Legislature(2015 - 2016)BELTZ 105 (TSBldg)

03/31/2016 01:30 PM LABOR & COMMERCE

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01:32:46 PM Start
01:34:01 PM Confirmation Hearings
01:47:27 PM SB201
02:07:10 PM Confirmation Hearings
02:14:33 PM SB175
03:04:15 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees: TELECONFERENCED
State Medical Board
*+ SB 201 PHARMA BD & EMPLOYEES;DRUG DIST/MANUFAC TELECONFERENCED
Heard & Held
*+ SB 175 PHARMACY BENEFITS MANAGERS TELECONFERENCED
Heard & Held
*+ SB 166 DRUG PRESCRIPTION DATABASE; REGISTRATION TELECONFERENCED
<Bill Hearing Canceled>
*+ SB 169 PHARMACIST PRESCRIPTION OF CONTRACEPTIVES TELECONFERENCED
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled TELECONFERENCED
-- Public Testimony --
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 31, 2016                                                                                         
                           1:32 p.m.                                                                                            
                                                                                                                                
                                                                                                                              
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mia Costello, Chair                                                                                                     
Senator Cathy Giessel, Vice Chair                                                                                               
Senator Kevin Meyer                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Gary Stevens                                                                                                            
Senator Johnny Ellis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
                                                                                                                                
     State Medical Board                                                                                                    
                                                                                                                                
          Stephen Craig Humphreys - Soldotna                                                                                    
          Camille (Cam) Olson Carlson - Fairbanks                                                                               
          Bruck Ann Clift - Mat-Su Valley                                                                                       
          Joy Marasco Neyhart - Juneau                                                                                          
          Grant Thomas Roderer - Anchorage                                                                                      
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 201                                                                                                             
"An  Act relating  to  the  Board of  Pharmacy;  relating to  the                                                               
licensing and  inspection of  certain facilities  located outside                                                               
the state; relating  to drug supply chain  security; and creating                                                               
a  position   of  executive  administrator   for  the   Board  of                                                               
Pharmacy."                                                                                                                      
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 175                                                                                                             
"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."                                                                    
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 166                                                                                                             
"An  Act  relating  to   the  controlled  substance  prescription                                                               
database; relating to the Board  of Dental Examiners; relating to                                                               
the  State  Medical Board;  relating  to  the Board  of  Nursing;                                                               
relating to the Board of  Examiners in Optometry; relating to the                                                               
Board of Pharmacy; and providing for an effective date."                                                                        
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
SENATE BILL NO. 169                                                                                                             
"An Act  relating to  the authority  of pharmacists  to prescribe                                                               
and   dispense   self-  administered   hormonal   contraceptives;                                                               
relating  to the  duties of  the Board  of Pharmacy;  relating to                                                               
insurance coverage for  contraceptives prescribed by pharmacists;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 201                                                                                                                  
SHORT TITLE: PHARMA BD & EMPLOYEES; DRUG DIST/MANUFAC                                                                           
SPONSOR(s): SENATOR(s) GIESSEL                                                                                                  
                                                                                                                                
02/22/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/22/16       (S)       L&C, FIN                                                                                               
03/31/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 175                                                                                                                  
SHORT TITLE: PHARMACY BENEFITS MANAGERS                                                                                         
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST                                                                                       
                                                                                                                                
02/10/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/10/16       (S)       L&C, FIN                                                                                               
03/31/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
DR. STEPHEN CRAIG HUMPHREYS, Appointee                                                                                          
State Medical Board                                                                                                             
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified as appointee to  the State Medical                                                             
Board.                                                                                                                        
                                                                                                                                
CAMILLE (CAM) OLSON CARLSON, Appointee                                                                                          
State Medical Board - public seat                                                                                               
Fairbanks, Alaska                                                                                                             
POSITION STATEMENT:  Testified as appointee to  the State Medical                                                             
Board.                                                                                                                          
                                                                                                                                
DR. BRUCK ANN CLIFT, Appointee                                                                                                  
State Medical Board                                                                                                             
Mat-Su Valley, Alaska                                                                                                           
POSITION STATEMENT:  Testified as appointee to  the State Medical                                                             
Board.                                                                                                                          
                                                                                                                              
DR. JOY MARASCO NEYHART, Appointee                                                                                              
State Medical Board                                                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as appointee to  the State Medical                                                             
Board.                                                                                                                          
                                                                                                                                
DR. GRANT THOMAS RODERER, Appointee                                                                                             
State Medical Board                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified as appointee to  the State Medical                                                             
Board.                                                                                                                          
                                                                                                                                
EMMIE VAN WYHE, Intern                                                                                                          
Senator Cathy Giessel                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided the sectional analysis for SB 201.                                                               
                                                                                                                                
JANE CONWAY, Staff                                                                                                              
Senator Cathy Giessel                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented information related to  SB 201 and                                                             
SB 175.                                                                                                                         
                                                                                                                                
JANEY HOVENDEN, Director                                                                                                        
Division  of Corporations,  Business  and Professional  Licensing                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented information on SB 201.                                                                          
                                                                                                                                
MOLLY GRAY, Executive Director                                                                                                  
Alaska Pharmacists Association                                                                                                  
Anchorage, Alaska,                                                                                                              
POSITION STATEMENT: Testified in support of SB 201 and SB 175.                                                                
                                                                                                                                
DIRK WHITE, representing himself                                                                                                
Sitka, Alaska                                                                                                                   
POSITION STATEMENT: Testified in support of SB 201 and SB 175.                                                                
                                                                                                                                
