Legislature(2017 - 2018)BARNES 124

02/02/2018 03:15 PM LABOR & COMMERCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 302 EXTEND: BOARD OF PROFESSIONAL COUNSELORS TELECONFERENCED
Heard & Held
-- Public Testimony --
*+ HB 255 PLUMBING/ELECTRIC CERTIFICATE OF FITNESS TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 240 PHARMACY BENEFITS MANAGERS TELECONFERENCED
Moved HB 240 Out of Committee
-- Public Testimony --
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                        February 2, 2018                                                                                        
                           3:11 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
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. 302                                                                                                              
"An  Act  extending   the  termination  date  of   the  Board  of                                                               
Professional Counselors; and providing for an effective date."                                                                  
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 255                                                                                                              
"An  Act relating  to  individuals and  employees  who must  have                                                               
certificates  of   fitness  to   perform  certain   plumbing  and                                                               
electrical work;  and relating to civil  penalties and violations                                                               
for not having required certificates of fitness."                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 240                                                                                                              
"An  Act relating  to  the registration  and  duties of  pharmacy                                                               
benefits  managers;  relating   to  procedures,  guidelines,  and                                                               
enforcement mechanisms for pharmacy  audits; relating to the cost                                                               
of  multi-source   generic  drugs  and   insurance  reimbursement                                                               
procedures;  relating  to  the  duties of  the  director  of  the                                                               
division of insurance; and providing for an effective date."                                                                    
                                                                                                                                
     - MOVED HB 240 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 302                                                                                                                  
SHORT TITLE: EXTEND: BOARD OF PROFESSIONAL COUNSELORS                                                                           
SPONSOR(s): REPRESENTATIVE(s) WOOL                                                                                              
                                                                                                                                
01/24/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/18       (H)       L&C, FIN                                                                                               
02/02/18       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 255                                                                                                                  
SHORT TITLE: PLUMBING/ELECTRIC CERTIFICATE OF FITNESS                                                                           
SPONSOR(s): REPRESENTATIVE(s) TUCK                                                                                              
                                                                                                                                
01/08/18       (H)       PREFILE RELEASED 1/8/18                                                                                
01/16/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/18       (H)       L&C, FIN                                                                                               
02/02/18       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 240                                                                                                                  
SHORT TITLE: PHARMACY BENEFITS MANAGERS                                                                                         
SPONSOR(s): REPRESENTATIVE(s) GUTTENBERG                                                                                        
                                                                                                                                
04/28/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/28/17       (H)       L&C, FIN                                                                                               
05/17/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
05/17/17       (H)       -- MEETING CANCELED --                                                                                 
01/26/18       (H)       L&C AT 3:15 PM BARNES 124                                                                              
01/26/18       (H)       Heard & Held                                                                                           
01/26/18       (H)       MINUTE(L&C)                                                                                            
02/02/18       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ASHLEY STRAUCH, Staff                                                                                                           
Representative Adam Wool                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska.                                                                                                                 
POSITION STATEMENT:  Introduced HB 302 on behalf of                                                                           
Representative Wool, prime sponsor.                                                                                             
                                                                                                                                
KRIS CURTIS, Legislative Auditor                                                                                                
Legislative Audit Division                                                                                                      
Legislative Agencies and Offices                                                                                                
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:       Presented   auditor    findings   and                                                             
recommendations and answered questions during the discussion of                                                                 
HB 302.                                                                                                                         
                                                                                                                                
KENDRA KLOSTER, Staff                                                                                                           
Representative Chris Tuck                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Introduced HB 255 on behalf of                                                                           
Representative Chris Tuck, prime sponsor.                                                                                       
                                                                                                                                
REPRESENTATIVE CHRIS TUCK                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 255 as prime sponsor.                                                                       
                                                                                                                                
DEBORAH KELLY, Director                                                                                                         
Labor Standards and Safety Division                                                                                             
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions in the hearing on HB                                                                  
255.                                                                                                                            
                                                                                                                                
WILLIAM HARLAN, Chief                                                                                                           
Mechanical Inspection Section                                                                                                   
Department of Labor & Workforce Development (DLWD)                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions in the hearing on HB                                                                  
255.                                                                                                                            
                                                                                                                                
BRANDON MCGUIRE                                                                                                                 
UA Local 367 Plumbers Union                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Spoke in support of HB 255.                                                                              
                                                                                                                                
BRENT HOVDEN                                                                                                                    
Licensed Electrician                                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Spoke in support of HB 255.                                                                              
                                                                                                                                
JASON ROE                                                                                                                       
Plumber                                                                                                                         
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Spoke in support of HB 255.                                                                              
                                                                                                                                
KYLE KAISER                                                                                                                     
IBEW Local 1547                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Spoke in support of HB 255.                                                                              
                                                                                                                                
RYAN ANDREW                                                                                                                     
IBEW Local 1547                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Spoke in support of HB 255.                                                                              
                                                                                                                                
PAUL GROSSI                                                                                                                     
Alaska State Pipe Trades                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Spoke in support of HB 255.                                                                              
                                                                                                                                
DEBORAH BROLLINI                                                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Spoke in support of HB 255.                                                                              
                                                                                                                                
REPRESENTATIVE DAVID GUTTENBERG                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 240 as prime sponsor.                                                                       
                                                                                                                                
BILL HEAD                                                                                                                       
Pharmaceutical Care Management Association                                                                                      
Washington, D.C.                                                                                                                
POSITION STATEMENT:  Spoke in opposition to HB 240.                                                                           
                                                                                                                                
DOMINIC GUGLIUZZA, Vice President                                                                                               
Finance                                                                                                                         
CVS Health                                                                                                                      
Colleyville, Texas                                                                                                              
POSITION STATEMENT:  Testified in opposition to HB 240.                                                                       
                                                                                                                                
LEIF HOLM, Pharmacist                                                                                                           
North Pole, Alaska                                                                                                              
POSITION STATEMENT:  Spoke in support of HB 240.                                                                              
                                                                                                                                
JUSTIN RUFFRIDGE, Owner                                                                                                         
Soldotna Professional Pharmacy;                                                                                                 
Juneau Drug Company                                                                                                             
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Spoke in support of HB 240.                                                                              
                                                                                                                                
STEPHEN SREBERNAK, Owner                                                                                                        
Family Pharmacy                                                                                                                 
Eagle River, Alaska                                                                                                             
POSITION STATEMENT:  Spoke in support of HB 240.                                                                              
                                                                                                                                
