Legislature(2017 - 2018)SENATE FINANCE 532

04/09/2018 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 38 PHARMACY BENEFITS MANAGERS TELECONFERENCED
Heard & Held
+ SB 185 REEMPLOYMENT OF RETIRED TEACHERS & ADMIN TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= HB 273 EXTEND: MARIJUANA CONTROL BOARD TELECONFERENCED
Moved HB 273 Out of Committee
+= HB 278 EXTEND:CERT. REAL ESTATE APPRAISERS BOARD TELECONFERENCED
Moved HB 278 Out of Committee
+= HB 279 EXTEND: REAL ESTATE COMMISSION TELECONFERENCED
Moved HB 279 Out of Committee
                 SENATE FINANCE COMMITTEE                                                                                       
                       April 9, 2018                                                                                            
                         9:13 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:13:32 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  MacKinnon  called  the  Senate  Finance  Committee                                                                    
meeting to order at 9:13 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Natasha von Imhof                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Sam  Kito,  Sponsor; Sara  Chambers,  Deputy                                                                    
Director,   Division    of   Corporations,    Business   and                                                                    
Professional  Licensing, Department  of Commerce,  Community                                                                    
and  Economic  Development; Representative  Andy  Josephson,                                                                    
Sponsor;  Senator  Cathy   Giessel,  Sponsor;  Jane  Conway,                                                                    
Staff,  Senator Cathy  Giessel;  Lori Wing-Heier,  Director,                                                                    
Division  of Insurance,  Department  of Commerce,  Community                                                                    
and   Economic  Development;   Emily  Ricci,   Chief  Policy                                                                    
Administrator,   Division   of  Retirement   and   Benefits,                                                                    
Department of  Administration; Rachel Hanke,  Staff, Senator                                                                    
Peter  Micciche;  Lisa  Parady, Executive  Director,  Alaska                                                                    
Council  of   School  Administrators;  Dr.   Karen  Gaborik,                                                                    
President, Alaska Superintendents  Association; Norm Wooten,                                                                    
Executive  Director, Association  of  Alaska School  Boards;                                                                    
Mark  Miller, Superintendent,  Juneau School  District; Mary                                                                    
Wegner, Superintendent,  Sitka School District;  Sean Dusek,                                                                    
Superintendent,  Kenai  Peninsula Borough  School  District;                                                                    
Bobby Bolen, Superintendent,  Bering Strait School District;                                                                    
Monica   Goyette,  Superintendent,   Matsu  Borough   School                                                                    
District; Kathy Lea, Chief Pension Officer Division of                                                                          
Retirement and Benefits, Department of Administration.                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Deena Bishop, Superintendent, Anchorage School District.                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 38     PHARMACY BENEFITS MANAGERS                                                                                            
                                                                                                                                
          SB 38 was HEARD and  HELD in committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
SB 185    REEMPLOYMENT OF RETIRED TEACHERS and ADMIN                                                                            
                                                                                                                                
          SB  185  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 273    EXTEND: MARIJUANA CONTROL BOARD                                                                                       
                                                                                                                                
          HB 273  was REPORTED out  of committee with  a "do                                                                    
          pass"  recommendation  and   with  the  previously                                                                    
         published fiscal impact note: FN 2(DEC).                                                                               
                                                                                                                                
HB 278    EXTEND:CERT. REAL ESTATE APPRAISERS BOARD                                                                             
                                                                                                                                
          HB 278  was REPORTED out  of committee with  a "do                                                                    
          pass" recommendation and with  one new fiscal note                                                                    
          from  the Department  of  Commerce, Community  and                                                                    
          Economic Development.                                                                                                 
                                                                                                                                
HB 279    EXTEND: REAL ESTATE COMMISSION                                                                                        
                                                                                                                                
          HB 279  was REPORTED out  of committee with  a "do                                                                    
          pass" recommendation and with  one new fiscal note                                                                    
          from  the Department  of  Commerce, Community  and                                                                    
          Economic Development.                                                                                                 
                                                                                                                                
HOUSE BILL NO. 273                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the                                                                              
     Marijuana Control Board; and providing for an                                                                              
     effective date."                                                                                                           
                                                                                                                                
9:15:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SAM KITO, SPONSOR, introduced himself.                                                                           
                                                                                                                                
Vice-Chair Bishop MOVED to REPORT HB 273 out of Committee                                                                       
with individual recommendations and the accompanying fiscal                                                                     
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
HB 273 was REPORTED out of committee with a "do pass"                                                                           
recommendation and with the previously published fiscal                                                                         
impact note: FN 2(DEC).                                                                                                         
                                                                                                                                
9:15:51 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:16:42 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 278                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the Board of                                                                     
     Certified Real Estate Appraisers; and providing for an                                                                     
     effective date."                                                                                                           
                                                                                                                                
9:16:49 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon discussed the history of the bill.                                                                           
                                                                                                                                