JOHN COTTER, President                                                                                                          
Board of Pharmacy                                                                                                               
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in strong support of SB 201.                                                                    
                                                                                                                                
JASON TAPLEY, Community Pharmacist                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 175.                                                                           
                                                                                                                                
MARGARET SODEN, representing herself                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 175.                                                                           
                                                                                                                                
GERALD BROWN, representing himself                                                                                              
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 175.                                                                           
                                                                                                                                
SCOTT WATTS, Community Pharmacy                                                                                                 
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in strong support of SB 175.                                                                    
                                                                                                                                
CINDY LAUBACHER                                                                                                                 
Express Scripts                                                                                                                 
Roseville, California                                                                                                           
POSITION STATEMENT: Testified in opposition to SB 175.                                                                        
                                                                                                                                
ERIC DOUGLAS                                                                                                                    
CVS Health                                                                                                                      
Washington, DC                                                                                                                  
POSITION STATEMENT: Testified in opposition to SB 175.                                                                        
                                                                                                                                
BARRY CHRISTENSEN, Co-Chair                                                                                                     
Alaska Pharmacists Association                                                                                                  
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 175.                                                                           
                                                                                                                                
JENNY CASTILLO, Trust Administrator                                                                                             
Alaska Teamster Employer Welfare Trust                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in opposition to SB 175.                                                                        
                                                                                                                                
CHRIS MURRAY, Program Coordinator                                                                                               
Division of Insurance                                                                                                           
Department of Commerce, Community and Economic Development                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Answered questions related to SB 175.                                                                     
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                              
1:32:46 PM                                                                                                                  
                                                                                                                                
CHAIR MIA COSTELLO called the  Senate Labor and Commerce Standing                                                             
Committee meeting  to order at 1:32  p.m. Present at the  call to                                                               
order  were  Senators Giessel,  Meyer,  and  Chair Costello.  She                                                               
reviewed the agenda.                                                                                                            
                                                                                                                                
^Confirmation Hearings                                                                                                          
                     CONFIRMATION HEARINGS                                                                                  
                      State Medical Board                                                                                   
                                                                                                                                
1:34:01 PM                                                                                                                    
CHAIR COSTELLO  announced the  first order  of business  would be                                                               
confirmation hearings  for Governor Walker's appointments  to the                                                               
State Medical Board.                                                                                                            
                                                                                                                                
She asked  Dr. Humphreys  to express his  interest in  serving on                                                               
the State Medical Board.                                                                                                        
                                                                                                                                
1:34:11 PM                                                                                                                    
STEPHEN  CRAIG HUMPHREYS,  Appointee, State  Medical Board,  said                                                               
he's been  on the  board for a  little over a  year and  hopes to                                                               
bring a positive, unique perspective to the board.                                                                              
                                                                                                                                
CHAIR  COSTELLO asked  what the  board  is doing  to address  the                                                               
backlog  in processing  applications for  individuals seeking  to                                                               
practice medicine in Alaska.                                                                                                    
                                                                                                                                
DR. HUMPHREYS  said they're addressing  the applications  as fast                                                               
as they  can while  still maintaining  quality. Some  states have                                                               
tried to make the process more  automated and the board and staff                                                               
are looking at that option.                                                                                                     
                                                                                                                                
CHAIR  COSTELLO  asked   if  he  would  like   to  highlight  any                                                               
experience that has been particularly helpful.                                                                                  
                                                                                                                                
DR. HUMPHREYS talked about growing  up in Anchorage and the broad                                                               
patient base  in Alaska.  Trying to deal  with the  numbers while                                                               
keeping  it economical  is a  challenge. It's  been inspiring  to                                                               
hear from other board members.                                                                                                  
                                                                                                                                
CHAIR COSTELLO  thanked Dr. Humphreys.  She asked Ms.  Carlson to                                                               
tell the  committee her  interest in continuing  to serve  on the                                                               
State Medical Board.                                                                                                            
                                                                                                                                
1:40:41 PM                                                                                                                    
CAMILLE  (CAM) OLSON  CARLSON,  Appointee,  State Medical  Board,                                                               
noted  hers is  the  public seat  on the  board.  She shared  her                                                               
history in  Alaska and work on  past boards. She found  the State                                                               
Medical  Board work  the  last four  years  very interesting  and                                                               
challenging.                                                                                                                    
                                                                                                                                
SENATOR GIESSEL asked  what she looks for when  she considers the                                                               
licensing of a physician.                                                                                                       
                                                                                                                                
MS. CARLSON said  both public and medical board  members look for                                                               
the most competent  candidates. They look at  the person's record                                                               
to  ensure  they  come  well  qualified  and  are  filling  their                                                               
obligations to patients.                                                                                                        
                                                                                                                                
CHAIR COSTELLO thanked  her for her service. She  asked Dr. Clift                                                               
to tell the committee her interest in serving on the board.                                                                     
                                                                                                                                
1:43:21 PM                                                                                                                    
DR. BRUCK ANN CLIFT, Appointee,  State Medical Board, said she is                                                               
a  family   physician  practicing  in  the   Mat-Su  Valley.  She                                                               
described   her  educational   background.  She   said  she   was                                                               
originally asked  to serve on  the Midwifery Board, but  then was                                                               
appointed to the State Medical Board.                                                                                           
                                                                                                                                
CHAIR COSTELLO noted Dr. Clift is  a new appointee. She asked her                                                               
what she hopes to contribute if appointed to the board.                                                                         
                                                                                                                                
DR.  CLIFT  said  she  is   particularly  interested  in  ethical                                                               
policies  for  licensure  in  the state,  as  well  as  expedited                                                               
licensing of out-of-state physicians to practice in Alaska.                                                                     
                                                                                                                                
