Legislature(2007 - 2008)BELTZ 211

03/27/2008 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
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= bill was previously heard/scheduled
Heard & Held
Heard & Held
Heard & Held
Bills Previously Heard/Scheduled
Heard & Held
Scheduled But Not Heard
Moved SJR 18 Out of Committee
Moved CSHB 289(FSH) Out of Committee
Moved SB 305 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 27, 2008                                                                                         
                           1:38 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Johnny Ellis, Chair                                                                                                     
Senator Bettye Davis                                                                                                            
Senator Con Bunde                                                                                                               
MEMBERS ABSENT                                                                                                                
Senator Gary Stevens, Vice Chair                                                                                                
Senator Lyman Hoffman                                                                                                           
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 113                                                                                                             
"An  Act  relating to  break  times  for  employees who  nurse  a                                                               
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 118                                                                                                             
"An  Act   establishing  a  fee   for  disposable   plastic  bags                                                               
distributed by retail  sellers of goods or  services to consumers                                                               
to  carry away  or  protect goods;  and  establishing the  Alaska                                                               
litter and marine debris reduction and recycling fund."                                                                         
     SCHEDULED BUT NOT HEARD                                                                                                    
SENATE BILL NO. 305                                                                                                             
"An  Act relating  to recorking,  sealing, or  packaging of  wine                                                               
served with a  meal and removal of recorked,  sealed, or packaged                                                               
wine from licensed premises."                                                                                                   
     MOVED SB 305 OUT OF COMMITTEE                                                                                              
CS FOR HOUSE BILL NO. 289(FSH)                                                                                                  
"An  Act exempting  employers from  paying  unemployment tax  for                                                               
temporary  services provided  by fishing  vessel crewmembers  and                                                               
related to emergency oil spill  training and response activities;                                                               
and providing for an effective date."                                                                                           
     MOVED CSHB 289(FSH) OUT OF COMMITTEE                                                                                       
SENATE JOINT RESOLUTION NO. 18                                                                                                  
Requesting  the President  of  the United  States  to direct  the                                                               
United  States Consumer  Product  Safety Commission  to test  the                                                               
materials used  in children's toys and  other children's products                                                               
for toxicity and to make the results publicly available.                                                                        
     MOVED SJR 18 OUT OF COMMITTEE                                                                                              
SENATE BILL NO. 286                                                                                                             
"An Act relating to creation  and regulation of pharmacy benefits                                                               
managers,  and authorizing  the  board of  pharmacy to  cooperate                                                               
with the  division of insurance  in regulating  pharmacy benefits                                                               
     HEARD AND HELD                                                                                                             
CS FOR HOUSE BILL NO. 357(L&C)                                                                                                  
"An Act requiring errors and  omissions insurance for real estate                                                               
licensees;  renaming the  real  estate surety  fund  as the  real                                                               
estate recovery  fund and relating  to that fund,  and redefining                                                               
the procedures  and criteria used  by the Real  Estate Commission                                                               
to  make an  award from  the fund  to a  person suffering  a loss                                                               
caused by certain misconduct of  real estate licensees; requiring                                                               
a real  estate licensee to maintain  an office in the  state; and                                                               
providing for an effective date."                                                                                               
     HEARD AND HELD                                                                                                             
HOUSE BILL NO. 413                                                                                                              
"An  Act  extending the  termination  date  for the  Real  Estate                                                               
Commission; and providing for an effective date."                                                                               
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 113                                                                                                                  
SHORT TITLE: NURSING MOTHERS IN WORKPLACE                                                                                       
SPONSOR(s): SENATOR(s) ELLIS                                                                                                    
03/12/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/12/07       (S)       L&C, HES                                                                                               
02/28/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/28/08       (S)       Heard & Held                                                                                           
02/28/08       (S)       MINUTE(L&C)                                                                                            
03/27/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 305                                                                                                                  
SHORT TITLE: RECORKING WINE SERVED WITH A MEAL                                                                                  
SPONSOR(s): LABOR & COMMERCE                                                                                                    