9:17:08 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:18:40 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
9:18:58 AM                                                                                                                    
                                                                                                                                
Senator Micciche stated that he had a question for the                                                                          
department.                                                                                                                     
                                                                                                                                
9:19:21 AM                                                                                                                    
                                                                                                                                
Senator Micciche looked at the fee analysis.                                                                                    
                                                                                                                                
9:19:53 AM                                                                                                                    
                                                                                                                                
SARA  CHAMBERS, DEPUTY  DIRECTOR, DIVISION  OF CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, //                                                                                
                                                                                                                                
9:20:07 AM                                                                                                                    
                                                                                                                                
Senator Micciche //                                                                                                             
                                                                                                                                
9:20:17 AM                                                                                                                    
                                                                                                                                
Vice-Chair Bishop  MOVED to REPORT  HB 278 out  of Committee                                                                    
with  individual  recommendations  and  accompanying  fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
HB  278 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation  and  with  one  new  fiscal  note  from  the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
9:20:42 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:24:13 AM                                                                                                                    
                                                                                                                                
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 279                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the Real                                                                         
     Estate Commission; and providing for an effective                                                                          
     date."                                                                                                                     
                                                                                                                                
9:24:55 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:25:08 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
9:25:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ANDY  JOSEPHSON,  SPONSOR, stated  that  the                                                                    
Senatre Labot and Commerce COmmittee //                                                                                         
                                                                                                                                
9:25:37 AM                                                                                                                    
                                                                                                                                
Senator Micciche //                                                                                                             
                                                                                                                                
9:26:03 AM                                                                                                                    
                                                                                                                                
SARA  CHAMBERS, DEPUTY  DIRECTOR, DIVISION  OF CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  explained                                                                    
that the statute outlined that //                                                                                               
                                                                                                                                
9:26:58 AM                                                                                                                    
                                                                                                                                
Senator Micciche noted that // Ms. Chambers replied //                                                                          
                                                                                                                                
9:28:41 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon // Ms. Chambers //                                                                                           
                                                                                                                                
9:28:56 AM                                                                                                                    
                                                                                                                                
Vice-Chair Bishop  MOVED to REPORT  HB 279 out  of Committee                                                                    
with  individual  recommendations  and  accompanying  fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
HB  279 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation  and  with  one  new  fiscal  note  from  the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
9:29:27 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:30:58 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 38                                                                                                            
                                                                                                                                
     "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."                                                                           
                                                                                                                                
9:32:05 AM                                                                                                                    
                                                                                                                                
SENATOR CATHY GIESSEL, SPONSOR, introduced the legislation.                                                                     
                                                                                                                                
9:34:41 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon //                                                                                                           
                                                                                                                                
9:34:53 AM                                                                                                                    
                                                                                                                                
JANE CONWAY, STAFF, SENATOR CATHY GIESSEL, stated that she                                                                      
would provide an overview.                                                                                                      
                                                                                                                                
9:35:11 AM                                                                                                                    
                                                                                                                                
Ms. Conway discussed, "Pharmacy Benefit Managers" (copy on                                                                      
file).                                                                                                                          
                                                                                                                                
9:35:19 AM                                                                                                                    
                                                                                                                                
Ms. Conway looked at slide 2, "SB 38 is a":                                                                                     
                                                                                                                                
     •  consumer  protection  bill shines  a  light  on  PBM                                                                    
     opaque  auditing  and  MAC pricing  practices  to  help                                                                    
     drive prescription costs down                                                                                              
                                                                                                                                
                                                                                                                                
     •  small-business protection  bill  components of  this                                                                    
     bill  helps  ensure  viability of  critical  small-town                                                                    
     Alaska pharmacies and access to health care                                                                                
                                                                                                                                
9:35:48 AM                                                                                                                    
                                                                                                                                
Ms. Conway highlighted slide 3, "What's a PBM?":                                                                                
                                                                                                                                
     PBMs are multi-billion dollar middlemen                                                                                    
                                                                                                                                
     Started  in1970 as  claims processers,  now intertwined                                                                    
     in almost  every aspect of  the pharmaceutical/pharmacy                                                                    
     supply chain                                                                                                               
                                                                                                                                
     Virtually unregulated, state or federal level                                                                              
                                                                                                                                
     Today,  the  top  PBMs  represent   some  of  the  most                                                                    
     profitable companies in the nation                                                                                         
                                                                                                                                
9:36:28 AM                                                                                                                    
                                                                                                                                
Ms. Conway addressed slide 4, "Examples of PBM's Market                                                                         
Power/Influence":                                                                                                               
                                                                                                                                
     CVS/Caremark (AK State Plan Pharmacy Benefit Manager)                                                                      
                                                                                                                                
          2017 - 7th most profitable U.S. company in                                                                            
          Fortune 500                                                                                                           
                                                                                                                                