SENATOR GIESSEL  asked if anything  else is a priority.  She also                                                               
inquired about what interested her in the Midwifery Board.                                                                      
                                                                                                                                
DR.  CLIFT said  she was  asked to  serve by  a midwife  and felt                                                               
under-qualified because she is not an OBGYN.                                                                                    
                                                                                                                                
SENATOR GIESSEL asked if she has attended any board meetings.                                                                   
                                                                                                                                
DR. CLIFT said no.                                                                                                              
                                                                                                                                
CHAIR COSTELLO  thanked Dr.  Clift for  her interest  in serving.                                                               
She  informed  the  committee  that   there  are  two  additional                                                               
appointees for consideration to the  State Medical Board but they                                                               
are not  available at this  time. She  stated that she  will hold                                                               
all the appointments and forward them in one batch.                                                                             
                                                                                                                                
1:46:40 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
        SB 201-PHARMA BD & EMPLOYEES; DRUG DIST/MANUFAC                                                                     
                                                                                                                                
1:47:27 PM                                                                                                                    
CHAIR COSTELLO  announced the consideration of  SB 201. She noted                                                               
this is the first hearing.                                                                                                      
                                                                                                                                
1:48:03 PM                                                                                                                    
SENATOR CATHY  GIESSEL, Alaska State  Legislature, sponsor  of SB
201,  explained that  the bill  is an  opportunity for  Alaska to                                                               
come into compliance  with the federal Drug  Quality Security Act                                                               
established in  2013. It will  create a new license  category for                                                               
out-of-state  wholesale drug  distributors. The  bill deals  with                                                               
the  safe practice  of pharmaceutical  manufacturing and  what is                                                               
shipped to  Alaska for  distribution. This  is of  utmost concern                                                               
due to an increase in prescription drug counterfeiting.                                                                         
                                                                                                                                
Currently, the  Board of  Pharmacy has  no authority  to regulate                                                               
out-of-state   wholesale   drug   distributors   or   third-party                                                               
logistics providers. Alaska  is one of few  remaining states that                                                               
does not  license out-of-state drug distributors.  The bill would                                                               
ensure  that they  comply  with the  same  regulations as  Alaska                                                               
wholesalers.  It  requires  out-of-state  drug  distributors,  or                                                               
outsourcing  facility,   to  follow  specific   guidelines.  This                                                               
includes obtaining a  license, authorizing inspection, appointing                                                               
an  agent before  shipping,  mailing  or delivering  prescription                                                               
drugs, or  advertising. An outsourcing facility  must comply with                                                               
the Drug Quality and Security Act.                                                                                              
                                                                                                                                
She  pointed out  that  SB  201 would  also  allow  the Board  of                                                               
Pharmacy to  create an executive administrator  position to serve                                                               
as the  liaison, to implement  statutes and regulations,  and aid                                                               
in managing new licensees.                                                                                                      
                                                                                                                                
1:50:37 PM                                                                                                                    
EMMIE VAN WYHE, Intern, Senator Cathy Giessel, Alaska State                                                                     
Legislature, provided the following sectional analysis for SB
201:                                                                                                                            
                                                                                                                                
     Section  1:  AS  08.80.130(13):  Allows  licensing  and                                                                  
     inspecting  for  out-of-state   drug  distributors  and                                                                    
     outsourcing facilities.                                                                                                    
                                                                                                                                
     AS   08.80.130(14):   Establishes  qualifications   and                                                                  
     duties    of    executive   administrator.    Executive                                                                    
     administrator  is  delegated   authority  in  order  to                                                                    
     conduct board business.                                                                                                    
                                                                                                                                
     Section   2:   AS   08.80.03(c):   Specifications   for                                                                  
     facilities,  equipment, personnel,  and procedures  for                                                                    
     control of drugs.                                                                                                          
                                                                                                                                
     Section 3:  AS 08.80.157(k): Applies to  wholesale drug                                                                  
     distributors  and  outsourcing facilities  outside  the                                                                    
     state under AS 08.80.159, regarding licensing.                                                                             
                                                                                                                                
     Section 4:  Amends AS  08.80 by  adding a  new section:                                                                  
     Sec.   08.80.159:  Requires   that  a   wholesale  drug                                                                  
     distributor or  outsourcing facility have a  license in                                                                    
     Alaska   before   shipping,  mailing,   or   delivering                                                                    
     prescription  drugs  to  a licensee  in  the  state  or                                                                    
     before  advertising  in the  state,  an  agent must  be                                                                    
     appointed in  the state,  and a  designee of  the board                                                                    
     must authorize inspection of the facility.                                                                                 
                                                                                                                                
     An outsourcing facility, in  addition, must comply with                                                                    
     the Drug  Quality and Security  Act of 2013.  The board                                                                    
     may  require   an  inspection  of   facilities  located                                                                    
     outside of  the state,  approve a designee  to inspect.                                                                    
     The  board shall  adopt regulations  to implement  this                                                                    
     section.                                                                                                                   
                                                                                                                                
     Section 5:  Amends AS  08.80 by  adding new  section to                                                                  
     Article 2:  Sec. 08.80.270: Allows the  Board to create                                                                  
     an executive  administrator position. Defines  the role                                                                    
     of the executive administrator.                                                                                            
                                                                                                                                
     Section  6:  AS   08.80.480(37):  Defines  "outsourcing                                                                  
     facility"                                                                                                                  
                                                                                                                                
1:52:45 PM                                                                                                                    
SENATOR MEYER  asked if there's  been a problem  with counterfeit                                                               
drugs coming to Alaska.                                                                                                         
                                                                                                                                
