Legislature(2017 - 2018)SENATE FINANCE 532
04/20/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB240 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 214 | TELECONFERENCED | |
| + | HB 240 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 20, 2018
9:12 a.m.
9:12:47 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:12 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Donny Olson
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Representative David Guttenberg, Sponsor; Seth Whitten,
Staff, Representative David Guttenberg; Cindy Laubacher,
Express Scripts, Juneau; Michelle Vaughn, President, Alaska
Pharmacists Association, Juneau; Scott Watts, Ron's
Apothecary, Juneau; Barbara Huff Tuckness, Teamsters,
Juneau; Jason Tapley, Self, Juneau; Lori Morton, Self,
Juneau; Lori Wing-Heier, Director, Division of Insurance,
Department of Commerce, Community and Economic Development.
PRESENT VIA TELECONFERENCE
Barry Christensen, Alaska Pharmacists Association,
Ketchikan; Leif Holm, Vice Chair, State Board of Pharmacy,
North Pole; Bill Head, Pharmaceutical Care Management
Association, California; Richard Holt, Chair, Alaska Board
of Pharmacy, Fairbanks; Sue Seggerman, Self, Soldotna;
Barry Christensen, Alaska Pharmacists Association,
Ketchikan; Catherine Kowalski, Self, Petersburg; Jerry
Brown, Self, Fairbanks; Tom Hodel, Alaska Pharmacists
Association, Soldotna; Tom Wadsworth, Pharmacist, Wasilla;
Justin Ruffridge, Self, Soldotna.
SUMMARY
CSHB 240(FIN)
DRUG PRICING; PHARMACY BENEFITS MANAGERS
CSHB 240(FIN) was REPORTED out of committee with
a "do pass" recommendation and with one Statement
of Zero Fiscal Impact by the Office of the
Governor for the Department of Administration and
the Department of Commerce, Community and
Economic Development.
Co-Chair MacKinnon informed that Senator Micciche was on
other state business in another committee.
CS FOR HOUSE BILL NO. 240(FIN)
"An Act relating to prescription prices available to
consumers; relating to penalties for certain pharmacy
or pharmacist violations; relating to the registration
and duties of pharmacy benefits managers; relating to
procedures, guidelines, and enforcement mechanisms for
pharmacy audits; relating to the cost of multi-source
generic drugs and insurance reimbursement procedures;
relating to the duties of the director of the division
of insurance; and providing for an effective date."
9:13:21 AM
Co-Chair MacKinnon read the title of the bill.
REPRESENTATIVE DAVID GUTTENBERG, SPONSOR, explained that
the bill would drive down the cost of prescription drug
prices. He said that the bill would create a fair and
equitable process for pharmacists to appeal in
disagreements with pharmaceutical drug managers. He stated
that the bill worked to ensure that communities had access
to local pharmacies.
Senator Olson noted that Alaska had one of the highest
healthcare costs in the nation and the price of medications
was a significant driver. He thought the bill was
admirable. He considered that pharmaceutical companies were
bearing the cost of developing medication. He thought that
drug research and the development of new drugs was an
important factor to consider. He mentioned drug-resistant
diseases. He asked for the sponsor's comment on the issue.
Representative Guttenberg asserted that the world of
medical delivery in the country was complex and costly;
Alaska was the most expensive state for medical care in the
country with the highest medical costs in the world. He
wanted to ensure that every entity could make a living and
get a return on the dollar. He believed that the bill
focused on a fair process. He said that the bill focused on
streamlining medical delivery.
9:17:19 AM
SETH WHITTEN, STAFF, REPRESENTATIVE DAVID GUTTENBERG,
discussed the Sectional Analysis (copy on file):
Section 1. Prohibits contracts from establishing 'gag
clauses' that prevent providers from informing a
patient of a less costly alternative for a
prescription drug, device, or supply.
Section 2. Requires pharmacists to notify a patient if
a less costly alternative for a prescription drug,
device or supply is available.
Sections 3 and 4. Establish that a pharmacist who
knowingly fails to notify a patient of a less costly
alternative for a prescription drug, device or supply
may be punished by a civil fine set by the Alaska
Board of Pharmacy.
Section 5.: Adds a new section, Article 10, concerning
Pharmacy Benefits Managers.