          2017 Revenue: $177.5 Billion                                                                                          
          Express Scripts Holding                                                                                               
                                                                                                                                
          ESH generated $100.3 billion in revenue in 2017 -                                                                     
          Number 22 ranking                                                                                                     
                                                                                                                                
9:37:02 AM                                                                                                                    
                                                                                                                                
Ms. Conway discussed slide 5, "State of Alaska Health Care                                                                      
Plan."                                                                                                                          
                                                                                                                                
9:37:19 AM                                                                                                                    
                                                                                                                                
Ms. Conway highlighted slide 6, "PBMs were designed to:"                                                                        
                                                                                                                                
     reduce administrative costs for insurers                                                                                   
                                                                                                                                
     validate patient eligibility                                                                                               
                                                                                                                                
     administer plan benefits                                                                                                   
                                                                                                                                
    negotiate costs between pharmacies and health plans                                                                         
                                                                                                                                
     audit pharmacies for fraud                                                                                                 
                                                                                                                                
9:37:40 AM                                                                                                                    
                                                                                                                                
Ms. Conway discussed slide 7, "PBM's Impact on Pharmacy and                                                                     
Patients":                                                                                                                      
                                                                                                                                
     PBMs develop pharmacy provider networks with contracts                                                                     
                                                                                                                                
     Pharmacies must accept a PBM contract                                                                                      
                                                                                                                                
     Many contracts truly are "take it or leave it."                                                                            
     If they don't sign it, they lose all the customers                                                                         
     covered by that plan                                                                                                       
                                                                                                                                
     PBMs influence what drugs are dispensed regardless of                                                                      
     what a physician prescribes by using a list of PBM-                                                                        
     approved drugs known as "formularies"                                                                                      
                                                                                                                                
                                                                                                                                
     PBMs  receive  rebates   from  drug  manufacturers  for                                                                    
     putting their drugs on a given formulary                                                                                   
                                                                                                                                
9:38:23 AM                                                                                                                    
                                                                                                                                
Ms. Conway looked at slide 8, "PBM's Impact on Pharmacy and                                                                     
Patients":                                                                                                                      
                                                                                                                                
     PBMs dictate how  much pharmacies will be  paid for the                                                                    
     drugs  they  dispense  regardless  of  the  pharmacies'                                                                    
     acquisition costs                                                                                                          
                                                                                                                                
     PBMs  have free  reign to  dictate what  pharmacies are                                                                    
     permitted  to do  in a  given  network thereby  driving                                                                    
     patients to particular pharmacy options                                                                                    
                                                                                                                                
     PBMs operate  their own  mail-order pharmacies  and can                                                                    
     incentivize  or  mandate  that customers  obtain  their                                                                    
     medications only through the mail-order option                                                                             
                                                                                                                                
9:38:59 AM                                                                                                                    
                                                                                                                                
Ms. Conway addressed slide 9, " ///                                                                                             
                                                                                                                                
9:41:59 AM                                                                                                                    
                                                                                                                                
Ms. Conway highlighted slide 10, "National Academy of State                                                                     
Health Policy:"                                                                                                                 
                                                                                                                                
     •  80 pieces  of  legislation  currently introduced  in                                                                    
     state legislatures  across the country to  regulate PBM                                                                    
     practices. Even the White House is paying attention.                                                                       
                                                                                                                                
     • The  fair audit  provisions of  SB 38  are consistent                                                                    
     with legislation in other states                                                                                           
                                                                                                                                
     •  The  PBM  requirements  for  setting  pharmacy  drug                                                                    
     reimbursement rates, including  appeals, are similar to                                                                    
     other states                                                                                                               
                                                                                                                                
9:42:40 AM                                                                                                                    
                                                                                                                                
Ms. Conway looked at slide 11, "Fair Pharmacy Audit                                                                             
Legislation in the States."                                                                                                     
                                                                                                                                
9:43:03 AM                                                                                                                    
                                                                                                                                
Ms. Conway highlighted slide 12, "States With Generic Drug                                                                      
Pricing Transparency Legislation Enacted."                                                                                      
                                                                                                                                
9:43:18 AM                                                                                                                    
                                                                                                                                
Ms. Conway discussed slide 13, "Maximum Allowable Cost                                                                          
(MAC)":                                                                                                                         
                                                                                                                                
     A "maximum  allowable cost" or  "MAC" list refers  to a                                                                    
     payer or PBM -generated  list of products that includes                                                                    
     the upper limit or maximum  amount that a plan will pay                                                                    
     for  generic  drugs  and  brand-name  drugs  that  have                                                                    
    generic versions available ("multi-source brands").                                                                         
                                                                                                                                
     A PBM  may have several different  MAC lists, depending                                                                    
     on the plan                                                                                                                
                                                                                                                                
     Essentially, no  two MAC lists  are alike and  each PBM                                                                    
     has free  reign to pick  and choose products  for their                                                                    
     MAC lists.                                                                                                                 
                                                                                                                                