MS. VAN WYHE said  the bill is a result of  an occurrence in 2012                                                               
when a  compounding facility in Massachusetts  shipped unsanitary                                                               
medication to  nine different states.  Alaska is one of  the only                                                               
states that hasn't come into compliance with the federal law.                                                                   
                                                                                                                                
SENATOR MEYER asked if the  federal government provides money for                                                               
implementation.                                                                                                                 
                                                                                                                                
1:54:25 PM                                                                                                                    
JANE CONWAY,  Staff, Senator  Giessel, Alaska  State Legislature,                                                               
said  the  federal government  would  impose  regulations if  the                                                               
state doesn't  come into compliance  with this federal  law. Most                                                               
other  states  have  determined  that they  would  rather  do  it                                                               
themselves.                                                                                                                     
                                                                                                                                
She noted that  John Cotter from the Board of  Pharmacy is online                                                               
to answer technical questions.                                                                                                  
                                                                                                                                
SENATOR MEYER asked if an executive administrator is necessary.                                                                 
                                                                                                                                
MS. CONWAY  said the board  doesn't have  the capacity to  do the                                                               
extra work. The licenses will cover the cost of that position.                                                                  
                                                                                                                                
1:55:55 PM                                                                                                                    
SENATOR  GIESSEL  added  that most  of  the  larger  professional                                                               
boards have an executive administrator.                                                                                         
                                                                                                                                
1:57:01 PM                                                                                                                    
JANEY HOVENDEN, Director, Division  of Corporations, Business and                                                               
Professional  Licensing, Department  of  Commerce, Community  and                                                               
Economic Development  (DCCED), presented  information on  SB 201.                                                               
She advised that  the Board of Pharmacy has  entertained the idea                                                               
of an executive administrator position for some time.                                                                           
                                                                                                                                
CHAIR COSTELLO asked her to review the fiscal note.                                                                             
                                                                                                                                
MS. HOVENDEN  said the  first year anticipates  a cost  of $124.4                                                               
thousand.  The personal  services cost  will be  $100.9 thousand.                                                               
Some travel  for the executive  administrator to attend  Board of                                                               
Pharmacy  meetings is  included. The  bill requires  a change  in                                                               
regulations at a  cost of $2.5 thousand, and there  is a one-time                                                               
overhead cost for the new position.                                                                                             
                                                                                                                                
CHAIR  COSTELLO asked  if  the fiscal  note  includes travel  for                                                               
licensing   and  inspecting   of   out-of-state  wholesale   drug                                                               
distributors. She inquired about the board's budget.                                                                            
                                                                                                                                
MS. HOVENDEN said no; those  services would be on contract within                                                               
those  states. The  Board  of Pharmacy  currently  has a  surplus                                                               
budget.                                                                                                                         
                                                                                                                                
1:59:43 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on SB 201.                                                                               
                                                                                                                                
1:59:56 PM                                                                                                                    
MOLLY GRAY,  Executive Director, Alaska  Pharmacists Association,                                                               
testified in support of SB 201.  It is vitally important to bring                                                               
all pharmacists in  Alaska into compliance with  federal law. The                                                               
bill   aligns  with   the  association's   mission  and   ensures                                                               
compliance with the federal mandate.                                                                                            
                                                                                                                                
2:01:04 PM                                                                                                                    
DIRK  WHITE, representing  himself,  testified in  support of  SB
201. Speaking as  a community hospital pharmacist in  Sitka and a                                                               
former president of  the board when this issue first  came up, he                                                               
said  he supports  the bill  and  asks that  it be  moved out  of                                                               
committee. He offered to answer questions.                                                                                      
                                                                                                                                
2:01:52 PM                                                                                                                    
JOHN COTTER,  President, Board of  Pharmacy, testified  in strong                                                               
support of SB  201. Alaska is one of the  few states that doesn't                                                               
regulate 503B  pharmacies and that  is a loophole that  should be                                                               
closed  in order  to ensure  that  drugs being  brought into  the                                                               
state are  safe. The license fees  will fully cover the  costs of                                                               
doing this  business and most  of the  new position. The  cost of                                                               
inspections would  be borne  by the  pharmacy that  is inspected.                                                               
The cost of the bill is reasonable and the need is important.                                                                   
                                                                                                                                
SENATOR GIESSEL  asked for examples of  in-state and out-of-state                                                               
wholesale distributors.                                                                                                         
                                                                                                                                
MR.  COTTER said  the issue  is with  smaller companies  that are                                                               
secondary suppliers  that pick  up drugs on  the open  market for                                                               
resale.  There is  often a  problem  with the  pedigree of  those                                                               
drugs.                                                                                                                          
                                                                                                                                
SENATOR MEYER  assumed that out-of-country drug  suppliers aren't                                                               
an issue.                                                                                                                       
                                                                                                                                
MR. COTTER  said they can't ship  to the state, but  that doesn't                                                               
keep them from selling over the Internet.                                                                                       
                                                                                                                                
2:06:02 PM                                                                                                                    
SENATOR MEYER asked if Puerto Rico is considered a state.                                                                       
                                                                                                                                
MR. COTTER said yes.                                                                                                            
                                                                                                                                
CHAIR COSTELLO asked if telemedicine is affected by the bill.                                                                   
                                                                                                                                
MR. COTTER said no.                                                                                                             
                                                                                                                                
2:06:39 PM                                                                                                                    
CHAIR COSTELLO  stated she would  keep public testimony  open and                                                               
hold SB 201 in committee for further review.                                                                                    
                                                                                                                                