DIRK WHITE, Pharmacist                                                                                                          
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Spoke in support of HB 240.                                                                              
                                                                                                                                
CATHERINE KOWALSKI, Pharmacist                                                                                                  
Petersburg, Alaska                                                                                                              
POSITION STATEMENT:  Spoke in support of HB 240.                                                                              
                                                                                                                                
DEBBIE JOHNSON                                                                                                                  
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Spoke in support of HB 240.                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:17:49 PM                                                                                                                    
                                                                                                                                
CHAIR  SAM KITO  called  the House  Labor  and Commerce  Standing                                                             
Committee meeting  to order at  3:11 p.m.   Representatives Kito,                                                               
Sullivan-Leonard, Stutes, Knopp, Birch,  Josephson, and Wool were                                                               
present at the call to order.                                                                                                   
                                                                                                                                
                                                                                                                                
        HB 302-EXTEND: BOARD OF PROFESSIONAL COUNSELORS                                                                     
                                                                                                                              
3:20:33 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that the  first order of business  would be                                                               
HOUSE BILL  NO. 302,  "An Act extending  the termination  date of                                                               
the  Board  of  Professional  Counselors; and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
3:20:51 PM                                                                                                                    
                                                                                                                                
ASHLEY  STRAUCH, Staff,  Representative Adam  Wool, Alaska  State                                                               
Legislature, introduced HB 302 on  behalf of Representative Wool,                                                               
prime sponsor.   She  stated the proposed  bill would  extend the                                                               
sunset date for the Board  of Professional Counselors to June 30,                                                               
2026.  She  explained the board's primary function  is to license                                                               
professional  counselors and  to  issue supervisor  certificates.                                                               
She added  the board was made  up of five members,  of which four                                                               
were professional  counselors.  She highlighted  from fiscal year                                                               
2014 (FY 14)   to FY 16,  the board had a 46  percent increase in                                                               
new licenses  and had issued  190 new licenses and  73 supervisor                                                               
certifications over  that time.   The audit recommended  the full                                                               
extension.                                                                                                                      
                                                                                                                                
3:21:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KNOPP  asked whether  she knew  what the  new rate                                                               
for licenses was following the [46] percent increase.                                                                           
                                                                                                                                
MS. STRAUCH deferred to Kris Curtis, Legislative Auditor.                                                                       
                                                                                                                                
3:22:23 PM                                                                                                                    
                                                                                                                                
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Legislative  Agencies and  Offices, presented  April 2017  sunset                                                               
audit  findings  related  to  HB  302.   She  stated  the  report                                                               
concluded  that the  board  was serving  the  public interest  by                                                               
effectively  licensing and  regulating  counselors and  certified                                                               
counselor supervisors.   She added the  board monitored licensees                                                               
and  worked to  ensure that  only qualified  counselors practice.                                                               
She reiterated  that the board  was growing, with an  increase of                                                               
46 percent  in licensees compared  to the previous  sunset audit.                                                               
She stated the board had a  surplus of just over $70 thousand and                                                               
the board  planned to reduce  fees to  address the surplus.   She                                                               
presented that  the Office of  the Governor, the  department, and                                                               
the board all concurred with the recommended extension.                                                                         
                                                                                                                                
3:24:43 PM                                                                                                                    
                                                                                                                                
CHAIR  KITO  opened public  testimony  on  HB 302  and  announced                                                               
public testimony would remain open.                                                                                             
                                                                                                                                
CHAIR KITO held over HB 302.                                                                                                    
                                                                                                                                
                                                                                                                                
         HB 255-PLUMBING/ELECTRIC CERTIFICATE OF FITNESS                                                                    
                                                                                                                                
3:25:28 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that  the next order  of business  would be                                                               
HOUSE  BILL  NO.  255,  "An   Act  relating  to  individuals  and                                                               
employees  who  must  have certificates  of  fitness  to  perform                                                               
certain  plumbing  and electrical  work;  and  relating to  civil                                                               
penalties and violations for not  having required certificates of                                                               
fitness."                                                                                                                       
                                                                                                                                
3:26:00 PM                                                                                                                    
                                                                                                                                
KENDRA KLOSTER,  Staff, Representative  Chris Tuck,  Alaska State                                                               
Legislature, introduced HB 255 on  behalf of Representative Tuck,                                                               
prime sponsor.   She read from the sponsor  statement, which read                                                               
as follows:                                                                                                                     
                                                                                                                                
     House  Bill 255  will change  enforcement policies  for                                                                    
     individuals  performing  electrical  or  plumbing  work                                                                    
     without  a   valid  certificate  of   fitness.  Current                                                                    
     enforcement   techniques  are   ineffective,  and   the                                                                    
     revisions proposed  in this  legislation will  give the                                                                    
     Department  of Labor  a  substantive  way of  enforcing                                                                    
     certificate of fitness requirements.                                                                                       
                                                                                                                                
     A certificate  of fitness is  issued by  the Mechanical                                                                    
     Inspection section  of the Division  of Labor  Safety &                                                                    
     Standards  in the  Department  of  Labor and  Workforce                                                                    
     Development,   and  is   essentially  an   occupational                                                                    
     license  for performing  electrical  or plumbing  work.                                                                    
     Alaska  statute prohibits  individuals from  performing                                                                    
     these types of work without a valid certificate                                                                            
     of fitness.                                                                                                                
                                                                                                                                
     The current  enforcement for operating without  a valid                                                                    
     certificate  of fitness  is  ineffective. AS  18.62.080                                                                    
     states  that  it  is  a  misdemeanor  to  perform  work                                                                    
     requiring a certificate of  fitness without having one.                                                                    
     However,   enforcement   requires  filing   a   written                                                                    
     complaint through the Department  of Law and taking the                                                                    
     matter to the superior  court, and often these offenses                                                                    
     are too  minor to  merit the  interest of  the District                                                                    
     Attorney's office.  The department's  other enforcement                                                                    
     option is to  issue a civil order to  cease and desist,                                                                    
     which  carries no  punitive sanction,  and so  provides                                                                    
     little  motivation  for  the  offender  to  remedy  the                                                                    
     situation. Therefore, offenders often go unpunished.                                                                       
                                                                                                                                
     House  Bill   255  will  change  the   penalty  from  a                                                                    
     misdemeanor  to  a  violation,  which  will  allow  the                                                                    
     department to  issue citations  and civil  penalties to                                                                    
     individuals and  to employers  using employees  who are                                                                    
     operating without a valid  certificate. New sections of                                                                    
     statute added  by this legislation give  the department                                                                    
     authority  to issue  citations, outline  the procedures                                                                    
     for issuing  citations, and set  the amount of  and the                                                                    
     procedure  for   administering  civil   penalties.  The                                                                    
     penalty is set  at $125 for an individual  and $250 for                                                                    
     an  employer  for a  first  offense,  and $250  for  an                                                                    
     individual and $500 for an employer for subsequent                                                                         
     offenses.                                                                                                                  
                                                                                                                                