     Sometimes   the  MAC   list   is   confused  with   the                                                                    
     "formulary."                                                                                                               
                                                                                                                                
     A  Formulary  is a  list  of  all  the drugs  that  are                                                                    
     covered by  a particular  insurance plan.  Generally it                                                                    
     has no pricing  attached to it. A  formulary will usual                                                                    
     contain both Brand and Generic Drugs.                                                                                      
                                                                                                                                
9:44:19 AM                                                                                                                    
                                                                                                                                
Ms. Conway highlighted slide 14, "PBM Use of MAC as Revenue                                                                     
Stream":                                                                                                                        
                                                                                                                                
     Because of  this lack  of clarity,  PBMs can  use their                                                                    
     MAC lists to generate significant revenue                                                                                  
                                                                                                                                
     Typically, they  utilize an aggressively low  MAC price                                                                    
     list  to reimburse  their contracted  pharmacies and  a                                                                    
     different, higher  list of  prices when  they negotiate                                                                    
     prices with their clients or plan sponsors                                                                                 
                                                                                                                                
     Essentially,  the PBMs  reimburse low  and charge  high                                                                    
     with their  MAC price lists, pocketing  the significant                                                                    
     spread between the two prices                                                                                              
                                                                                                                                
     Most plan sponsors are unaware  that multiple MAC lists                                                                    
     are being  used and  have no real  concept of  how much                                                                    
     revenue the PBM retains                                                                                                    
                                                                                                                                
Ms. Conway looked at slide 15, "MAC Pricing":                                                                                   
                                                                                                                                
     When  the PBMs  fail to  update MAC  lists in  a timely                                                                    
     manner, pharmacies  are often  forced to dispense  at a                                                                    
     loss, sometimes  as high  as $100 or  more on  a single                                                                    
     prescription, or not dispense at all                                                                                       
                                                                                                                                
     (The MAC  lists can  be updated at  any time  - usually                                                                    
     decreased- so  real time prices are  often obsolete and                                                                    
     less than what the pharmacist expected)                                                                                    
                                                                                                                                
     When  prices increase,  PBMs often  wait weeks  or even                                                                    
     months before  updating MAC lists and  rarely, if ever,                                                                    
     reimburse  pharmacies retroactively,  yet the  PBMs act                                                                    
    swiftly to update MAC list when drug costs decrease                                                                         
                                                                                                                                
     This significantly  jeopardizes financial  viability of                                                                    
     community pharmacies                                                                                                       
                                                                                                                                
     In   fact,  84   percent   of   pharmacists  said   the                                                                    
     acquisition price spike/lagging  reimbursement trend is                                                                    
     a "very significant" impact on  their ability to remain                                                                    
     in business and to continue serving patients                                                                               
                                                                                                                                
9:46:31 AM                                                                                                                    
                                                                                                                                
Ms. Conway looked at slide 16, "MAC Pricing":                                                                                   
                                                                                                                                
     MAC  legislation  is  designed  to  reasonably  address                                                                    
     concerns by:                                                                                                               
                                                                                                                                
          Providing clarity to plan sponsors and pharmacies                                                                     
          with/regard to how MAC pricing is determined and                                                                      
          updated                                                                                                               
                                                                                                                                
          Establishing an appeals process by which a                                                                            
          dispensing pharmacist can contest a listed MAC                                                                        
          price                                                                                                                 
                                                                                                                                
          Providing standardization for how products are                                                                        
          selected for inclusion on a MAC list                                                                                  
                                                                                                                                
     The  MAC  process  provides no  transparency  for  plan                                                                    
     sponsors or contracted retail network pharmacies.                                                                          
                                                                                                                                
     They are required to blindly agree to contracts.                                                                           
                                                                                                                                
Ms. Conway skipped slide 17, "MAC Pricing."                                                                                     
                                                                                                                                
9:47:16 AM                                                                                                                    
                                                                                                                                
Ms. Conway discussed slide 18, "SB 38: What Does A MAC                                                                          
Transparency Bill Do?"                                                                                                          
                                                                                                                                
     Sets reasonable standards                                                                                                  
                                                                                                                                
     Requires  regular reporting  of MACs  to a  pharmacy in                                                                    
     useable format                                                                                                             
                                                                                                                                
     Provides for a defined MAC appeals process                                                                                 
                                                                                                                                
     A MAC Transparency Bill Does NOT:                                                                                          
                                                                                                                                
          Mandate that a PBM reimburse a pharmacy at a                                                                          
          higher amount                                                                                                         
                                                                                                                                
          Represent an administrative burden on the PBM                                                                         
                                                                                                                                
          Mandate that a PBM approve a pharmacy's MAC                                                                           
          appeal                                                                                                                
                                                                                                                                
          Result in increased costs to the healthcare                                                                           
          system                                                                                                                
                                                                                                                                