^Confirmation Hearings                                                                                                          
                     CONFIRMATION HEARINGS                                                                                  
                      State Medical Board                                                                                   
                                                                                                                                
CHAIR  COSTELLO stated  that the  committee would  hear from  two                                                               
additional appointees to the State Medical Board.                                                                               
                                                                                                                                
CHAIR  COSTELLO  asked Dr.  Neyhart  to  tell the  committee  her                                                               
interest in serving on the State Medical Board.                                                                                 
                                                                                                                                
2:07:10 PM                                                                                                                    
DR.  JOY MARASCO  NEYHART, Appointee,  State Medical  Board, said                                                               
the Governor asked her to serve and she is eager to do so.                                                                      
                                                                                                                                
CHAIR COSTELLO asked if she is a new appointee.                                                                                 
                                                                                                                                
DR. NEYHART said yes.                                                                                                           
                                                                                                                                
CHAIR COSTELLO asked what perspectives she brings to the board.                                                                 
                                                                                                                                
DR. NEYHART replied  she has the Southeast  Alaska perspective as                                                               
a practicing pediatrician and wants  to see the implementation of                                                               
telemedicine in a safe and appropriate way.                                                                                     
                                                                                                                                
CHAIR COSTELLO thanked Dr. Neyhart  and asked Dr. Roderer to tell                                                               
the committee about his interest  in serving on the State Medical                                                               
Board.                                                                                                                          
                                                                                                                                
2:08:48 PM                                                                                                                    
DR. GRANT  THOMAS RODERER, Appointee,  State Medical  Board, said                                                               
he  has  served  for  about   two  years  and  is  interested  in                                                               
continuing to serve.  His interest is in pain  management and the                                                               
problem with over prescribing for this condition.                                                                               
                                                                                                                                
CHAIR COSTELLO  asked whether  he sees  any challenges  the board                                                               
will be facing.                                                                                                                 
                                                                                                                                
DR. RODERER  said the board  has to  address the problem  of over                                                               
prescribing  opioids to  patients.  He hopes  to  help the  board                                                               
draft regulations to regulate this form of treatment.                                                                           
                                                                                                                                
CHAIR COSTELLO noted there is  a prescription drug database being                                                               
reviewed in current legislation.                                                                                                
                                                                                                                                
SENATOR  GIESSEL  highlighted  the Medicaid  reform  bill  moving                                                               
through  the legislative  process that  incorporates Centers  for                                                               
Disease  Control  and   Prevention  (CDC)  recommendations  which                                                               
include a  more robust  use of  the prescription  drug monitoring                                                               
program. She asked what can be  done to educate clinicians on the                                                               
safe prescribing of opioids.                                                                                                    
                                                                                                                                
DR.  RODERER  said  having  the   database  available  will  help                                                               
physicians   know  if   there  is   a   potential  for   multiple                                                               
prescriptions. He  cautioned that compliance to  use the database                                                               
may be another issue.                                                                                                           
                                                                                                                                
SENATOR GIESSEL said she's hearing  about fear of harsh penalties                                                               
for noncompliance. She asked if  he knows of disciplinary actions                                                               
the board might take.                                                                                                           
                                                                                                                                
DR. RODERER  stated it will  take much more discussion  to define                                                               
disciplinary actions.  The board first adopts  regulations before                                                               
determining sanctions. There  has to be a law first  and then the                                                               
board can adopt regulations.                                                                                                    
                                                                                                                                
SENATOR GIESSEL thanked Dr. Roderer.                                                                                            
                                                                                                                                
CHAIR COSTELLO echoed appreciation for his service.                                                                             
                                                                                                                                
[The names were  held in committee with the  intention of sending                                                               
all the confirmation candidate names forward in one batch.]                                                                     
                                                                                                                                
2:13:50 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
               SB 175-PHARMACY BENEFITS MANAGERS                                                                            
                                                                                                                                
2:14:33 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of  SB 175.  She  noted  that  this is  the  first                                                               
hearing and a committee substitute is forth coming.                                                                             
                                                                                                                                
2:15:43 PM                                                                                                                    
SENATOR  CATHY GIESSEL,  Alaska  State  Legislature, as  sponsor,                                                               
introduced  SB  175.  She  noted  that  the  Labor  and  Commerce                                                               
Committee is  very supportive of  small businesses in  Alaska, of                                                               
which  local pharmacies  are one.  Small businesses  are a  vital                                                               
part of Alaska's economy and that is  the focus of SB 175. It has                                                               
to  do  with  fair  and   reasonable  treatment  and  predictable                                                               
guidelines that  come from  an entity  called a  pharmacy benefit                                                               
manager (PBM). Local  pharmacies must deal with PBMs  in order to                                                               
run  their businesses.  Currently, there  are no  real guidelines                                                               
for  reimbursements  by PBMs  to  local  pharmacies so  PBMs  can                                                               
change reimbursement rates  and request audits at  will. They can                                                               
also refuse to respond to,  or pay pharmacies, for the dispensing                                                               
medications. Pharmacies have no legal  recourse at this point. SB
175 will provide an avenue of  appeal to an unreasonable audit as                                                               
their last recourse.                                                                                                            
                                                                                                                                
She noted  support letters  from many  small pharmacies  and some                                                               
include examples of unfair treatment  by PBMs. Several pharmacies                                                               
have been  driven out  of business  by PBMs.  She also  noted the                                                               
four-page  letter  from  a   large  pharmaceutical  company  from                                                               
Washington,   DC,  that   outlines  reasons   not  to   pass  the                                                               
legislation. She  provided the history behind  the profitable PBM                                                               
industry.                                                                                                                       
                                                                                                                                