03/21/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/21/08       (S)       L&C                                                                                                    
03/25/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/25/08       (S)       Scheduled But Not Heard                                                                                
BILL: HB 289                                                                                                                  
SHORT TITLE: EMPLOYMENT TAX EXEMPTION: SPILL RESPONSE                                                                           
SPONSOR(s): REPRESENTATIVE(s) HARRIS, SEATON                                                                                    
01/04/08       (H)       PREFILE RELEASED 1/4/08                                                                                
01/15/08       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/15/08       (H)       FSH, L&C                                                                                               
01/23/08       (H)       FSH AT 8:30 AM BARNES 124                                                                              
01/23/08       (H)       Heard & Held                                                                                           
01/23/08       (H)       MINUTE(FSH)                                                                                            
01/28/08       (H)       FSH AT 8:30 AM BARNES 124                                                                              
01/28/08       (H)       Moved CSHB 289(FSH) Out of Committee                                                                   
01/28/08       (H)       MINUTE(FSH)                                                                                            
01/30/08       (H)       FSH RPT CS(FSH) NT 4DP                                                                                 
01/30/08       (H)       DP: HOLMES, EDGMON, JOHANSEN, SEATON                                                                   
02/13/08       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
02/13/08       (H)       Moved CSHB 289(FSH) Out of Committee                                                                   
02/13/08       (H)       MINUTE(L&C)                                                                                            
02/15/08       (H)       L&C RPT CS(FSH) NT 4DP 2NR                                                                             
02/15/08       (H)       DP: GARDNER, LEDOUX, BUCH, GATTO                                                                       
02/15/08       (H)       NR: NEUMAN, OLSON                                                                                      
03/13/08       (H)       TRANSMITTED TO (S)                                                                                     
03/13/08       (H)       VERSION: CSHB 289(FSH)                                                                                 
03/14/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/08       (S)       L&C, FIN                                                                                               
03/25/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/25/08       (S)       Heard & Held                                                                                           
03/25/08       (S)       MINUTE(L&C)                                                                                            
BILL: SJR 18                                                                                                                  
SHORT TITLE: CHILD PRODUCT SAFETY                                                                                               
SPONSOR(s): SENATOR(s) WIELECHOWSKI                                                                                             
02/19/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/19/08       (S)       HES, L&C                                                                                               
03/14/08       (S)       HES AT 1:30 PM BUTROVICH 205                                                                           
03/14/08       (S)       Heard & Held                                                                                           
03/14/08       (S)       MINUTE(HES)                                                                                            
03/19/08       (S)       HES AT 1:45 PM BUTROVICH 205                                                                           
03/19/08       (S)       Moved SJR 18 Out of Committee                                                                          
03/19/08       (S)       MINUTE(HES)                                                                                            
03/21/08       (S)       HES RPT  5DP                                                                                           
03/21/08       (S)       DP: DAVIS, ELTON, THOMAS, COWDERY,                                                                     
03/25/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/25/08       (S)       Heard & Held                                                                                           
03/25/08       (S)       MINUTE(L&C)                                                                                            
BILL: SB 286                                                                                                                  
SHORT TITLE: PHARMACY BENEFITS MANAGERS                                                                                         
SPONSOR(s): SENATOR(s) ELTON                                                                                                    
02/19/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/19/08       (S)       L&C, FIN                                                                                               
03/27/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: HB 357                                                                                                                  
SHORT TITLE: CLAIMS AGAINST REAL ESTATE LICENSEES                                                                               
SPONSOR(s): LABOR & COMMERCE BY REQUEST                                                                                         
02/06/08       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/06/08       (H)       L&C, FIN                                                                                               
02/11/08       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
02/11/08       (H)       Heard & Held                                                                                           
02/11/08       (H)       MINUTE(L&C)                                                                                            
02/22/08       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
02/22/08       (H)       -- MEETING CANCELED --                                                                                 
03/03/08       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
03/03/08       (H)       Moved CSHB 357(L&C) Out of Committee                                                                   
03/03/08       (H)       MINUTE(L&C)                                                                                            
03/04/08       (H)       L&C RPT CS(L&C) 3DP 2NR 2AM                                                                            
03/04/08       (H)       DP: GATTO, RAMRAS, OLSON                                                                               
03/04/08       (H)       NR: BUCH, NEUMAN                                                                                       
03/04/08       (H)       AM: GARDNER, LEDOUX                                                                                    
03/11/08       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/11/08       (H)       Scheduled But Not Heard                                                                                