     There is no documented  evidence or analysis nationally                                                                    
     that MAC  pricing legislation has  increased healthcare                                                                    
     costs.                                                                                                                     
                                                                                                                                
Ms. Conway looked at slide 19, "SB 38 - What Does a Fair                                                                        
Audit Bill Do?                                                                                                                  
                                                                                                                                
     Brings  fairness  to   the  unregulated  and  expanding                                                                    
     practice of pharmacy audits                                                                                                
                                                                                                                                
     Does not  allow audits during the  first seven calendar                                                                    
     days of each month because  of the high patient volume,                                                                    
     unless the pharmacy and auditor agree otherwise                                                                            
                                                                                                                                
     Prevents   the   targeting   of   minor   clerical   or                                                                    
     administrative errors  here no fraud, patient  harm, or                                                                    
     financial loss has occurred                                                                                                
                                                                                                                                
     Establishes    submission   of    data/medical   record                                                                    
     standards    to   allow    for   clarification    where                                                                    
     discrepancies are identified                                                                                               
                                                                                                                                
     Establishes   a   reasonable   time   frame   for   the                                                                    
     announcement of  an audit to allow  proper retrieval of                                                                    
     records under review                                                                                                       
                                                                                                                                
Ms. Conway highlighted slide 20, "What Does a Fair Audit                                                                        
Bill Do?"                                                                                                                       
                                                                                                                                
    Establishes an audit appeals process for pharmacies                                                                         
                                                                                                                                
     Establishes  guidelines for  PBMs  to follow  regarding                                                                    
     patient confidentiality                                                                                                    
                                                                                                                                
    Prohibits extrapolation in assessing fees/penalties                                                                         
                                                                                                                                
     Allows   Alaska  pharmacists   to  provide   mail-order                                                                    
     service to their customers without penalization                                                                            
                                                                                                                                
     Local  mail-order  service   keeps  Alaska  dollars  in                                                                    
     Alaska                                                                                                                     
                                                                                                                                
     Legislation does  not prevent  the recoupment  of funds                                                                    
     where fraud, waste, and abuse exist                                                                                        
                                                                                                                                
9:50:06 AM                                                                                                                    
                                                                                                                                
Ms. Conway discussed slide 21, "SB 38: Summary":                                                                                
                                                                                                                                
     40 states have enacted fair audit legislation                                                                              
                                                                                                                                
     34  states have  enacted Maximum  Allowable Cost  (MAC)                                                                    
     transparency legislation                                                                                                   
                                                                                                                                
     Bill will also include:                                                                                                    
                                                                                                                                
     Registration of PBMs with the  State of Alaska Division                                                                    
     of  Insurance   Set-up  guidelines  for   generic  drug                                                                    
     maximum allowable cost (MAC) pricing by PBMs                                                                               
                                                                                                                                
     Establish  a mechanism  for a  pharmacy  to appeal  MAC                                                                    
     pricing appeal denials                                                                                                     
                                                                                                                                
     Don't audit local pharmacies out of business.                                                                              
     Their services are crucial in our rural areas.                                                                             
                                                                                                                                
9:50:51 AM                                                                                                                    
                                                                                                                                
Ms. Conway highlighted slide 22, "This legislation has been                                                                     
the Alaska Pharmacists":                                                                                                        
                                                                                                                                
     Association's  Number  1  Priority  bill  for  past  10                                                                    
     years.                                                                                                                     
                                                                                                                                
     Sponsored by  Senator Kim  Elton, Senator  Dennis Egan,                                                                    
     and now, Senator Giessel                                                                                                   
                                                                                                                                
     In your  packets you will see  numerous articles. Those                                                                    
     are just the tip of the iceberg.                                                                                           
                                                                                                                                
     Nationally, the  opaque "black  box" practices  of PBMs                                                                    
     are now under intense scrutiny.                                                                                            
                                                                                                                                
     All  one  needs  to  do  is  Google  "Pharmacy  Benefit                                                                    
     Manager" and  you will see  countless articles  on this                                                                    
     emerging concern. NCSL is now tracking these trends.                                                                       
                                                                                                                                
     In a few  states now, PBMs have sued  states because of                                                                    
     their PBM legislation and have lost.                                                                                       
                                                                                                                                
     It is even more crucial  to support this legislation in                                                                    
     Alaska   because   of   the   critical   service   that                                                                    
     independent pharmacies provide to its rural clientele.                                                                     
                                                                                                                                
          • Rich Holt - Chair, AK State Board of Pharmacy                                                                       
          • Barry Christensen - AK Pharmacist Association                                                                       
          Legislative Chair                                                                                                     
          • Emily Ricci - Dept. of Administration,                                                                              
          Retirement and Benefits                                                                                               
          • Lori Wing-Heier - Director, Division of                                                                             
          Insurance                                                                                                             
                                                                                                                                