SENATOR  GIESELL  said  33  other   states  have  passed  similar                                                               
legislation demanding  transparency in  pricing and  fair audits.                                                               
She  concluded  that she  considers  PBMs  as "pharmacy  billion-                                                               
dollar middlemen."                                                                                                              
                                                                                                                                
JANE  CONWAY,   Staff,  Senator   Cathy  Giessel,   Alaska  State                                                               
Legislature,  presented  information  related   to  SB  175.  She                                                               
delivered a PowerPoint to explain  PBMs. She said PBMs started in                                                               
1970 as  claims processors and  have since become  intertwined in                                                               
almost every aspect of the  pharmaceutical supply chain. They are                                                               
almost  unregulated at  the  state and  federal  levels and  they                                                               
represent some of the largest companies in the nation.                                                                          
                                                                                                                                
She  listed  examples  of  PBM's   market  power  and  influence:                                                               
CVS/Caremark,  Express  Scripts,  and  OptumRX  control  over  70                                                               
percent of all U.S. scripts.                                                                                                    
                                                                                                                                
She said  PBMs are  designed to  reduce administrative  costs for                                                               
insurers,   validate   patient   eligibility,   administer   plan                                                               
benefits, negotiate  costs between  pharmacies and  health plans,                                                               
and  audit  pharmacies  for fraud.  PBMs  also  develop  pharmacy                                                               
provider networks, and pharmacies must accept PBM contracts.                                                                    
                                                                                                                                
She  noted   every  opposition  letter  talks   about  negotiated                                                               
contracts, but they  are really "take it or  leave it" contracts.                                                               
She cited an example.                                                                                                           
                                                                                                                                
MS. CONWAY  continued to say  that PBMs influence what  drugs are                                                               
dispensed, collect  money from  drug manufacturers,  and restrict                                                               
pharmacies on how  many pills they can dispense at  a given time.                                                               
They dictate how much pharmacies will  be paid for the drugs they                                                               
dispense,  have  free  reign  to   dictate  what  pharmacies  are                                                               
permitted to do in a  given network, operate their own mail-order                                                               
pharmacies, and audit pharmacies at will.                                                                                       
                                                                                                                                
2:23:19 PM                                                                                                                    
MS. CONWAY  explained how PBMs work.  The insurer hires a  PBM to                                                               
manage   drug   costs  and   it   negotiates   prices  for   both                                                               
insurers/manufacturers   and   insurers/pharmacies,   then   with                                                               
manufacturers,   and   finally  with   manufacturers/wholesalers.                                                               
Finally, the  PBM negotiates insurer reimbursement  for drugs and                                                               
dispensing fees with pharmacies.                                                                                                
                                                                                                                                
MS.  CONWAY said  SB 175  brings fairness  to audits  and doesn't                                                               
allow audits  during the first  seven days of each  month because                                                               
of high  patient volume. It  is designed to prevent  targeting of                                                               
clerical  errors and  it establishes  a  reasonable timeframe  to                                                               
prepare for an audit.                                                                                                           
                                                                                                                                
The  bill   also  establishes  an   audit  appeals   process  for                                                               
pharmacies and  guidelines for PBMs  to follow  regarding patient                                                               
confidentiality. Extrapolation  cannot be used in  assessing fees                                                               
and  penalties. Alaska  pharmacists  would not  be penalized  for                                                               
providing  mail-order service  to their  customers. Finally,  the                                                               
bill  does  not prevent  the  recoupment  of funds  where  fraud,                                                               
waste, and abuse exist.                                                                                                         
                                                                                                                                
She  noted  that  33  states  have  already  enacted  fair  audit                                                               
legislation and 24 states have  already enacted Maximum Allowable                                                               
Cost (MAC) transparency legislation.                                                                                            
                                                                                                                                
MS. CONWAY said  the bill will also require  registration of PBMs                                                               
with  the  Division  of  Insurance. It  sets  up  guidelines  for                                                               
generic drug MAC pricing, establishes  a mechanism for a pharmacy                                                               
to appeal  MAC pricing, and  prevents auditing  local pharmacists                                                               
out of a job.                                                                                                                   
                                                                                                                                
2:26:28 PM                                                                                                                    
She related  that there are  many stories from  pharmacists about                                                               
the  abuses of  PBMs. She  reviewed  an audit  from her  hometown                                                               
pharmacy in  Soldotna. The  PBM extrapolated  a .1  percent error                                                               
and came up with a $7,300  bill. The pharmacist found no recourse                                                               
but to sell his business to an outside company.                                                                                 
                                                                                                                                
2:28:15 PM                                                                                                                    
MS. CONWAY  turned to the  maximum allowable cost (MAC)  that can                                                               
be reimbursed  to the pharmacist  for dispensing  a prescription.                                                               
Typically,  PBMs  use  an  aggressively low  MAC  price  list  to                                                               
reimburse  their contracted  pharmacies and  a different,  higher                                                               
list of prices when they sell  to their clients or plan sponsors.                                                               
They  reimburse low  and charge  high, 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.                                                                                            
                                                                                                                                
She said when  PBMs fail to update MAC lists  in a timely manner,                                                               
pharmacies are  forced to dispense  at a loss, sometimes  as high                                                               
as $100  or more, or not  dispense at all. When  prices increase,                                                               
PBMs often wait  weeks or even months before  updating MAC lists.                                                               
The  acquisition price  spike/lagging reimbursement  trend has  a                                                               
very  significant  impact on  pharmacies'  ability  to remain  in                                                               
business.  Neither plan  sponsors nor  contracted retail  network                                                               
pharmacies have any transparency into the MAC process.                                                                          
                                                                                                                                