03/12/08       (H)       FIN RPT CS(L&C) 5DP 3NR                                                                                
03/12/08       (H)       DP: HAWKER, CRAWFORD, THOMAS, MEYER,                                                                   
03/12/08       (H)       NR: NELSON, KELLY, STOLTZE                                                                             
03/12/08       (H)       FIN AT 8:30 AM HOUSE FINANCE 519                                                                       
03/12/08       (H)       Scheduled But Not Heard                                                                                
03/12/08       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/12/08       (H)       Moved Out of Committee                                                                                 
03/12/08       (H)       MINUTE(FIN)                                                                                            
03/26/08       (H)       TRANSMITTED TO (S)                                                                                     
03/26/08       (H)       VERSION: CSHB 357(L&C)                                                                                 
03/27/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: HB 413                                                                                                                  
SHORT TITLE: EXTENDING THE REAL ESTATE COMMISSION                                                                               
SPONSOR(s): LABOR & COMMERCE                                                                                                    
02/20/08       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/08       (H)       L&C, FIN                                                                                               
02/25/08       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
02/25/08       (H)       Moved Out of Committee                                                                                 
02/25/08       (H)       MINUTE(L&C)                                                                                            
02/27/08       (H)       L&C RPT 5DP                                                                                            
02/27/08       (H)       DP: GARDNER, BUCH, NEUMAN, LEDOUX,                                                                     
03/03/08       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/03/08       (H)       Moved Out of Committee                                                                                 
03/03/08       (H)       MINUTE(FIN)                                                                                            
03/04/08       (H)       FIN RPT 3DP 6NR                                                                                        
03/04/08       (H)       DP: CRAWFORD, NELSON, MEYER                                                                            
03/04/08       (H)       NR: HAWKER, STOLTZE, JOULE, THOMAS,                                                                    
                        KELLY, CHENAULT                                                                                         
03/10/08       (H)       TRANSMITTED TO (S)                                                                                     
03/10/08       (H)       VERSION: HB 413                                                                                        
03/12/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/12/08       (S)       L&C, FIN                                                                                               
03/27/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
PATRICK CUNNINGHAM                                                                                                              
Staff to Senator Ellis                                                                                                          
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on CSSB 113(L&C) for the sponsor.                                                               
REPRESENTATIVE PAUL SEATON                                                                                                      
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of HB 289.                                                                                        
DANA OWEN                                                                                                                       
Staff to the Senate Labor and Commerce Committee                                                                                
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on SB 305.                                                                                      
KATHERINE PUSTAY                                                                                                                
Staff to Senator Wielechowski                                                                                                   
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of SJR 18.                                                                                        
BARRY CHRISTIANSON, Co-chair                                                                                                    
Legislative Committee                                                                                                           
Alaska Pharmacy Association                                                                                                     
Ketchikan, AK                                                                                                                   
POSITION STATEMENT: Supported SB 286.                                                                                         
REGINA BENJAMIN, Senior Director                                                                                                
Public Policy                                                                                                                   
National Community Pharmacists Association                                                                                      
Alexandria, VA                                                                                                                  
POSITION STATEMENT: Supported SB 286.                                                                                         
ELEANOR WOLFE                                                                                                                   
Staff for Representative Kurt Olson                                                                                             
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on HB 357 and HB 413 for the                                                                    
DAVE FEEKIN                                                                                                                     
Alaska Association of Realtors                                                                                                  
Kenai, AK                                                                                                                       
POSITION STATEMENT: Supported HB 357.                                                                                         
PAT DAVIDSON, Auditor                                                                                                           
Division of Legislative Audit                                                                                                   
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Supported HB 413.                                                                                         
ACTION NARRATIVE                                                                                                              
CHAIR JOHNNY ELLIS called the Senate Labor and Commerce Standing                                                              
Committee meeting to order at 1:38:52 PM. Present at the call to                                                              