9:52:37 AM                                                                                                                    
                                                                                                                                
Senator von Imhof // Ms. Conway //                                                                                              
                                                                                                                                
9:53:29 AM                                                                                                                    
                                                                                                                                
Senator von Imhof // Ms. Conway //                                                                                              
                                                                                                                                
9:54:12 AM                                                                                                                    
                                                                                                                                
Senator Stevens // Ms. Conway replied                                                                                           
                                                                                                                                
9:54:46 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon //                                                                                                           
                                                                                                                                
9:55:26 AM                                                                                                                    
                                                                                                                                
LORI   WING-HEIER,   DIRECTOR,    DIVISION   OF   INSURANCE,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
//                                                                                                                              
                                                                                                                                
9:57:21 AM                                                                                                                    
                                                                                                                                
EMILY  RICCI,   CHIEF  POLICY  ADMINISTRATOR,   DIVISION  OF                                                                    
RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION,                                                                          
                                                                                                                                
9:59:48 AM                                                                                                                    
                                                                                                                                
Senator von Imhof // Ms. Ricci //                                                                                               
                                                                                                                                
SB  38  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 185                                                                                                           
                                                                                                                                
     "An Act relating to reemployment of persons who retire                                                                     
     under the teachers' retirement system."                                                                                    
                                                                                                                                
10:01:38 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:02:11 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
10:02:21 AM                                                                                                                   
                                                                                                                                
SENATOR  PETER  MICCICHE,  SPONSOR discussed  the  bill.  He                                                                    
stated that //  He remarked that // He stated  that the bill                                                                    
allowed teacher's  to be paid  normal retirement,  while not                                                                    
accruing additional  benefits in the system.  There would be                                                                    
no additional cost to school district. // He recounted that                                                                     
between //                                                                                                                      
                                                                                                                                
10:05:28 AM                                                                                                                   
                                                                                                                                
Senator Stevens thought the bill was good in many ways. He                                                                      
asked about the bill provision related to the age of the                                                                        
teacher.                                                                                                                        
                                                                                                                                
Senator Micciche stated that the provision had to do with a                                                                     
ruling of the IRS. He deferred //                                                                                               
                                                                                                                                
10:06:16 AM                                                                                                                   
                                                                                                                                
RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, discussed the                                                                      
Sectional Analysis (copy on file):                                                                                              
                                                                                                                                
     Section 1                                                                                                                  
     Adds new section to AS 14.20:                                                                                              
     AS  14.20.136(a)  allows  school  districts  to  rehire                                                                    
     educators that  have retired under the  defined benefit                                                                    
     plan or the defined contribution plan when;                                                                                
                                                                                                                                
     AS  14.20.136(b)(1) the  retired member  certifies that                                                                    
     there was no prearrangement  of reemployment made prior                                                                    
     to retirement;                                                                                                             
                                                                                                                                
     AS  14.20.136(b)(2)  the  member has  been  retired  at                                                                    
     least 60 days  if they are 62 years of  age or older or                                                                    
     six months  if the member  is younger than 62  years of                                                                    
     age;                                                                                                                       
                                                                                                                                
     AS  14.20.136(c)  the  school district  has  adopted  a                                                                    
     rehire   policy   by   resolution  and   has   publicly                                                                    
     advertised  the position  for 10  business days  and is                                                                    
     actively recruiting to fill the  position with a person                                                                    
     other than a retired member.                                                                                               
                                                                                                                                
     AS 14.20.136(d)  reemployment contracts may  not exceed                                                                    
     12 consecutive months.                                                                                                     
                                                                                                                                
     AS  14.20.136(e)  the  school  district  that  hires  a                                                                    
     retiree must  provide the administrator with  a copy of                                                                    
     the resolution and policy required  by (e) as well as a                                                                    
     report  stating  the  retiree's  name,  description  of                                                                    
     circumstances,  and actions  taken to  comply with  the                                                                    
     policy. The  school district is  also required  to make                                                                    
     contributions to AS 14.25.070.                                                                                             
                                                                                                                                
     AS  14.20.136(f) certain  requirements  of the  section                                                                    
     don't  apply to  a  rehire member  that's eligible  for                                                                    
     restoration of tenure rights.                                                                                              
                                                                                                                                
     Section 2                                                                                                                  
     Allows  retirees  who  are  rehired,  as  permitted  by                                                                    
     section 1,  to continue to receive  retirement benefits                                                                    
     during the  period of  reemployment unless  they become                                                                    
     an active member.                                                                                                          
                                                                                                                                
     Sections 3                                                                                                                 
     Makes  retirees who  are  reemployed,  as permitted  by                                                                    
     section 1, ineligible  to receive additional retirement                                                                    
     benefits based  on their service and  salary during the                                                                    
     period of reemployment.                                                                                                    
                                                                                                                                