** PBM means "pharmacy benefit manager'' in this
sectional
Sec. 21.27 .901. Registry of pharmacy benefit
managers; scope of business practice. Requires that
PBMs register as third-party administrators under
21.27.630 and describes the parameters under which
they may contract with an insurer or network
pharmacies, set the cost of multi-source generic drugs
and allows for an appeal process.
Sec. 21.27.905. Renewal of registration. Establishes a
bi-annual renewal of a registration fee for a PBM as
set by the director.
Sec. 21.27.910. Pharmacy audit procedural
requirements. Describes the procedural and time
requirements required of the PBMs for an audit and
defines who conducts an audit and what records can may
be provided by the pharmacy.
Sec. 21.27.915. Overpayment or underpayment. Indicates
that a PBM shall base a finding of overpayment or
underpayment on the actual payment and not a
projection of patients served by similar
circumstances. It also designates the dispensing fee
limitations.
Sec. 21.27.920. Recoupment. Establishes how a PBM
shall base the recoupment of overpayments from a
pharmacy. It prohibits extrapolation to calculate
recoupment or penalties.
Sec. 21.27.925. Pharmacy audit reports. Establishes
time frames for when preliminary and final audit
reports shall be delivered to a pharmacy and the
response time for any discrepancies found in the
audits.
Sec. 21.27.930. Pharmacy audit appeal; future
repayment. A written appeals process shall be
established by a pharmacy benefits manager. It also
states that future repayment of disputed funds or
other penalties imposed on a pharmacy shall occur only
when all appeals have been exhausted.
Sec. 21.27.935. Fraudulent activity. Defines what may
not be considered fraud by the PBM. Defines
"fraudulent activity."
Sec. 21.27.940. Pharmacy audits; restrictions. Adopts
restrictions on the requirements of the entire Section
1 when applied to an audit in which intentional or
suspected fraud is demonstrated in a review of the
claims data. In addition, the requirements do not
apply to any claims paid for under the medical
assistance program (Medicaid) found in AS 47.07.
Sec. 21.27.945. Drug pricing list; procedural
requirements. The methodology and sources used to
determine the drug pricing list (the "MAC" list) will
be provided to each network pharmacy at the beginning
of their contract term and updated weekly by the PBM.
Basic contact information shall also be provided by
the PBM.
Sec. 21.27.950. Multi-source generic drug appeal.
Establishes a process by which a network pharmacy may
appeal the reimbursement for a multi-source generic
drug and procedures if their appeal is denied. It also
sets the limitations on the PBM and the insurance
division director as to how many days they have to
resolve an appeal or a request for review.
Sec. 21.27.955. Definitions. Defines all selective
wording as used in Section 5.
Section 6. Adds a new section on Applicability as it
applies to audits of pharmacies as conducted by PBMs.
Section 7. Adds a new section granting authority to
Division of Insurance for adopting regulations.
Section 8. Adds a new section stating the Reviser's
instructions for statute reference changes.
Section 9. Effective date clause for Bill section 7 is
immediate.
Section 6. Effective date clause for this Act is July
1, 2019.
9:20:56 AM
Co-Chair MacKinnon reminded the committee that it had heard
the companion bill in committee.
Senator Stevens asked for clarification about the "gag
clause". He wondered why it existed and how it was
enforced.
Mr. Whitten referenced Sections 1 through 4 on pages 1 and
2, of the bill. He said that the intention of the provision
was to simplify the pharmacist's procedures and allow the
patient to receive the lowest cost for their prescription.
9:22:56 AM
Co-Chair MacKinnon stated that currently pharmacy benefit
managers engaged in contracts with individual pharmacists.
Mr. Whitten agreed.
Co-Chair MacKinnon thought some of the contracts had
stipulation that medications would be found by lowest costs
for patients.
Mr. Whitten answered in the affirmative.
Co-Chair MacKinnon asked whether the bill asked for the
ability to allow pharmacists to inform recipients of lower
prices.
Mr. Whitten answered in the affirmative. He qualified that
if a patient could achieve a lower cost paying outside of
their insurance, a pharmacist would notify them of that
information.
9:24:02 AM
Senator Stevens surmised that there was a contractual
arrangement between the pharmacy and the Pharmacy Benefit
manager (PBM).
Mr. Whitten stated that there was a contractual issue
between the two. He shared that he had heard from
pharmacists that the contracts were non-negotiable and
restricted patient information.
Representative Guttenberg stated that the bill would not
negate the contracts but would strike the "gag order" from
future contracts.