order were Senators Bunde, Davis, Ellis.                                                                                        
1:41:00 PM at ease 1:41:29 PM                                                                                               
              SB 113-NURSING MOTHERS IN WORKPLACE                                                                           
1:41:29 PM                                                                                                                    
CHAIR ELLIS announced SB 113 to be up for consideration. He                                                                     
noted a proposed CS.                                                                                                            
PATRICK CUNNINGHAM, staff to Senator Ellis, sponsor of SB 113,                                                                  
explained CSSB 113(L&C) 25-LS0435\E, and that changes were made                                                                 
to better clarify the intent of  the bill in response to question                                                               
raised in  the first  hearing. One  was on page  1, line  10, (b)                                                               
that says an  employer shall provide a private  and sanitary room                                                               
or other location  in close proximity to the work  area. The word                                                               
"secure" was deleted to provide  more flexibility to the employer                                                               
to provide the  room without enduring any additional  cost. A new                                                               
section was  added on  line 13  (c) that  states nothing  in this                                                               
section requires an  employer to allow a child in  the work place                                                               
at  times   other  than  break  times.   This  addresses  Senator                                                               
Stevens's  concern that  employers might  be required  to provide                                                               
day care services.                                                                                                              
MR.  CUNNINGHAM went  on  to  say that  section  (e) was  deleted                                                               
because the  language "undue hardship"  was no  longer necessary.                                                               
The overriding  emphasis is  to provide  reasonable accommodation                                                               
to the nursing mother.                                                                                                          
SENATOR  BUNDE  asked  how  "reasonable"   would  be  defined  in                                                               
relation to "undue hardship".                                                                                                   
MR. CUNNINGHAM answered that could be addressed in regulation.                                                                  
CHAIR ELLIS set SB 113 aside for further work.                                                                                  
     CSHB 289(FSH)-EMPLOYMENT TAX EXEMPTION: SPILL RESPONSE                                                                 
1:46:39 PM                                                                                                                    
CHAIR ELLIS announced CSHB 289(FSH) to be up for consideration.                                                                 
REPRESENTATIVE  SEATON,  sponsor of  HB  289,  said this  measure                                                               
deals   with  exempts   fishing  vessel   owners  and   crew  who                                                               
participate from having to pay  unemployment taxes while they are                                                               
performing oil spill response duties.                                                                                           
1:47:40 PM                                                                                                                    
SENATOR BUNDE moved  to report CSHB 289(FSH)  from committee with                                                               
individual recommendations and attached  fiscal notes. There were                                                               
no objections and it was so ordered.                                                                                            
            SB 305-RECORKING WINE SERVED WITH A MEAL                                                                        
1:48:25 PM                                                                                                                    
CHAIR ELLIS announced SB 305 to be up for consideration.                                                                        
DANA  OWEN, staff  to the  Senate Labor  and Commerce  Committee,                                                               
explained  SB 305  allows patrons  at  a restaurant  who order  a                                                               
bottle of  wine to take  that bottle with  them as they  leave if                                                               
they haven't finished  it. The bill is supported  by the industry                                                               
with the idea  that people will more likely purchase  a bottle of                                                               
wine  rather than  a glass.  It is  also supported  by folks  who                                                               
believe it  will create  a positive incentive  for people  to not                                                               
drink too much at the table  because they order an expensive wine                                                               
and might feel  compelled to finish it.  Thirty-four other states                                                               
have recorking laws.                                                                                                            
SENATOR BUNDE asked if industry is comfortable with resealing.                                                                  
MR. OWEN answered yes.                                                                                                          
SENATOR BUNDE asked if they had heard from restaurants and bars.                                                                
MR. OWEN replied that he has received verbal support from them.                                                                 
CHAIR ELLIS recapped  this issue had been  before the legislature                                                               
for some time.                                                                                                                  
1:51:05 PM                                                                                                                    
SENATOR  BUNDE  moved  to  report  SB  305  from  committee  with                                                               
individual recommendations.  There were no objections  and it was                                                               
so ordered.                                                                                                                     
                  SJR 18-CHILD PRODUCT SAFETY                                                                               
1:51:56 PM                                                                                                                    
KATHERINE PUSTAY,  staff to Senator Wielechowski,  sponsor of SJR                                                               