2:30:52 PM                                                                                                                    
MS. CONWAY addressed what SB  175, a MAC transparency bill, does.                                                               
It  sets reasonable  standards  on what  can  be MAC'd,  requires                                                               
regular reporting of MACs to a  pharmacy in a useable format, and                                                               
provides for a defined MAC appeals process.                                                                                     
                                                                                                                                
It does not  mandate that a PBM reimburse a  pharmacy at a higher                                                               
amount, or  represent an  administrative burden  on the  PBM, nor                                                               
does it  mandate that a PBM  approve a pharmacy's MAC  appeal. It                                                               
does not result in increased costs to the healthcare system.                                                                    
                                                                                                                                
2:31:38 PM                                                                                                                    
She reviewed  the statistics on  the total pharmacies  in Alaska;                                                               
of the 84 pharmacies, 20 are independents.                                                                                      
                                                                                                                                
She said  that 24 states  have passed similar legislation  and 33                                                               
have passed fair and uniform pharmacy audits.                                                                                   
                                                                                                                                
2:32:33 PM                                                                                                                    
CHAIR COSTELLO opened public testimony.                                                                                         
                                                                                                                                
2:33:10 PM                                                                                                                    
JASON TAPLEY,  Community Pharmacist,  testified in support  of SB
175. He  said he works for  SEARCH. He has had  5-10 audits where                                                               
he  has had  to prove  "that the  money was  yours," and  to show                                                               
documentation that  he could  recover the  costs. This  bill will                                                               
provide a clear, consistent process for these audits to occur.                                                                  
                                                                                                                                
2:35:13 PM                                                                                                                    
MARGARET  SODEN,  representing herself,  said  she  is a  retired                                                               
pharmacist  testifying in  support of  SB 175.  She recalled  her                                                               
fifty years  in the field  and the current policy  of third-party                                                               
billing. She said she has undergone  a number of audits, but with                                                               
proper notification  and conduct they  can be done and  cause the                                                               
least disruption.  She shared a  personal story of  undergoing an                                                               
audit in mid-winter  in Fairbanks and opined that  this bill will                                                               
establish some parameters for audits to make them easier.                                                                       
                                                                                                                                
2:38:56 PM                                                                                                                    
GERALD BROWN, representing  himself, said he is  a pharmacist and                                                               
business  owner  testifying  in  support  of SB  175.  A  lot  of                                                               
contracts are sent by PBMs  and this would provide some structure                                                               
for those  contracts, most of  which are  "take it or  leave it."                                                               
The  MAC provision  is  very important  because  of the  terrible                                                               
reimbursement reductions. The take it  or leave it contracts make                                                               
it impossible to negotiate.                                                                                                     
                                                                                                                                
2:41:56 PM                                                                                                                    
SCOTT  WATTS, Community  Pharmacy, said  he is  a business  owner                                                               
testifying  in strong  support of  SB 175.  The bill  establishes                                                               
strong standards for audits and  does away with the penalties for                                                               
clerical errors.  He provided an  example of a recent  audit that                                                               
contained  clerical errors  and the  pharmacy was  charged $6,000                                                               
recoupment for the entire prescription.                                                                                         
                                                                                                                                
He noted  that MAC pricings  need to  be updated or  the pharmacy                                                               
ends up dispensing at a lower  cost. There is currently no way to                                                               
get  through  to  a  PBM.  While the  contract  is  signed  by  a                                                               
pharmacist, there is no room for negotiation.                                                                                   
                                                                                                                                
2:44:48 PM                                                                                                                    
MOLLY GRAY, President,  Alaska Pharmacists Association, testified                                                               
in support  of SB 175. It  aligns with the pharmacy's  mission to                                                               
provide  quality care.  They are  asking  for a  standard set  of                                                               
rules for audits.                                                                                                               
                                                                                                                                
2:46:17 PM                                                                                                                    
DIRK  WHITE, representing  himself,  testified in  support of  SB
175. He said  he has been a community hospital  pharmacist for 31                                                               
years. Their primary  issue is the low cost  reimbursement; it is                                                               
all  about  MAC  pricing.  Last  year  they  lost  $22,176.42  on                                                               
prescriptions in  the grocery store  pharmacy. He  provided other                                                               
examples of losses.                                                                                                             
                                                                                                                                
The said  the bill wouldn't  limit audits. He mentioned  that his                                                               
contract does not allow mail order prescriptions to rural areas.                                                                
                                                                                                                                
2:49:07 PM                                                                                                                    
CINDY LAUBACHER,  Express Scripts, testified in  opposition to SB
175. She  voiced concern about  cost implications the  bill would                                                               
have  on  their  clients  and the  limitations  on  auditing.  It                                                               
restricts  the number  of claims  that  can be  reviewed and  the                                                               
lookback timeframe.                                                                                                             
                                                                                                                                
She  said  MAC  was  created  as a  means  of  incentivizing  the                                                               
purchase of generic drugs. That  became the industry standard for                                                               
reimbursing   pharmacies.   If    the   pharmacy   disputes   the                                                               
reimbursement,  they have  the opportunity  to request  an audit.                                                               
This  bill   would  destroy  any  incentive   to  prescribe  less                                                               
expensive medications.                                                                                                          
                                                                                                                                
2:51:48 PM                                                                                                                    
ERIC DOUGLAS, CVS  Health, testified in opposition to  SB 175. He                                                               
addressed misnomers  mentioned in  today's testimony. He  said SB
175 is an  omnibus bill aimed at every  anti-PBM legislation that                                                               
has been  introduced. He  said there are  multiple audit  laws in                                                               
the U.S. He said CVS was not contacted to discuss this bill.                                                                    
                                                                                                                                