Co-Chair MacKinnon was sure that there would be
pharmaceutical benefit managers that would testify as to
why the clause was beneficial.
Senator Olson asked who enforced the gag order.
Representative Guttenberg stated that the gag order was a
contractual obligation between the pharmacists and the PBM.
9:26:05 AM
Senator von Imhof looked at Page 4, line 18(f):
(f) A pharmacy benefits manager shall audit each
pharmacy under the same 19 standards and parameters as
other similarly situated pharmacies in a network 20
pharmacy contract in this state.
She wondered where the standards and parameters could be
found.
Mr. Whitten deferred to the Division of Insurance but
understood that the contracts were confidential.
Co-Chair MacKinnon OPENED public testimony.
9:28:03 AM
BARRY CHRISTENSEN, ALASKA PHARMACISTS ASSOCIATION,
KETCHIKAN (via teleconference), testified in support of the
bill. He spoke to work on the issue over the past ten
years. He lamented the role of PBM in the demise of
pharmacies in the state. He offered an explanation as to
why the bill had not been successfully deliberated by the
legislature in the past. He said that a 10-day notice of
onsite pharmacy audits would be standardized in the bill,
as well as prescription mailings to rural Alaskans. He
thanked the committee for hearing the legislation.
9:32:06 AM
LEIF HOLM, VICE CHAIR, STATE BOARD OF PHARMACY, NORTH POLE
(via teleconference), spoke in support of the bill. He was
a second-generation pharmacist and owner of multiple
pharmacies in the state. He related that the environment
surrounding pharmacies and PBMs was hostile. He noted that
the bill would not eliminate audits or force PBMs to
reimburse but would create a fair playing field for
guidelines to follow for auditing procedures and to prevent
"witch hunts" against pharmacies for clerical errors or
staffing problems. He said that the bill would allow
pharmacies to better serve their communities through the
mail. He asserted that PBM mail order pharmacies were the
most wasteful form of prescription dispensing. He asked the
committee to help Alaskan pharmacists in the fight against
PBMs.
Co-Chair MacKinnon relayed that she had contacted a PBM
representative in order to offer a different perspective.
9:36:04 AM
CINDY LAUBACHER, EXPRESS SCRIPTS, JUNEAU, testified in
opposition to the bill. She explained that PBMs were
healthcare companies that performed pharmacy benefit
management services. She said that PBM clients included
health plans, labor unions, large employers, and state
employee plans. She stated that clients hired PBMs to
manage the healthcare benefit, all the details of the
management were dictated by the client, and a variety of
services was performed based on those requirements. She
spoke to a "PBM 101" [Pharmacy Benefit Managers: HB 240 and
SB 38, Page 2] offered by Senator Geissel at a previous
hearing. She clarified that PBMs were indirectly regualtion
through health plan contracts; to the extent that the
division of insurance had formulary requirements and
mandates, they were responsible to be compliant on behalf
of their clients. She said that PBMs were regulated through
healthcare clients and mail order pharmacies were regulated
through the board of pharmacy and were subject to all the
rules and regulation under the board. She stated that they
were regulated by Medicare and Medicaid through CMS. She
quoted Page 8 of the aforementioned presentation:
• PBMs have free reign to dictate what pharmacies are
permitted to do in a given network thereby driving
patients to particular pharmacy options.
She contended that her clients had the opportunity to
determine what their networks looked like and whether or
not mail service was used. She refuted the assertion that
PBMs could mandate beneficiaries to use PBM mail order. She
stated that she suggested that the sponsor engage in a
stakeholder meeting but had received no response. She
stressed that PBMs did not have a problem with the
enactment of reasonable standards for pharmacy audits or
maximum of allowable cost (MAC) appeals. She said that she
did not appose Section 1 of the bill but did have
recommendations for language that should be changed. She
related that the bill in its current form allowed
pharmacies to tell a patient if a lower cost alternative
drug was available; when pharmacies offered alternative
drugs, they needed to first talk to the doctor. She relayed
that the language should be changed to say that pharmacies
could tell patients if the price at the pharmacy was less
than the co-pay. She stated that the language would also
prohibit plans and PBMs from penalizing a pharmacy for
sharing such information. She added that the langue would
ensure that the payment would count against the patient's
deductible. She asserted that paying outside of the benefit
was not in anyone's benefit. She said that whatever cash
price the patient paid should be counted against their
deductible. She spoke to the issue of registration. She
said that the Express Scripts was already a third-party
administrator (TPA) in the state and that the Division of
Insurance had jurisdiction over the pharmacy benefit
through regualtion of insurance plans and could enforce
requirements on the plans. She said that her business could
not do anything that would bring her client out of
compliance with Alaska law.