18,  recapped  that  this  measure calls  on  the  United  States                                                               
Consumer  Products Safety  Commission or  CSBC to  test materials                                                               
used  in children's  products and  toys  for hazardous  chemicals                                                               
like  lead.  She  said  while  the CSBC  tests  for  choking  and                                                               
aspiration issues,  currently no  government agency is  tasked to                                                               
do this  chemical testing. Twenty-nine  other states  have passed                                                               
similar resolutions.                                                                                                            
1:53:29 PM                                                                                                                    
SENATOR  BUNDE  moved  to  report  SJR  18  from  committee  with                                                               
individual recommendations.  There were no objections  and it was                                                               
so ordered.                                                                                                                     
               SB 286-PHARMACY BENEFITS MANAGERS                                                                            
1:54:38 PM                                                                                                                    
CHAIR ELLIS announced SB 286 to be up for consideration.                                                                        
SENATOR ELTON,  sponsor of  SB 286,  said he  hoped to  begin and                                                               
refine a dialogue.  This bill is based on  model legislation that                                                               
has been done elsewhere and they  already know of a few alignment                                                               
issues  need  to  occur  between   this  bill  and  the  existing                                                               
He said pharmacy benefit managers  (PBM) are groups of businesses                                                               
that people  contract with to  manager pharmacy  and prescription                                                               
drug insurance  plans. These plan  managers include the  State of                                                               
Alaska, the  federal government  and union  groups. He  said that                                                               
PBMs  are largely  unregulated. The  purpose of  this bill  is to                                                               
provide transparency into their business model.                                                                                 
SENATOR   ELTON   related   that   PBMs   negotiate   with   drug                                                               
manufacturers  and  pharmacies  on  behalf  of  health  insurance                                                               
plans,   but   those   negotiations   and   arrangements   aren't                                                               
transparent.     The  danger  is  that   PBMs  receive  financial                                                               
remuneration   from   drug   manufacturers  and   because   those                                                               
transactions aren't transparent, they  don't pass any information                                                               
to   the   contractor   -   information   like   allocation   and                                                               
recommendations on  what drugs should  be used. It  doesn't allow                                                               
the  contractor, the  state for  instance, to  know what  kind of                                                               
other profits  the PBM is  getting based  on the contract  it has                                                               
with the state.                                                                                                                 
He said  another major concern  is how PBMs might  increase their                                                               
profit margins. For  instance, in many cases PBMs  also have mail                                                               
order drug  stores and  it's to  their benefit  to try  and shift                                                               
business  from a  pharmacy that  may be  located down  the street                                                               
that has a  relationship with both the doctor and  the person who                                                               
is getting the drugs to the mail order firms.                                                                                   
1:58:36 PM                                                                                                                    
SENATOR  ELTON said  the bill  allows  the Board  of Pharmacy  to                                                               
regulate  the terms  of an  agreement  and lets  the Division  of                                                               
Insurance access the  PBM's books and records  that are pertinent                                                               
to  the contract  they have  with the  person providing  the drug                                                               
benefit. This gets back to the  issue of alignment, and he didn't                                                               
know if  what worked in other  states would work in  Alaska. They                                                               
need to  discuss whether or not  they want the Board  of Pharmacy                                                               
to get into  this kind of business; it might  be more appropriate                                                               
for the Division of Insurance to fill this role.                                                                                
1:59:25 PM                                                                                                                    
He said 20 other states' attorney  generals have sued PBMs to try                                                               
and  get  the information;  eight  states  plus the  District  of                                                               
Columbia have  adopted a similar transparency  bill. He clarified                                                               
that when  he is  talking about transparency,  he is  not talking                                                               
about   the  state   or  any   other   contractor  posting   this                                                               
information.  He  is  talking   about  transparency  between  the                                                               
contractor and  the PMB itself.  This information  is proprietary                                                               
and is not shared with the public.                                                                                              
SENATOR  ELTON said  another important  provision does  not allow                                                               
"extrapolation audits" by  PBMs. He explained that  PBMs or their                                                               
agents can  now go to a  local pharmacy and audit  its books, and                                                               
if they find an  error, even a keystroke error -  and that may be                                                               
a $25 error one way or  the other - an extrapolation audit allows                                                               