     Section 4                                                                                                                  
     Clarifies  that a  member who  is  reemployed does  not                                                                    
     become an  active member, the  member will  continue to                                                                    
     receive retirement benefits,  deductions under TRS will                                                                    
     not be  made to  their salary and  reemployed educators                                                                    
     will  not  receive  credited time  for  service  during                                                                    
     reemployment. This section also  ensures that a retired                                                                    
     and  rehired teacher  will be  eligible to  receive the                                                                    
     group health  plan coverage that is  provided to active                                                                    
     members  employed by  the school  district  if they  so                                                                    
     choose.                                                                                                                    
                                                                                                                                
     Section 5                                                                                                                  
     Inserts reference  to section 1 which  will require the                                                                    
     employer  to  make   TRS  contribution  for  reemployed                                                                    
     retirees at a rate of 12.56 percent.                                                                                       
                                                                                                                                
     Section 6                                                                                                                  
     Applies the  bill's provisions to contracts  made on or                                                                    
     after the effective date.                                                                                                  
                                                                                                                                
10:09:32 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon //                                                                                                           
                                                                                                                                
10:10:10 AM                                                                                                                   
                                                                                                                                
Senator Micciche //                                                                                                             
                                                                                                                                
10:10:58 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon wondered                                                                                                     
                                                                                                                                
Senator Micciche //                                                                                                             
                                                                                                                                
10:12:18 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon //                                                                                                           
                                                                                                                                
10:13:07 AM                                                                                                                   
                                                                                                                                
Senator Stevens //                                                                                                              
                                                                                                                                
10:13:37 AM                                                                                                                   
                                                                                                                                
Senator Micciche //                                                                                                             
                                                                                                                                
10:14:35 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon //                                                                                                           
                                                                                                                                
10:14:59 AM                                                                                                                   
                                                                                                                                
Senator Stevens //                                                                                                              
                                                                                                                                
10:16:16 AM                                                                                                                   
                                                                                                                                
LISA PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL                                                                       
ADMINISTRATORS, (ACSA) spoke in support of the bill.                                                                            
                                                                                                                                
10:21:16 AM                                                                                                                   
                                                                                                                                
Ms. Parady continued her testimony //                                                                                           
                                                                                                                                
Co-Chair MacKinnon // Ms. Parady replied that the bill                                                                          
sunset was 2009.                                                                                                                
                                                                                                                                
10:24:28 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman // Ms. Parady //                                                                                               
                                                                                                                                
10:26:12 AM                                                                                                                   
                                                                                                                                
DR. KAREN GABORIK, PRESIDENT, ALASKA SUPERINTENDENTS                                                                            
ASSOCIATION, spoke in support of the bill.                                                                                      
                                                                                                                                
10:28:43 AM                                                                                                                   
                                                                                                                                
Senator Stevens // Ms. Gaborik //                                                                                               
                                                                                                                                
Senator Stevens // Ms. Gaborik                                                                                                  
                                                                                                                                
10:30:06 AM                                                                                                                   
                                                                                                                                
DEENA BISHOP, SUPERINTENDENT, ANCHORAGE SCHOOL DISTRICT                                                                         
(via teleconference), spoke in support of the bill.                                                                             
                                                                                                                                
10:32:01 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon //                                                                                                           
                                                                                                                                
10:32:29 AM                                                                                                                   
                                                                                                                                
NORM WOOTEN, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA                                                                          
SCHOOL BOARDS, testified in support of the bill.                                                                                
                                                                                                                                
10:34:57 AM                                                                                                                   
                                                                                                                                
Senator Stevens // Mr. Wooten //                                                                                                
10:35:23 AM                                                                                                                   
                                                                                                                                
MARK MILLER, SUPERINTENDENT, JUNEAU SCHOOL DISTRICT, spoke                                                                      
in support of the legislation.                                                                                                  
                                                                                                                                
10:37:25 AM                                                                                                                   
                                                                                                                                
Vice-Chair Bishop //                                                                                                            
                                                                                                                                
10:37:33 AM                                                                                                                   
                                                                                                                                
Senator Micciche //                                                                                                             
                                                                                                                                
10:37:41 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon //                                                                                                           
                                                                                                                                
10:37:45 AM                                                                                                                   
                                                                                                                                
Senator von Imhof //                                                                                                            
                                                                                                                                
10:37:48 AM                                                                                                                   
                                                                                                                                
Mr. Miller //                                                                                                                   
                                                                                                                                
10:38:08 AM                                                                                                                   
                                                                                                                                
MARY  WEGNER, SUPERINTENDENT,  SITKA SCHOOL  DISTRICT, spoke                                                                    
in support of the bill.                                                                                                         
                                                                                                                                
10:41:01 AM                                                                                                                   
                                                                                                                                
SEAN DUSEK,  SUPERINTENDENT, KENAI PENINSULA  BOROUGH SCHOOL                                                                    
DISTRICT, testified in support of the legislation.                                                                              
                                                                                                                                