3:27:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHRIS TUCK,  Alaska State  Legislature, presented                                                               
HB  255 as  prime  sponsor.   He  said  he  thought the  overview                                                               
covered the intent of HB 255.                                                                                                   
                                                                                                                                
3:28:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH  asked whether  Representative Tuck  held an                                                               
electrical  certificate of  fitness or  whether it  was something                                                               
with which he was familiar.                                                                                                     
                                                                                                                                
REPRESENTATIVE  TUCK   replied  he  did  not   currently  hold  a                                                               
certificate of fitness.                                                                                                         
                                                                                                                                
REPRESENTATIVE BIRCH cited bill language  from page 1, line 13 of                                                               
the proposed bill, which reads as follows:                                                                                      
                                                                                                                                
     (c) An  employee of an  electric utility that  does not                                                                    
     have   within  its   service  area   a  portion   of  a                                                                    
     municipality that  has a population of  more than 2,500                                                                    
     is not required to have a certificate of fitness                                                                           
                                                                                                                                
REPRESENTATIVE BIRCH asked how the  exemption still protected the                                                               
people involved.                                                                                                                
                                                                                                                                
REPRESENTATIVE TUCK explained that  the exemption was in existing                                                               
statute  and would  not  change  under HB  255.    He added  that                                                               
utilities  tended  to  have   different  standards  and  training                                                               
programs to fit their safety concerns.                                                                                          
                                                                                                                                
3:29:21 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  added that  in the  engineering profession  the state                                                               
does not  require engineers  to be licensed  if they  are working                                                               
only  on   industrial  projects   within  the  confines   of  the                                                               
organization and not engaging with the public.                                                                                  
                                                                                                                                
REPRESENTATIVE  TUCK stated  that maintenance  work was  also not                                                               
covered in the proposed bill.                                                                                                   
                                                                                                                                
3:30:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KNOPP  asked whether Representative Tuck  had ever                                                               
held a certificate of fitness.                                                                                                  
                                                                                                                                
REPRESENTATIVE TUCK answered in the affirmative.                                                                                
                                                                                                                                
REPRESENTATIVE  KNOPP asked  what benefit  the certificate  gave.                                                               
He  stated he  had concerns  about increasing  penalties and  the                                                               
amount of training and paperwork required to get the card.                                                                      
                                                                                                                                
REPRESENTATIVE  TUCK   answered  he  had  served   an  8,000-hour                                                               
apprenticeship  program   with  an  additional  1,400   hours  of                                                               
classroom  time.    He  explained the  training  had  ensured  he                                                               
performed his  work correctly to  make sure the public  was safe.                                                               
He underlined that  the penalty was currently  a misdemeanor with                                                               
a fine of up  to $2,500, and HB 255 would be  lowering it to $125                                                               
for the first fine.                                                                                                             
                                                                                                                                
3:33:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON commented that  a certificate of fitness                                                               
was already  required in statute  and it  did not appear  that HB                                                               
255 was demonstrably changing that.                                                                                             
                                                                                                                                
3:33:53 PM                                                                                                                    
                                                                                                                                
DEBORAH  KELLY, Director,  Labor Standards  and Safety  Division,                                                               
Department of  Labor & Workforce  Development (DLWD),  added that                                                               
the  proposed legislation  was an  enforcement tools  bill.   She                                                               
stated that the  graduated enforcement tool proposed  in the bill                                                               
had worked  well with contractor  licensing and that she  felt it                                                               
would work well with certificates of fitness.                                                                                   
                                                                                                                                
3:34:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK added  that  the structure  set  out in  the                                                               
proposed bill was no different  from someone needing a commercial                                                               
driver's  license  (CDL)  license  or  a  techniques  of  alcohol                                                               
management (TAM) card for the food and beverage service sector.                                                                 
                                                                                                                                
REPRESENTATIVE  KNOPP  commented  that  driving  an  80,000-pound                                                               
truck is not  the same as running  a simple sewer line.   He said                                                               
he thought the proposed  bill goes a little far.   He did not see                                                               
how  the  certificate had  served  Representative  Tuck over  and                                                               
above his  training.   He stated  he would  rather have  a strict                                                               
penalty,  and  he  said  he  was fond  of  a  policy  giving  the                                                               
department the power to write citations.                                                                                        
                                                                                                                                
REPRESENTATIVE TUCK  replied that the purpose  of the certificate                                                               
of fitness was not to benefit the worker but the public.                                                                        
                                                                                                                                
3:37:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STUTES asked  whether the  8,000 hours  and 1,400                                                               
hours   of  classroom   training  are   a  requirement   for  the                                                               
certificate of fitness.                                                                                                         
                                                                                                                                
REPRESENTATIVE TUCK  answered that it  depends on the  trade, and                                                               
the only requirement  for the state of Alaska was  8,000 hours of                                                               
classroom  and   on-the-job  training.     He  deferred   to  the                                                               
department.                                                                                                                     
                                                                                                                                
MS. KELLY added that there  are several different classifications                                                               
for  plumbers.   She gave  the  example of  the simplest  license                                                               
which had a  requirement of 1,000 hours of work,  to give an idea                                                               
of the range of requirements.                                                                                                   
                                                                                                                                
3:39:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STUTES  asked  whether the  licenses  expire  and                                                               
whether they are maintained through continuing education.                                                                       
                                                                                                                                
REPRESENTATIVE TUCK answered  in the affirmative.   He stated the                                                               
requirement was continuing  education of 16 hours  for a two-year                                                               
renewal.                                                                                                                        
                                                                                                                                
3:40:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KNOPP  asked for confirmation of  the inclusion of                                                               
work on private property in the proposed bill.                                                                                  
                                                                                                                                
MS. KELLY answered in the affirmative.                                                                                          
                                                                                                                                
3:40:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL asked whether  homeowners would be subject to                                                               
the requirements as the bill says "person", not employer.                                                                       
                                                                                                                                
REPRESENTATIVE TUCK  answered that the certificate  of fitness is                                                               
for construction workers and a private citizen is exempt.                                                                       
                                                                                                                                