The  audit provision  in SB  175 is  not how  they operate.  They                                                               
don't extrapolate  and there is  an appeal process  available. He                                                               
disputed the  statement about  MAC reimbursement  levels. Generic                                                               
drugs are commoditized and they  set a maximum allowable cost. He                                                               
maintained that there  is an appeals process.  Putting PBMs under                                                               
the insurance  division regulations is wrong  because they aren't                                                               
insurance companies.                                                                                                            
                                                                                                                                
SENATOR  GIESSEL  asked   if  he  has  supported   this  type  of                                                               
legislation in any of the 33 states that have passed it.                                                                        
                                                                                                                                
MR.  DOUGLAS answered  no,  but they  have  supported some  audit                                                               
bills.                                                                                                                          
                                                                                                                                
2:57:07 PM                                                                                                                    
BARRY  CHRISTENSEN,  Co-Chair,  Alaska  Pharmacists  Association,                                                               
testified in  support of  SB 175.  He noted  that this  topic has                                                               
been discussed since 2008 when  a similar bill passed the Senate.                                                               
He  disputed the  statement that  there hadn't  been meetings  or                                                               
negotiations with PBMs; he recalled  a meeting Senator Egan held.                                                               
PBMs also have lobbyists in Juneau.                                                                                             
He noted he  submitted written testimony listing  reasons why the                                                               
bill is  needed. Pharmacies  in Alaska need  help with  the audit                                                               
process  and   the  amount  they're  getting   paid  for  generic                                                               
prescription drugs.                                                                                                             
                                                                                                                                
2:59:47 PM                                                                                                                    
JENNY  CASTILLO, Trust  Administrator,  Alaska Teamster  Employer                                                               
Welfare  Trust, testified  in opposition  to SB  175. She  stated                                                               
that  their PBM  performs infrequent  on-site audits;  the audits                                                               
are  multi-source  claim  reviews  and are  concurrent  to  claim                                                               
submissions  to  mitigate  client prolonged  risk  to  inaccurate                                                               
payments   and  decreased   repetitive   errors  through   timely                                                               
corrections. Their  PBM conducts  many audits and  the parameters                                                               
are   clearly  outlined.   The  relationship   is  a   negotiated                                                               
arrangement  and  should  remain  that  way.  It  should  not  be                                                               
legislated.                                                                                                                     
                                                                                                                                
3:01:59 PM                                                                                                                    
CHAIR COSTELLO  kept public testimony  open on SB 175.  She asked                                                               
if the administration has a position on the bill.                                                                               
                                                                                                                                
3:02:14 PM                                                                                                                    
CHRIS  MURRAY,   Program  Coordinator,  Division   of  Insurance,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED), said he does not have a position on SB 175.                                                                            
                                                                                                                                
CHAIR COSTELLO asked if he agrees PBMs need regulation.                                                                         
                                                                                                                                
MR. MURRAY  said he  just recently learned  about this  issue and                                                               
isn't prepared to answer.                                                                                                       
                                                                                                                                
CHAIR COSTELLO  asked if  it is appropriate  for the  division to                                                               
regulate PBMs.                                                                                                                  
                                                                                                                                
MR. MURRAY said they would be able to do the job, should the                                                                    
legislation pass.                                                                                                               
                                                                                                                                
CHAIR COSTELLO held SB 175 in committee awaiting a committee                                                                    
substitute.                                                                                                                     
                                                                                                                                
3:04:15 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Costello adjourned the Senate Labor and Commerce Standing                                                                 
Committee meeting at 3:04 p.m.                                                                                                  

Document Name Date/Time Subjects
24 - State Medical Board.pdf SL&C 3/31/2016 1:30:00 PM
State Medical Board
Medical Board Fact Sheet.pdf SL&C 3/31/2016 1:30:00 PM
State Medical Board
Medical - Carlson #1.pdf SL&C 3/31/2016 1:30:00 PM
State Medical Board
Medical - Clift #1.pdf SL&C 3/31/2016 1:30:00 PM
State Medical Board
Medical - Neyhart #1.pdf SL&C 3/31/2016 1:30:00 PM
State Medical Board
Medical - Humphreys #1.pdf SL&C 3/31/2016 1:30:00 PM
State Medical Board
Medical - Roderer #1.pdf SL&C 3/31/2016 1:30:00 PM
State Medical Board
SB 175 vsn W.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175- Sectional Analysis.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Sponsor Statement.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Supporting Document - White 3-11-16.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Supporting Document - Cordova Drug 3-15-16.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Supporting Document - AKPhA.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Supporting Document - Island Pharm 3-11-16.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 201 - Sectional Analysis.pdf SL&C 3/31/2016 1:30:00 PM
SB 201
SB 201 Sponsor Statement.pdf SL&C 3/31/2016 1:30:00 PM
SB 201
SB 201 Hearing Request.pdf SL&C 3/31/2016 1:30:00 PM
SB 201
SB 201 - Supporting Document - Board of Pharmacy.pdf SL&C 3/31/2016 1:30:00 PM
SB 201
SB 201 - Supporting Document - AKPha.pdf SL&C 3/31/2016 1:30:00 PM
SB 201
SB 175 - News Article - Anthem vs Express Scripts.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Opposition Letter - Teamsters.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - PBM and MAC Presentation.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Supporting Document - Info NACDS.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Supporting Document - Soden.pdf SL&C 3/31/2016 1:30:00 PM
SB 175
SB 175 - Supporting Document PBM Watch - other states legislation.pdf SL&C 3/31/2016 1:30:00 PM
SB 175