10:43:26 AM                                                                                                                   
                                                                                                                                
BOBBY BOLEN, SUPERINTENDENT,  BERING STRAIT SCHOOL DISTRICT,                                                                    
spoke in support of the bill.                                                                                                   
                                                                                                                                
10:45:01 AM                                                                                                                   
                                                                                                                                
Senator Olson // Mr. Bolen replied //                                                                                           
                                                                                                                                
10:46:31 AM                                                                                                                   
                                                                                                                                
Senator Olson // Mr. Bolen //                                                                                                   
                                                                                                                                
10:46:54 AM                                                                                                                   
                                                                                                                                
Senator von Imhof // Mr. Bolen //                                                                                               
                                                                                                                                
10:47:45 AM                                                                                                                   
                                                                                                                                
MONICA   GOYETTE,  SUPERINTENDENT,   MATSU  BOROUGH   SCHOOL                                                                    
DISTRICT, spoke in support of the bill.                                                                                         
                                                                                                                                
10:48:49 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon // Ms. Goyette  agreed and furthered that                                                                    
//                                                                                                                              
                                                                                                                                
10:49:22 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
10:49:39 AM                                                                                                                   
                                                                                                                                
KATHY LEA, CHIEF PENSION OFFICER  DIVISION OF RETIREMENT AND                                                                    
BENEFITS, DEPARTMENT OF ADMINISTRATION,  stated that she was                                                                    
available   for  questions.   She  also   stated  that   the                                                                    
Department  of Administration's  position  on  the bill  was                                                                    
neutral.                                                                                                                        
                                                                                                                                
Co-Chair MacKinnon // Ms. Lea //                                                                                                
                                                                                                                                
Co-Chair MacKinnon //                                                                                                           
                                                                                                                                
10:50:17 AM                                                                                                                   
                                                                                                                                
Ms. Lea explained //                                                                                                            
10:52:03 AM                                                                                                                   
                                                                                                                                
Senator Stevens // Ms. Lea //                                                                                                   
                                                                                                                                
10:54:49 AM                                                                                                                   
                                                                                                                                
Vice-Chair Bishop //                                                                                                            
                                                                                                                                
10:55:06 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon   asked  for   an  explanation   of  the                                                                    
indeterminate fiscal note. Ms. Lea replied //                                                                                   
                                                                                                                                
11:00:48 AM                                                                                                                   
                                                                                                                                
Senator Stevens // Ms. Lea //                                                                                                   
                                                                                                                                
11:01:25 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon //  Ms.  Lea replied  that  she had  not                                                                    
analyzed it //                                                                                                                  
                                                                                                                                
Co-Chair  MacKinnon announced  that amendments  were due  on                                                                    
Wednesday.  She  discussed  the  agenda  for  the  afternoon                                                                    
meeting.                                                                                                                        
                                                                                                                                
SB  185  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
11:02:39 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:02 a.m.                                                                                         

Document Name Date/Time Subjects
SB38 Background Document NPR How Generics are Killing Local Pharmacies 10-22-2015.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Letters of Support Compilation 4-4-18.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Sectional Analysis vsn D 4-4-18.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Sponsor Statement 4-4-18.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Summary of Changes vsn A to vsn D 3-31-18.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Support Letter AK Chamber 3-23-18.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Supporting Document NASHP 3-30-18.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Supporting Document NCPA 1-26-18.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Supporting Document PBMs in Alaska 3-2016.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Supporting Document Hidden Monopolies 3-2017.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Supporting Document Reuters-Business Insider Dec. 2017.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Supporting Document Bismark Tribune 11-17.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB38 Supporting Document Capitol Forum 1-2018.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB185 Explanation of Changes Ver. A to Ver. D.pdf SFIN 4/9/2018 9:00:00 AM
SB 185
SB185 Sponsor Statement.pdf SFIN 4/9/2018 9:00:00 AM
SB 185
SB185 Sectional Analysis ver. D.pdf SFIN 4/9/2018 9:00:00 AM
SB 185
SB185 Support Doc - 10 Year Utilization Summary.pdf SFIN 4/9/2018 9:00:00 AM
SB 185
SB185 Support Letters SB185 and HB224.pdf SFIN 4/9/2018 9:00:00 AM
HB 224
SB 185
SB185 Support Doc - Actuarial Risk Graphic.pdf SFIN 4/9/2018 9:00:00 AM
SB 185
SB 185 Alaska_HB224_FINAL Conduent analysis.pdf SFIN 4/9/2018 9:00:00 AM
HB 224
SB 185
SB38 Supporting Document AK Independent Pharmacy List 2018 4-8-18.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB 38 2018_0320_SFC Presentation for 3.22.2018 Hearing_Final.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB 38 support Medical Center Pharmacy.pdf SFIN 4/9/2018 9:00:00 AM
SB 38
SB 185 - Retire_Rehire of Teachers & Administrators.pdf SFIN 4/9/2018 9:00:00 AM
SB 185