3:41:33 PM                                                                                                                    
                                                                                                                                
CHAIR KITO clarified  that a homeowner who does  work would still                                                               
have to comply with municipal requirements for inspections.                                                                     
                                                                                                                                
REPRESENTATIVE  TUCK  explained that  he  meant  exempt from  the                                                               
certificate of fitness requirements.                                                                                            
                                                                                                                                
CHAIR  KITO  clarified  that  the  debate  was  not  whether  the                                                               
certificate  of  fitness  should   exist,  but  the  department's                                                               
ability to enforce.  He asked the department for confirmation.                                                                  
                                                                                                                                
MS. KELLY answered  in the affirmative.  She  reiterated that the                                                               
proposed  bill  was merely  an  enforcement  tool and  would  not                                                               
change   jurisdiction,  applicability,   or  responsibility   for                                                               
maintaining a certificate of fitness.                                                                                           
                                                                                                                                
3:42:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL asked whether  both the employee and employer                                                               
are liable.                                                                                                                     
                                                                                                                                
CHAIR  KITO asked  whether  he was  referring  to a  construction                                                               
company.  He  clarified that the individual doing  the work would                                                               
be required to have a certificate of fitness.                                                                                   
                                                                                                                                
3:43:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK  answered it  would be the  same thing  if an                                                               
employer asked  an employee  who did  not have a  CDL to  drive a                                                               
semi-truck across  town.  He  added that  was why the  penalty on                                                               
the employer was greater than that on the individual.                                                                           
                                                                                                                                
REPRESENTATIVE  WOOL asked  whether the  same would  apply to  an                                                               
apprentice.                                                                                                                     
                                                                                                                                
REPRESENTATIVE TUCK answered  if a person is not  in a registered                                                               
apprentice program, then they are probably a laborer.                                                                           
                                                                                                                                
REPRESENTATIVE WOOL asked the difference  between a license and a                                                               
certificate of fitness.                                                                                                         
                                                                                                                                
REPRESENTATIVE   TUCK  clarified   that   the   terms  are   used                                                               
interchangeably, and the certificate of fitness is a license.                                                                   
                                                                                                                                
3:46:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked whether  there would be any demand                                                               
on the department in terms of the expense of enforcement.                                                                       
                                                                                                                                
MS.  KELLY  stated  there  would  likely be  a  small  amount  of                                                               
administrative work,  especially if there is  an appeals process,                                                               
but the division anticipated it would be minimal.                                                                               
                                                                                                                                
3:46:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL gave  the example  of  a crew  working on  a                                                               
house.  He  asked whether someone could do the  work and a person                                                               
with the certificate of fitness could "sign off on it."                                                                         
                                                                                                                                
REPRESENTATIVE TUCK  answered that the material  handling of pipe                                                               
did  not require  a license,  but  performing installations  did,                                                               
particularly on new construction.                                                                                               
                                                                                                                                
3:47:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD  asked about the chain  of events                                                               
for inspections and whether inspectors administer misdemeanors.                                                                 
                                                                                                                                
MS. KELLY gave  a general overview of the inspections.   She said                                                               
inspectors already  carry out inspections  for their  primary job                                                               
duty  and while  on site  they carry  out certificate  of fitness                                                               
checks  and give  out  cease and  desist orders.    She said  the                                                               
proposed  bill would  allow them  to issue  administrative fines.                                                               
She deferred to the mechanical inspection chief.                                                                                
                                                                                                                                
3:50:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KNOPP   asked    whether   the   Department   of                                                               
Environmental  Conservation  (DEC)  or   DLWD  had  oversight  on                                                               
installations.                                                                                                                  
                                                                                                                                
3:51:13 PM                                                                                                                    
                                                                                                                                
WILLIAM HARLAN, Chief,  Mechanical Inspection Section, Department                                                               
of  Labor &  Workforce Development  (DLWD), answered  he was  not                                                               
sure he understood to which type of installations he referred.                                                                  
                                                                                                                                
REPRESENTATIVE  KNOPP  replied  that  he  was  asking  about  DEC                                                               
oversight on septic system installations.                                                                                       
                                                                                                                                
MR.  HARLAN answered  in  the  affirmative.   He  added that  DEC                                                               
permits for installing a septic  system cover that work; however,                                                               
DLWD  licensure would  also cover  it, and  the department  would                                                               
defer to DEC permits.                                                                                                           
                                                                                                                                
3:52:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL referred  to  section 3  and  asked why  the                                                               
language included "person" rather than "employer".                                                                              
                                                                                                                                
MS. KELLY deferred to the Legislative Legal for clarification.                                                                  
                                                                                                                                
REPRESENTATIVE  TUCK answered  Legislative  Legal  was trying  to                                                               
make that language standard throughout all statutes.                                                                            
                                                                                                                                
3:53:49 PM                                                                                                                    
                                                                                                                                
CHAIR KITO opened public testimony on HB 255.                                                                                   
                                                                                                                                
3:53:56 PM                                                                                                                    
                                                                                                                                
BRANDON  MCGUIRE,  UA  Local 367  Plumbers  Union,  testified  in                                                               
support  of HB  255.   He said  he felt  the proposed  bill would                                                               
strengthen enforcement.  He gave  the example of electricians and                                                               
plumbers  working in  private homes.   He  maintained that  often                                                               
those performing  the work did  not have  a current license.   He                                                               
stated  it is  his  job to  speak  with non-union,  unrepresented                                                               
workers, and he  finds that often they are not  licensed, and the                                                               
vast  majority  do  not  have  a  certificate  of  fitness.    He                                                               
underlined that  incorrect installation  was an  important health                                                               
and safety  issue.  He stated  the current problem is  that there                                                               
are "no teeth behind enforcement."                                                                                              
                                                                                                                                
3:57:23 PM                                                                                                                    
                                                                                                                                
BRENT HOVDEN,  Licensed Electrician,  testified in support  of HB                                                               
255.  He indicated he is  a licensed commercial electrician and a                                                               
member of  IBEW Local  1547.   He stated  the ability  to enforce                                                               
certification requirements was the only  way to make sure work is                                                               
done safely.                                                                                                                    
                                                                                                                                
3:58:24 PM                                                                                                                    
                                                                                                                                
JASON ROE, Plumber, spoke in support  of HB 255.  He indicated he                                                               
is a non-union  plumber in Fairbanks, Alaska, and  that he thinks                                                               
"in  this particular  instance the  union  guys are  right."   He                                                               
stated  it was  important to  license  the trades  as there  were                                                               
severe  risks such  as amoebic  dysentery and  gas explosions  at                                                               
stake.    He   stated  he  was  frequently   frustrated  by  poor                                                               
workmanship and  had complained about illegal  workmanship to the                                                               
Department of Law  (DOL).  He said he felt  DOL did not currently                                                               
have the enforcement  tools to do something about  the issue, and                                                               
the proposed bill was necessary.                                                                                                
                                                                                                                                
