deferred to Dr. Holm to answer the question.                                                                       
                                                                                                                                
DR. HOLM responded that there  have been no repercussions at this                                                               
time because the  FDA, federal government, has not  yet put forth                                                               
a licensing procedure.  He offered  his belief that three or four                                                               
other states have not yet licensed  and are therefore in the same                                                               
situation as Alaska and do not  monitor the drugs coming into the                                                               
state.  However,  he continued, years down the road  when the FDA                                                               
gets around to  it, the FDA would  be in charge and  have all the                                                               
rules and  regulations fall under  whatever the FDA  requires and                                                               
not necessarily what Alaska thinks is important.                                                                                
                                                                                                                                
REPRESENTATIVE WOOL remarked  that it looks like a  couple of the                                                               
situations mentioned are different  - for example, the compounder                                                               
in  Massachusetts   was  bad  practice  or   fraud,  rather  than                                                               
counterfeit.   He  surmised  that  that was  not  a supply  chain                                                               
problem as  illustrated on  [slide 5].   He inquired  whether Dr.                                                               
Holm agrees that the compounding problem was a different thing.                                                                 
                                                                                                                                
DR. HOLM  concurred that the  compounding problem is  a different                                                               
thing  and advised  that  that  is a  reason  why for  licensing.                                                               
While wholesaler drug distributors  have been referenced, it also                                                               
includes outsourcing  facilities, which that facility  would have                                                               
fallen under.   It goes  back to  inspections, he said,  and that                                                               
facility  would  have   been  required  to  have   some  form  of                                                               
inspection that [the Board of  Pharmacy] would have had to accept                                                               
before allowing  the facility to  operate in Alaska.   Without an                                                               
inspection, [the  board] would not  have allowed the  facility to                                                               
ship anything into  Alaska.  Based on what has  been on the news,                                                               
that facility would not have passed, period.                                                                                    
                                                                                                                                
3:59:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER, regarding what  would happen if the state                                                               
doesn't pass  the bill, added  that unless and until  the federal                                                               
government required  that licensing federally, there  would be no                                                               
stick that the State of Alaska  could use to punish someone.  For                                                               
example, if the compounding facility  in Massachusetts shipped to                                                               
Alaska and it did not produce  good product, Alaska would have no                                                               
statute with which to prosecute  the facility because there would                                                               
be no law requiring them to be inspected to get a license.                                                                      
                                                                                                                                
4:00:20 PM                                                                                                                    
                                                                                                                                
SCOTT WATTS, Pharmacist,  testified in support of HB 9.   He said                                                               
he is  the owner  of several pharmacies  in Juneau  and explained                                                               
that  a pharmacist's  main responsibility  is  ensuring that  the                                                               
right  person  gets  the  right medication  in  the  right  dose.                                                               
Pharmacists can  do all  of that in  their pharmacies,  he noted,                                                               
but they do  need to make sure  that that pill is  the right pill                                                               
that is being  ordered.  He advised that  pharmacists are getting                                                               
a  lot  of constraints  from  pharmacy  benefit managers  (PBMs),                                                               
middlemen that the committee may be hearing about.                                                                              
                                                                                                                                
MR.  WATTS,  regarding  maximum   allowable  cost  (MAC)  prices,                                                               
related  that  at times  pharmacists  have  difficulty finding  a                                                               
medication  from  the larger  wholesalers  at  that [MAC]  price.                                                               
This forces pharmacies  to go out to the  smaller wholesalers, he                                                               
said.    For  example,  he  gets phone  calls  daily  from  small                                                               
wholesalers  saying they  have this  medication at  this price  -                                                               
much lower  than what his  wholesalers are  offering it for.   He                                                               
pointed out that pharmacists don't  know if this small wholesaler                                                               
is  calling  from  a  garage  without  having  verification  that                                                               
they've been licensed or at least  that the state has the ability                                                               
to license that.                                                                                                                
                                                                                                                                
MR. WATTS  noted that a  pharmacist sending out  prescriptions to                                                               
other states must be licensed  in the state that the prescription                                                               
is being  sent to, and the  pharmacy must also be  licensed.  The                                                               
other states want to verify  that a pharmacist isn't doing things                                                               
under  the  table  or  incorrectly.   He  reiterated  his  strong                                                               
support for HB 9.                                                                                                               
                                                                                                                                
4:02:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH  shared  that  long  ago  he  studied  some                                                               
analysis techniques for minerals to  get a detailed analysis.  He                                                               
asked how a pharmacist confirms  that a pharmaceutical is what it                                                               
is purported to be.                                                                                                             
                                                                                                                                
MR.  WATTS replied  that there  are no  ways in-house  to test  a                                                               
medication.   Pharmacists  are relying  on the  manufacturers and                                                               
whether  the drug  can be  tracked from  the manufacturer  to the                                                               
wholesalers.   The FDA inspects  the manufacturers, he  said, and                                                               
that's where the assurance is  that that is the appropriate drug.                                                               
Also,  there are  markings for  identifying  a drug.   When  that                                                               
supply  chain is  not clear  it is  hard, he  added, and  that is                                                               
where  pharmacists need  the assurance  that that  pill and  that                                                               
bottle is what it is purported to be.                                                                                           
                                                                                                                                
REPRESENTATIVE BIRCH  noted there  are often  five pages  of tiny                                                               
print stating what a drug might  do, while street drugs are often                                                               
something that an amateur chemist  has tweaked.  He asked whether                                                               
a pharmacist can get a rock-solid  signature for a drug, so it is                                                               
known what it is.                                                                                                               
                                                                                                                                
MR. WATTS  responded that at  the pharmacy level,  the pharmacist                                                               
is looking at appearance and markings of the tablet.                                                                            
                                                                                                                                
4:05:24 PM                                                                                                                    
                                                                                                                                
CHAIR KITO held over HB 9.                                                                                                      
                                                                                                                                
4:05:35 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:06 p.m.                                                                                                                       
                                                                                                                                

Document Name Date/Time Subjects
HB009 Fiscal Note DCCED-CBPL 3.31.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 9
HB009 Summary of Changes version A to version J 4.6.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 9
HB009 Supporting Documents-Letter of Support Alaska Board of Pharmacy 3.6.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 9
HB009 Supporting Documents-Presentation Board of Pharmacy 4.7.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 9
HB009 version J 4.6.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 9
HB124 Explanation of changes version A to version D 4.6.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 124
HB124 Sectional Analysis ver D 4.6.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 124
HB124 Supporting Documents-Letters of Support 4.1.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 124
HB124 ver D 4.6.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 124
HB009 Sectional Analysis version J 4.7.17.pdf HL&C 4/7/2017 3:15:00 PM
HB 9