the PBM  to charge for the  prescription of the one  drug. If the                                                               
pharmacy  has done  150  or 1,500  other  prescriptions for  this                                                               
drug,  the  extrapolation audit  allows  the  PBM to  charge  the                                                               
pharmacy for  an error on each  transactions a single $25  or $50                                                               
error  can cost  a  pharmacy  $75,000 to  $80,000.  So this  bill                                                               
doesn't  allow  extrapolated  audits;  but  it  doesn't  disallow                                                               
2:03:00 PM                                                                                                                    
SENATOR BUNDE  asked if  this bill in  any way  prohibited online                                                               
SENATOR ELTON replied nothing in  this bill prohibits people from                                                               
shopping  on line.  He  tried to  convey that  some  PBMs have  a                                                               
business imperative  to try  and to create  a situation  in which                                                               
they make it  easier for people to buy their  drugs through their                                                               
subsidiary  online, and  because of  that they  might not  have a                                                               
business incentive to try to  keep their local pharmacy going. He                                                               
meant to suggest  that there is no way the  contractor could know                                                               
something has happened  without being able to pull  back the veil                                                               
that PBMs now have.                                                                                                             
2:05:33 PM                                                                                                                    
BARRY  CHRISTIANSON,  Co-chair,   Legislative  Committee,  Alaska                                                               
Pharmacy  Association,   said  he   is  a   practicing  community                                                               
pharmacist  in  Ketchikan and  supported  SB  286. It  will  help                                                               
insure that Alaska patients, employers  and pharmacists are being                                                               
fairly  treated by  an industry  that manages  the processing  of                                                               
prescription drug  benefits. The PBM industry  started out simply                                                               
acting as a conduit for  claims processing between pharmacies and                                                               
insurance  companies. However,  this simple  model has  ballooned                                                               
into a  myriad of other  services that  has made this  industry a                                                               
very  profitable   middle  man   in  managed  health   care.  The                                                               
Association believes  this profitability has come  at the expense                                                               
of patient  care and has not  lowered overall drug costs.  It has                                                               
been  estimated that  it takes  25-30 percent  of pharmacy  staff                                                               
time every day  to try to navigate the maze  of "pharmacy benefit                                                               
manager audits." This time is  usually spent on the phone talking                                                               
to a claims  representative in another state or  country. Yet for                                                               
all of their  efforts, their members every day bear  the brunt of                                                               
public comment about higher drug costs.                                                                                         
They  believe the  transparency called  for in  SB 286  will help                                                               
insure the manufacturer rebates negotiated  by the PBMs will flow                                                               
back to  the plans' sponsor  or employer. They also  believe that                                                               
the  authorized  substitution  sections  of the  bill  will  help                                                               
ensure  that  patients know  they  are  receiving the  most  cost                                                               
effective  medication as  approved by  their prescriber.  Far too                                                               
often  they see  instances of  drug substitutions  being made  by                                                               
PBM-owned mail  order pharmacies.  While these  substitutions are                                                               
legal, they are not communicated  to the patient. This can result                                                               
in  the  patient  continuing  to  take  the  original  prescribed                                                               
medication  along with  a  substitute  medication simply  because                                                               
they  sound or  look alike.  An example  is blood  pressure drugs                                                               
called Ramipril and  Lisinopril. Lastly, he said SB  286 does not                                                               
pad  the pockets  of Alaska  pharmacies, but  it sets  up pricing                                                               
guidelines  based  on  national  standards and  time  limits  for                                                               
pharmacy audits and payments.                                                                                                   
2:09:00 PM                                                                                                                    
MR.  CHRISTIANSON  said  most Alaska  pharmacists  don't  believe                                                               
legislation is needed  for every health care ill;  since they are                                                               
a  heavily regulated  profession.  However, now  is  the time  to                                                               
consider regulating the PBM industry  because it has had too many                                                               
instances of unfair business practices.                                                                                         
2:09:37 PM                                                                                                                    
REGINA  BENJAMIN,   Senior  Director,  Public   Policy,  National                                                               
Community Pharmacists  Association, Alexandria, VA, said  some of                                                               
her members are  in Alaska and they support SB  286. She said her                                                               
concern is that  PBMs are the only entities that  are involved in                                                               
a variety of  functions that impact the delivery and  the cost of                                                               