4:00:59 PM                                                                                                                    
                                                                                                                                
KYLE KAISER,  IBEW Local  1547, testified in  support of  HB 255.                                                               
He  stated it  is very  common  to find  unlicensed people  doing                                                               
electrical work.  He gave the  example of finding a work offer on                                                               
Craigslist  which   did  not  involve   proper  licensing.     He                                                               
maintained the immediate  fine of $125 would be  a huge deterrent                                                               
for the  individual working illegally  for $200 or $300  a night.                                                               
He  added it  was a  huge liability  to have  someone who  is not                                                               
trained, and  it is important to  make sure the people  doing the                                                               
job are qualified.  He said  he felt the proposed bill would help                                                               
enforcement and keep people safe.                                                                                               
                                                                                                                                
4:03:49 PM                                                                                                                    
                                                                                                                                
RYAN ANDREW, IBEW Local 1547, testified in support of HB 255.                                                                   
He stated the  issue of licensing was a public  safety issue.  He                                                               
added that license requirements  ensure the people doing plumbing                                                               
and electrical work are properly trained.                                                                                       
                                                                                                                                
4:05:27 PM                                                                                                                    
                                                                                                                                
PAUL GROSSI,  Alaska State Pipe  Trades, testified in  support of                                                               
HB  255.   He  stated  the proposed  bill  would  not change  the                                                               
requirements  for  certificates  of  fitness,  "only  change  the                                                               
current law  from a criminal to  a civil offense, which  makes it                                                               
easier for the DLWD to enforce."                                                                                                
                                                                                                                                
4:06:24 PM                                                                                                                    
                                                                                                                                
DEBORAH BROLLINI testified in support of  HB 255.  She stated she                                                               
hoped the  enforcement effort in  the proposed  legislation would                                                               
be passed and funded.                                                                                                           
                                                                                                                                
CHAIR KITO announced  that public testimony would  remain open on                                                               
HB 255.                                                                                                                         
                                                                                                                                
[HB 255 was held over.]                                                                                                         
                                                                                                                                
                HB 240-PHARMACY BENEFITS MANAGERS                                                                           
4:07:40 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that the  final order of business  would be                                                               
HOUSE  BILL NO.  240, "An  Act relating  to the  registration and                                                               
duties  of pharmacy  benefits managers;  relating to  procedures,                                                               
guidelines,  and  enforcement  mechanisms  for  pharmacy  audits;                                                               
relating to the cost of  multi-source generic drugs and insurance                                                               
reimbursement procedures; relating to  the duties of the director                                                               
of  the division  of insurance;  and providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
4:08:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DAVID   GUTTENBERG,  Alaska   State  Legislature,                                                               
presented HB  240 as  prime sponsor.   He explained  the proposed                                                               
legislation  is about  the  relationship  between pharmacies  and                                                               
pharmacy benefit  managers (PBMs).   He stated the  proposed bill                                                               
would give the  pharmacies a remedial place to go  when there was                                                               
a  conflict.   He  added  the  bill  would  put the  director  of                                                               
insurance in  the middle of  the process to adjudicate  issues in                                                               
the audit.   He stated it was modeled  after national legislation                                                               
that had  been passed in  around 23 states.   He said  he thought                                                               
one  of the  issues  the bill  would affect  was  the ability  to                                                               
understand the  pricing of  prescription drugs.   He said  it was                                                               
not transparent but was moving in that direction.                                                                               
                                                                                                                                
4:09:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  remarked  the opponents  of  the  bill                                                               
raise  concerns  that  without  the  oversight  of  the  existing                                                               
system,  prices will  rise.   He asked  Representative Guttenberg                                                               
for his thoughts.                                                                                                               
                                                                                                                                
REPRESENTATIVE GUTTENBERG  replied that there is  no oversight to                                                               
the  existing  system.    He  indicated  he  had  spoken  to  the                                                               
administrators  for the  state, and  they did  not know  what the                                                               
prices are or what  they pay.  He added they  don't know who gets                                                               
the rebate  or at what  percentage.   He reiterated there  was no                                                               
transparency.   He opined  the opposition  reflected PBMs  on the                                                               
top of the Forbes 500 list  were concerned that people are trying                                                               
to  understand  the  rising  cost  of  prescription  drugs.    He                                                               
reiterated there was no oversight in the state.                                                                                 
                                                                                                                                
4:11:34 PM                                                                                                                    
                                                                                                                                
CHAIR  KITO stated  that public  testimony  on HB  240 [had  been                                                               
opened on  January 26] and  that invited testimony would  also be                                                               
heard.                                                                                                                          
                                                                                                                                
4:11:59 PM                                                                                                                    
                                                                                                                                
BILL HEAD,  Pharmaceutical Care Management Association,  spoke in                                                               
opposition  to  HB   240.    He  explained   PBMs  contract  with                                                               
employers,  unions,  and  government  plans  to  administer  drug                                                               
benefits offered  by those entities.   He said PBMs  compete with                                                               
one  another by  finding  ways to  help payers  save  money.   He                                                               
stated it  was estimated  PBMs would help  save payers  over $650                                                               
billion over the next 10 years.   He underlined an important part                                                               
of what PBMs  do is negotiate costs with drug  manufacturers.  He                                                               
added PBMs  contract with pharmacies  to establish  networks that                                                               
ensure the widest access possible  for consumers and patients who                                                               
have drug  benefits.  He  said PBMs  are often required  to audit                                                               
entities to avoid  fraud, waste, and abuse, and  it was estimated                                                               
that nationally  3 percent to  10 percent of  healthcare spending                                                               
is lost to fraud, waste, and  abuse, which adds up to billions of                                                               
dollars.                                                                                                                        
                                                                                                                                
MR. HEAD  said one of  the main reasons his  organization opposed                                                               
HB  240  is  that  it  would  restrict  PBMs'  ability  to  audit                                                               
pharmacies and prevent  fraud, waste, and abuse.   He pointed out                                                               
that  Centers for  Medicare  & Medicaid  Services  (CMS) and  all                                                               
their contracts with Part D  plans require such auditing, as does                                                               
virtually any  plan that employs a  PBM.  He stated  the proposed                                                               
bill would add  costly regulations, which would add  costs to the                                                               
purchaser of  healthcare and their  enrollees.  He said  the bill                                                               
would  interfere  with  the  ability   for  private  entities  to                                                               
contract with a  PBM.  He concluded,  "At the end of  the day, it                                                               
comes  down to  PBMs helping  purchasers save  money on  the drug                                                               
benefits they offer their enrollees."                                                                                           
                                                                                                                                
4:14:54 PM                                                                                                                    
                                                                                                                                
CHAIR  KITO stated  Mr. Head  had  said the  proposed bill  would                                                               
prohibit PBMs  from auditing, but  it was his  understanding that                                                               
HB 240  put sideboards on  the audit  process.  He  asked whether                                                               
Mr. Head  could say specifically  within the bill where  it would                                                               
prohibit audits.                                                                                                                
                                                                                                                                
MR.  HEAD stated  he had  misspoken and  clarified that  the bill                                                               
would interfere  with the  audit process.   He said  the proposed                                                               
bill  defeats  the purpose  of  detecting  fraud  if the  PBM  is                                                               
required to notify  the pharmacies of the audit.   He said he did                                                               
not  think other  entities  that have  audit  processes would  do                                                               
that.                                                                                                                           
                                                                                                                                
CHAIR KITO replied  he did receive audits every  year on workers'                                                               
compensation insurance payments and that  he was informed 30 days                                                               
before the audit.   He added he thought  creating some sideboards                                                               
creates predictability for  the industry and there  were too many                                                               
opportunities for fraud and abuse  "from the other side" if there                                                               
was no notice provided when someone was being audited.                                                                          
                                                                                                                                
CHAIR  KITO informed  that pharmacists  in Alaska  were reporting                                                               
that  they were  being denied  reimbursement for  the drugs  they                                                               
purchase,  and they  were  having to  pay  out-of-pocket for  the                                                               
balance for drugs they had already  dispensed.  He asked Mr. Head                                                               
to speak to the issue.                                                                                                          
                                                                                                                                
4:16:59 PM                                                                                                                    
                                                                                                                                
MR.  HEAD answered  he  was not  familiar with  the  issue as  it                                                               
pertains to  Alaska, but  that generally  there are  processes in                                                               
place  for the  pharmacists  to  appeal to  the  PBM  and to  the                                                               
division  of   insurance  to   resolve  any   disputes  regarding                                                               
contracts.                                                                                                                      
                                                                                                                                
CHAIR KITO stated  the committee had heard  from three pharmacies                                                               
who had identified about 1,000 appeals pending.                                                                                 
                                                                                                                                
MR. HEAD  answered that  suggested the process  was in  place but                                                               
was not as efficient as it should be.                                                                                           
                                                                                                                                
CHAIR  KITO  asked  whether  PBMs   are  prohibited  from  owning                                                               
pharmacies.                                                                                                                     
                                                                                                                                
MR. HEAD answered many of them do own mail-order pharmacies.                                                                    
                                                                                                                                
CHAIR KITO  said he thought there  may be a conflict  of interest                                                               
if the PBM could drive business to its own online pharmacy.                                                                     
                                                                                                                                
MR.  HEAD  answered  PBMs  were  not  producing  money  but  were                                                               
providing a service to the purchaser  and were in fact audited by                                                               
the purchaser.                                                                                                                  
                                                                                                                                
4:18:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked Mr.  Head whether he  believed it                                                               
was  accurate that  the proposed  bill is  consistent with  model                                                               
legislation.                                                                                                                    
                                                                                                                                
MR. HEAD  answered he  did not  know of  another state  that made                                                               
changes  to auditing  requirements or  allowed the  state to  get                                                               
directly  involved in  the contracts  between the  purchasers and                                                               
PBMS.                                                                                                                           
                                                                                                                                
4:20:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SULLIVAN-LEONARD said  she was  aware legislation                                                               
has passed in  other states to eliminate the PBM,  and the states                                                               
had found it  very cumbersome to replace the  service provided by                                                               
the PBM.  She asked Mr. Head to comment.                                                                                        
                                                                                                                                
CHAIR KITO clarified there was  nothing in the proposed bill that                                                               
would eliminate PBMs.                                                                                                           
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD restated her question.                                                                          
                                                                                                                                
MR. HEAD stated  if PBMs did not exist it  would make things much                                                               
more difficult and more expensive for  the consumer.  He added it                                                               
was a service borne of  necessity, the elimination of which would                                                               
result in much higher costs to the purchaser.                                                                                   
                                                                                                                                
4:22:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON remarked the  proposed bill seemed to be                                                               
a bill of rights for  pharmacists relative to the audit structure                                                               
and  asked whether  that  could be  accommodated  within the  PBM                                                               
model.                                                                                                                          
                                                                                                                                
MR. HEAD clarified  he is not an expert on  the audit process and                                                               
would like to  defer to someone with more experience.   He stated                                                               
PBMs were not  performing the audits for self-gain  but on behalf                                                               
of the purchaser with limited  funds to ensure those dollars were                                                               
being spent  in the most  cost-effective way.  He  underlined the                                                               
savings go to the purchaser and not to the PBM.                                                                                 
                                                                                                                                
4:24:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL asked whether he meant the consumer.                                                                        
                                                                                                                                
MR.  HEAD  clarified he  meant  both  the  health plans  and  the                                                               
consumer.    He reiterated  the  PBM  was  saving money  for  the                                                               
organization  that provides  healthcare and  for the  consumer in                                                               
the long run through lower premiums and co-pays.                                                                                
                                                                                                                                
REPRESENTATIVE  WOOL  remarked  36   states  had  passed  similar                                                               
legislation.  He  asked whether online pharmacies  are subject to                                                               
the same audits and whether  the mail-order pharmacies were self-                                                               
audited.                                                                                                                        
                                                                                                                                
MR. HEAD  stated that would  be a  conflict of interest  and that                                                               
mail-order pharmacies are required to  have the same licenses and                                                               
follow  the same  rules as  any pharmacy,  including audits.   He                                                               
reminded that  mail-order was  not dispensing the  same way  as a                                                               
retail  pharmacy, which  ultimately means  the consumer  can save                                                               
money on prescriptions.                                                                                                         
                                                                                                                                