prescription drug benefits to the  consumer, but they are largely                                                               
She said  the most stringent  regulation to  date was found  in a                                                               
law passed in  Maine. The PBMs were successful in  tying that law                                                               
up in  court for several years,  but it succeeded at  every level                                                               
of court  action. Pharmacy Care Management  Association (PCMA) is                                                               
the trade association  for the PBMs that challenged  the law. The                                                               
law  finally became  effective in  June  2006. Now  PCMA is  also                                                               
suing District of Columbia for a similar law.                                                                                   
MS. BENJAMIN stated  that now they have  regulation by litigation                                                               
and settlement. There have been  two large settlements, one by 22                                                               
states attorneys general against Medco  in 2004 and last month by                                                               
PBS Caremark with  28 states and the District  of Columbia. These                                                               
settlements with  consent orders involved substitutions  and lack                                                               
of transparency which this bill tries to regulate in Alaska.                                                                    
She said that  15 states over the  last 3 or 4  years have passed                                                               
some kind of legislation that  has some minimal oversight of PBMs                                                               
and states  continue to look  at the industry and  debate whether                                                               
it should  be regulated.  Some of  the supporters  of legislation                                                               
are  the National  Legislative Association  on Prescription  Drug                                                               
Prices,  a group  of  bi-partisan  legislators, Consumers  Union,                                                               
AARP, National  Mental Health Association  and in some  cases the                                                               
Medical Societies. She  said this industry has a  large impact on                                                               
the cost  of health care  in this country, and  with transparency                                                               
employers will  save money because  they will realize  mail order                                                               
is  not  as cheap  as  they  think it  is  based  on the  limited                                                               
information they are given.                                                                                                     
2:14:05 PM                                                                                                                    
MS. BENJAMIN said SB 286  provides consumer protection especially                                                               
in  the area  of  substitution,  which is  a  major problem.  She                                                               
explained the  reason PBMs substitute medication  is because they                                                               
get a higher rebate on one drug  than they do on another and they                                                               
don't consider  the medical ramifications  for the  person taking                                                               
the drug.                                                                                                                       
CHAIR ELLIS thanked  her for her testimony and  closed the public                                                               
hearing saying he would hold the bill for further work.                                                                         
       CSHB 357(L&C)-CLAIMS AGAINST REAL ESTATE LICENSEES                                                                   
2:15:51 PM                                                                                                                    
ELEANOR WOLFE,  staff for Representative  Kurt Olson,  sponsor of                                                               
HB 357,  said the sponsor introduced  this bill on behalf  of the                                                               
Alaska Association of Realtors that  felt it was necessary due to                                                               
difficulties  with  the Surety  Fund  to  provide that  all  real                                                               
estate  agents have  errors and  omissions  (E&O) insurance.  She                                                               
explained  that   most  large  brokerages  already   provide  E&O                                                               
insurance, but  about 40 percent  of the agents in  Alaska don't.                                                               
This measure  would have  the department  seeking a  group policy                                                               
with a  minimum $100,000 coverage  that all members  could belong                                                               
to at a reasonable rate. This  would allow most of the complaints                                                               
that  go to  the  surety  fund to  be  handled through  insurance                                                               
rather  than have  all of  the complaints  go through  the surety                                                               
fund that has  a maximum of $15,000. A good  number of complaints                                                               
against real estate transactions exceed that.                                                                                   
MS.  WOLFE stated  that  the  surety fund  would  be renamed  the                                                               
recovery fund and it would cover  actions of deceit and breach of                                                               
trust. She  said one  insurance company  handles the  existing 13                                                               
states that  have this  provision and  it is  willing to  make an                                                               
offer once  the parameters  are laid out  by the  department. She                                                               
believes agents could be covered for less than $200 year.                                                                       
CHAIR  ELLIS asked  if she  has had  assurance that  an insurance                                                               
entity is out there that will write insurance in Alaska.                                                                        
MS. WOLFE replied yes.                                                                                                          
2:17:38 PM                                                                                                                    
DAVE FEEKIN, Alaska Association of  Realtors, Kenai, said that HB                                                               
357 is a joint effort by  the Alaska Association of Realtors, the                                                               
Division  of Occupational  Licensing, the  Division of  Insurance                                                               
and  the  Department of  Law.  It  accomplishes two  things.  The                                                               