4:28:07 PM                                                                                                                    
                                                                                                                                
DOMINIC   GUGLIUZZA,  Vice   President,   Finance,  CVS   Health,                                                               
testified  in opposition  to HB  240.   He explained  one of  his                                                               
team's responsibilities  is to  calculate maximum  allowable cost                                                               
(MAC) price  used by the  claims processing systems  to reimburse                                                               
pharmacies for generic drugs.   He explained the team reviews the                                                               
marketplace  and  product  availability   for  generic  drugs  to                                                               
implement MAC changes, typically on a  weekly basis.  He added it                                                               
creates an opportunity for  additional market feedback, including                                                               
pharmacy feedback  through the  appeals process.   He  stated the                                                               
feedback could lead the team to  modify MAC prices.  He explained                                                               
the MAC  model was  established by the  Centers for  Medicare and                                                               
Medicaid Services to create incentive  for pharmacies to purchase                                                               
the  lowest-priced drugs.   He  stated he  believes HB  240 would                                                               
drive  up  consumer  costs  by   limiting  the  use  of  the  MAC                                                               
reimbursement  tool.   He  said restricting  which  drugs can  be                                                               
reimbursed using  MAC would  allow pharmacies  to be  overpaid at                                                               
brand rates for generic drugs  and would remove the incentive for                                                               
wholesalers to  sell drugs  at the  lowest prices  if wholesalers                                                               
know  that the  reimbursement level  will ensure  a profit  for a                                                               
pharmacy and therefore ensure their profit.                                                                                     
                                                                                                                                
4:30:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked  in which section of  the bill MAC                                                               
pricing  is "undone,"  wherein  an  independent pharmacist  could                                                               
charge more than MAC pricing would allow.                                                                                       
                                                                                                                                
MR. GUGLIUZZA said he believed  one of the sections would require                                                               
PBMs  to  change their  prices  based  on  the invoiced  cost  if                                                               
pharmacies appeal MAC  prices.  He stated  this could incentivize                                                               
wholesalers to avoid  purchasing at the lowest cost.   He added a                                                               
lot   of  pharmacies   use   [Pharmacy  Services   Administrative                                                               
Organizations] PSAOs,  which are owned by  wholesalers, to obtain                                                               
their  products.   He said  it could  incentivize wholesalers  to                                                               
keep prices  high if  they knew pharmacies  could appeal  and the                                                               
PBM would have to grant the appeal and change the cost.                                                                         
                                                                                                                                
CHAIR  KITO posited  a  scenario in  which  a pharmacy  purchases                                                               
drugs on a  schedule and later dispenses that  medication but the                                                               
MAC price  changes in  the interim, causing  the pharmacy  to pay                                                               
out of  pocket.   He reiterated the  statement that  ensuring the                                                               
pharmacy  is responsible  for the  cost would  save the  consumer                                                               
money.  He suggested that   "too much activity in that vein could                                                               
actually put a pharmacy out of business."                                                                                       
                                                                                                                                
4:33:24 PM                                                                                                                    
                                                                                                                                
MR. GUGLIUZZA answered he thought  that would be a highly unusual                                                               
situation.   He  explained PBMs  do  not typically  have a  large                                                               
supply  of inventory.   He  added the  reverse could  occur where                                                               
there is  change in generic  price that makes it  more expensive.                                                               
He said the pharmacies were  still making money from an aggregate                                                               
perspective.                                                                                                                    
                                                                                                                                
4:34:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL  asked whether  Mr. Gugliuzza  was suggesting                                                               
the appeals process would be created or enhanced.                                                                               
                                                                                                                                
MR. GUGLIUZZA offered to describe the appeals process.                                                                          
                                                                                                                                
REPRESENTATIVE WOOL responded he thought it would be useful.                                                                    
                                                                                                                                
MR. GUGLIUZZA  explained CVS  has a  pharmacy portal  for appeals                                                               
which the  team monitors daily.   He said often  more information                                                               
is required for  evaluation, then a determination is  made, and a                                                               
response is given to the pharmacy.                                                                                              
                                                                                                                                
4:37:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD  stated it  seemed that  there is                                                               
already  a process  in  place involving  a  private contract  and                                                               
specific manuals for pharmacies.  She  asked why there was a need                                                               
for "government intrusion."                                                                                                     
                                                                                                                                
MR. GUGLIUZZA replied that he agreed with her statement.                                                                        
                                                                                                                                
4:38:43 PM                                                                                                                    
                                                                                                                                
LEIF  HOLM, Pharmacist,  testified  in  support of  HB  240.   He                                                               
stated he  is also state president  of the Board of  Pharmacy but                                                               
was  testifying as  a pharmacist.    He gave  his background  and                                                               
added  he started  the first  independent telepharmacy  in Healy,                                                               
Alaska.   He  stated pharmacists  live in  fear of  the PBMs  and                                                               
their tactics.   He  added pharmacists are  dependent on  PBMs as                                                               
only about  3 percent  of people pay  cash for  their medication.                                                               
He responded to the question  of government intrusion, stating it                                                               
was  because  contracts  were  "take  it or  leave  it"  with  no                                                               
negotiations.  He said he  thought PBMs were driving consumers to                                                               
mail-order pharmacy which they owned.                                                                                           
                                                                                                                                
MR. HOLM stated that since  October [2017] there had been drastic                                                               
cuts  in reimbursement  of  MAC  prices.   He  added the  appeals                                                               
process is broken and that all his  appeals are denied.   He said                                                               
he felt he was doing more  work for less compensation.  He stated                                                               
pharmacies  have  closed  everywhere,  which was  a  concern  for                                                               
public  safety as  small towns  depend on  independent pharmacies                                                               
for access  to medication.   He  stated mail-order  pharmacy does                                                               
not work in  Alaska as prescriptions are lost,  frozen, or create                                                               
waste  due  to the  pharmacy  not  receiving updated  information                                                               
regarding  the  customer's  need   to  continue  to  receive  the                                                               
medication.   He  said he  thought it  was not  a good  model for                                                               
Alaska.  He described his telepharmacy  in Healy and said the way                                                               
he was  being reimbursed at  MAC prices he  did not know  that he                                                               
could  sustain the  model.   He said  he thought  the bill  would                                                               
create a fair playing field.                                                                                                    
                                                                                                                                
4:44:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH asked  whether there  are any  models which                                                               
show  how  pharmacists could  get  paid  for their  services  and                                                               
expertise beyond retail transactions.                                                                                           
                                                                                                                                
MR. HOLM  answered that  pharmacists are  not currently  paid for                                                               
their expertise and there are no models that provide for that.                                                                  
                                                                                                                                
4:46:56 PM                                                                                                                    
                                                                                                                                
JUSTIN RUFFRIDGE,  Owner, Soldotna Professional  Pharmacy; Juneau                                                               
Drug Company, testified  in support of HB 240.   He stated he was                                                               
concerned  independent  pharmacies  could  be  misunderstood  and                                                               
wanted to  underline they only  want transparency from PBMs.   He                                                               
added  the  issue  of  PBMs  affects  all  pharmacies,  not  just                                                               
independents;     however,     independent    pharmacists     are                                                               
businessowners  and pharmacists  and have  a unique  prospective,                                                               
while other pharmacists working for  large stores may be shielded                                                               
from  the  problem through  corporate  structures.   He  remarked                                                               
audits  were originally  intended to  be random  fraud prevention                                                               
checks, whereas  pharmacies are now being  audited constantly and                                                               
were focused  on the  most expensive  brand drugs.   He  gave the                                                               
example of a request  for an audit going back 3  years by a major                                                               
PBM,  the information  for which  took 3  hours to  prepare.   He                                                               
stated  that  typically a  random  audit  would have  to  include                                                               
cheaper generic  drugs, but  he had been  able to  identify which                                                               
drugs would  be included in an  audit by price alone.   He stated                                                               
the example  showed the current  audit practices are not  fair or                                                               
random.    He  reiterated  pharmacies must  have  protections  in                                                               
place.                                                                                                                          
                                                                                                                                
4:52:25 PM                                                                                                                    
                                                                                                                                
STEPHEN SREBERNAK,  Owner, Family  Pharmacy, spoke in  support of                                                               
HB 240.   He clarified he did  not know of anyone  who is against                                                               
audits as they  are useful tools to detect problems  of fraud and                                                               
waste.  He compared PBM audits  with Medicare audits.  He said he                                                               
thinks it makes sense  to have rules.  He stated  he did not know                                                               
where MAC  prices came from  and that  he was "losing  money left                                                               
and  right."   He  stated  he  feels  the appeals  process  isn't                                                               
working.    He said  he  had  sent in  over  300  appeals in  the                                                               
previous year and had not had  a single response.  He highlighted                                                               
that pharmacies perform a service  for communities.  He concluded                                                               
that the pharmacists were hoping for some transparency.                                                                         
                                                                                                                                
4:55:00 PM                                                                                                                    
                                                                                                                                
DIRK WHITE,  Pharmacist, spoke in support  of HB 240.   He stated                                                               
he had about 30-35 employees in  two locations in Sitka.  He said                                                               
pharmacies  need  to  have the  proposed  legislation  passed  as                                                               
pharmacists have no place to go  for redress because PBMs are not                                                               
registered or  licensed in the  state.  He said  pharmacists need                                                               
some government  division to get help.   He described one  of the                                                               
latest issues with reversing a  claim, saying a prescription gets                                                               
taken back  from the  PBM after  a patient does  not pick  up the                                                               
prescription.  He  added this time the PBM took  the co-pay if as                                                               
if  the  patient got  it.    He spoke  to  MACs  coming in  below                                                               
acquisition  costs,  meaning  the  pharmacy  was  losing  freight                                                               
costs, which were  about 3 percent.  He suggested  no business is                                                               
going to  buy a more  expensive product  than it needs,  so there                                                               
was no way  a MAC was going  to incentivize to "buy  better."  He                                                               
mentioned other  states that have passed  similar legislation and                                                               
suggested  if the  prices  had  gone up,  the  states would  have                                                               
repealed the legislation.                                                                                                       
                                                                                                                                
5:00:44 PM                                                                                                                    
                                                                                                                                
CATHERINE KOWALSKI,  Pharmacist, testified in support  of HB 240.                                                               
She  shared her  family history  in the  pharmacy industry.   She                                                               
spoke to moments when the  pharmacies in remote communities saved                                                               
lives.  She emphasized that  her business was struggling in terms                                                               
of time,  labor, and reimbursement  from PBMs.  She  remarked she                                                               
currently had 250 negative revenue  claims.  She cited that other                                                               
states had passed similar bills and  said Alaska needed to do the                                                               
same.                                                                                                                           
                                                                                                                                
5:04:17 PM                                                                                                                    
                                                                                                                                
DEBBIE JOHNSON testified in support of  HB 240.  She relayed that                                                               
she lives in  a remote area of  Alaska off the road  system.  She                                                               
referred to  the section  in the  proposed legislation  stating a                                                               
pharmacy  should not  be penalized  for mailing  out drugs.   She                                                               
underlined that she does not have  a way to get medication except                                                               
through the mail or on float planes.                                                                                            
                                                                                                                                
5:06:39 PM                                                                                                                    
                                                                                                                                
CHAIR KITO closed public testimony on HB 240.                                                                                   
                                                                                                                                
5:06:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD stated she  would like to do more                                                               
research on the  matter.  She asked whether HB  240 could be held                                                               
over.                                                                                                                           
                                                                                                                                
CHAIR  KITO  explained  that  the   bill  had  another  committee                                                               
referral and that he was compelled to move the bill forward.                                                                    
                                                                                                                                
5:07:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether  the state  had taken  a                                                               
position on HB 240.                                                                                                             
                                                                                                                                
CHAIR KITO answered that the state  had not taken a position, but                                                               
that Emily Ricci from the  Department of Administration had given                                                               
testimony in the previous hearing of HB 240.                                                                                    
                                                                                                                                
5:08:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KNOPP indicated  he  was  convinced the  proposed                                                               
bill was  about clear and  transparent auditing, so he  was ready                                                               
to support the bill moving forward.                                                                                             
                                                                                                                                
5:08:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL moved to report  HB 240 out of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being  no objection, HB 240  was reported out of  the House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
5:09:34 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:09 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB302 Sponsor Statement.pdf HL&C 2/2/2018 3:15:00 PM
HB 302
HB302 Fiscal Note DCCED CBPL 1.26.18.pdf HL&C 2/2/2018 3:15:00 PM
HB 302
HB302 Version A.PDF HL&C 2/2/2018 3:15:00 PM
HB 302
HB240 Supporting Documents-National Community Pharmacists Association Payments That Give You Fevers and Chills 1.29.18.pdf HL&C 2/2/2018 3:15:00 PM
HB 240
HB255 Sectional Analysis 1.23.18.pdf HL&C 2/2/2018 3:15:00 PM
HB 255
HB255 ver O 1.23.18.PDF HL&C 2/2/2018 3:15:00 PM
HB 255
HB255 Sponsor Statement 1.23.18.pdf HL&C 2/2/2018 3:15:00 PM
HB 255
HB255 Fiscal Note DOLWD MI 1.26.18.pdf HL&C 2/2/2018 3:15:00 PM
HB 255