surety fund expands the claim  coverage by imposing mandatory E&O                                                               
MR. FEEKIN  explained that  the surety fund  was started  in 1974                                                               
and  covers reimbursement  for  fraud, misrepresentation,  deceit                                                               
and conversion  of trust. By statute  the fund balance has  to be                                                               
$250,000-$500,000.  That money  comes from  the licensees  at the                                                               
amount of  $30 per license period,  every two years. A  few years                                                               
ago  the fund  balance was  at or  above the  $500,000, but  more                                                               
recently it  has been  bouncing around  below the  $250,000 mark.                                                               
Two reasons the funds balance is  dropping is because there are a                                                               
high  number of  frivolous claims  brought against  licenses that                                                               
cost  the  fund  to  hold  the  hearings  even  though  they  are                                                               
meritless. The second is a  reduction in the number of licensees,                                                               
and that moves  with the market. He said the  number of licensees                                                               
doubled from 2000-2005  and the number of  transactions peaked at                                                               
2006 in Alaska and 2005 in the Lower  48. The U.S. as a whole has                                                               
seen a  33 percent drop  in real estate transactions,  but Alaska                                                               
has had  a drop  of 11 percent  from 2006 to  2007; this  year it                                                               
continues the same decline.                                                                                                     
MR.  FEEKIN said  it's  important to  understand  how small  this                                                               
problem really  is in light of  the size of the  market. In 2006,                                                               
15 claims  were filed against  the surety  fund and none  of them                                                               
were successful  in obtaining  a claim. In  2007, 13  claims were                                                               
filed with  two getting  paid.   MLS statistics  for Southcentral                                                               
Alaska  plus Kodiak  indicated an  average of  9,119 real  estate                                                               
transactions  per year  for each  of those  two years,  a lot  of                                                               
successful transactions.  The value of those  transactions was $2                                                               
billion per  year. Imposing mandatory E&O  insurance is supported                                                               
overwhelmingly by the  industry, because it is  a very affordable                                                               
cost  at   $200  or  less.   Colorado,  Idaho,   Iowa,  Kentucky,                                                               
Louisiana,  Mississippi,  Nebraska,  New  Mexico,  North  Dakota,                                                               
Rhode Island, South Dakota, Tennessee  and Wyoming are the states                                                               
involved.  Rice  and  Associates  considers  Alaska  to  be  very                                                               
similar  to Wyoming  as far  as the  number of  licensees. It  is                                                               
considered less  of a risk  because we  don't have the  very high                                                               
second home  values that Wyoming  has. He knew of  no opposition.                                                               
The  state  has never  purchased  a  group policy  for  licensees                                                               
before so the mechanism had to be worked out.                                                                                   
CHAIR ELLIS  thanked him for his  comments and said HB  357 would                                                               
be held.                                                                                                                        
          HB 413-EXTENDING THE REAL ESTATE COMMISSION                                                                       
2:24:10 PM                                                                                                                    
CHAIR ELLIS announced HB 413 to be up for consideration.                                                                        
ELEANOR WOLFE, staff to Representative  Kurt Olson, sponsor of HB                                                               
413, explained this was requested  by the Department of Commerce,                                                               
Community  &  Economic  Development and  Legislative  Budget  and                                                               
Audit Committee. No one had introduced  a bill to extend the Real                                                               
Estate Commission  and the Legislative Auditor  advised to extend                                                               
it to 2016.                                                                                                                     
2:25:11 PM                                                                                                                    
PAT  DAVIDSON, Division  Of Legislative  Audit,  said her  review                                                               
indicated  that the  commission was  operating in  a satisfactory                                                               
manner  and she  recommended a  2016 termination  date. She  also                                                               
recommended to  the Office of  the Governor that they  verify the                                                               
qualifications  of board  members before  presenting them  to the                                                               
legislature for  confirmation. One of the  recent appointments to                                                               
the  board  did not  have  the  necessary years  of  professional                                                               
CHAIR  ELLIS  asked  if that  recommendation  was  well  received                                                               
MS.  DAVIDSON replied  the Governor's  Office concurred  with the                                                               
recommendation and  said they would  improve their  procedures to                                                               
ensure that professional  requirements were met for  any of their                                                               
CHAIR  ELLIS thanked  her  for  her help  and  closed the  public                                                               
hearing saying  the bill  would be held.  There being  no further                                                               
business to come  before the committee, he  adjourned the meeting                                                               
at 2:27:36 PM.                                                                                                                

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