9:44:09 AM
Ms. Laubacher addressed the subject of audits. She
reiterated that she was not opposed to fair and reasonable
audit legislation. She agreed with the 10-day notice. She
said that many of the issues were drafting issues, such as
the definition of "fraudulent activity" on Page 6, lines 13
through 18. She argued that similar language could not be
found in any other auditing bill in the country, the langue
mixed up the issues of fraud and clerical errors. She
continued to the issue of extrapolation. She said that PBMs
did not practice extrapolation, which was predominately
done by Medicaid and not PBMs. She said that how she was
paid for audits should be at the direction of the client.
She objected to language that prohibited or set limits on
how best to cover the cost of required audits.
Ms. Laubacher felt that the most contentious part of the
bill involved the MAC portion. She explained that MAC was
how pharmacies were reimbursed for generic prescriptions
that they dispensed; MAC had been created by the federal
government under the Medicaid program in the attempt to
curb skyrocketing pharmacy costs. She said that the bill
would take reimbursement decisions and hand them over to
the Division of Insurance, which was concerning. She shared
that the division would accept appeals and claims for
review and determination in changes in reimbursement. She
felt that the process was significant and wondered why
there was not fiscal note for the change. She noted that
the bill would take part of the insurance code and overlay
MAC appeals into the system, which would be problematic and
costly. She said that taking that authority away from her
clients and giving it to the state to make reimbursement
decisions was problematic. She noted that the language in
the bill did not consider confidentiality provisions.
9:50:22 AM
Ms. Laubacher stated that she would be required to provide
MAC lists to pharmacies, which were highly proprietary and
should not be shared between pharmacies. She said that
community pharmacies were a critical component to the
benefit she provided to her clients. She asserted that
there was not a client existing that did not want
independent community pharmacies in their networks. She
related that 85 to 90 percent of the drugs the were
dispensed in the United States were through community
pharmacies.
9:51:42 AM
Co-Chair MacKinnon requested a copy of Ms. Laubacher's
testimony.
Vice-Chair Bishop asked whether Express Scripts was a
nationwide company.
Ms. Laubacher answered in the affirmative.
Vice-Chair Bishop asked whether passage of other similar
bills had affected profits and made by the company.
Ms. Laubacher thought the laws PBMs had negotiated for
audit practices had made things easier. She considered that
many of the problems expressed in public testimony
pertained to Medicaid audits. She did not know whether the
MAC laws had helped or hindered the industry. She said that
the issue of having divisions of insurance review appeals
had been problematic for all involved. She said that in
Washington State she had found that all of her appeals had
been upheld because all of the appeals for Express Scripts
had been for claims outside of the state's jurisdiction.
She said that the level of confusion in the community
pharmacy community as to which scripts were subject to the
law and which were not had led to numerous appeals.
9:55:04 AM
Senator von Imhof asked why MAC lists were not standard
across the state.
Ms. Laubacher replied that multiple MAC lists were normal
and varied based on the client. She said that the
development of the pricing was a highly proprietary system
that would not tolerate collusion by pharmacy sharing MAC
information. Sharing of MAC list prices would create
conflicts of interest and potential for collusion.
Co-Chair MacKinnon asked whether Ms. Laubacher was in favor
of the bill.
Ms. Laubacher said that she had serious concerns with the
current bill version. She believed that work could be done
in the next year that would lead to a bill everyone could
agree on.
9:58:38 AM
Co-Chair MacKinnon asked Ms. Laubacher to submit her ideas
for language changes.
Senator Olson asked about the potential impact of the bill
to the cost of the end payer.
Ms. Laubacher stated that the potential impact would
primarily occur through the MAC portion of the bill, as it
allowed pharmacies to file their reimbursement appeals with
the Division of Insurance and then give the division sole
authority to make the decision about what the reimbursement
should be.
Senator Micciche thought that industry regularly tried to
kill bills of this nature. He believed that if industry was
serious about negotiating to craft a bill that all parties
could agree on, it would have happened long ago.
Co-Chair MacKinnon reiterated her request that Express
Scripts provide their recommendations in writing.
10:01:23 AM
BILL HEAD, PHARMACEUTICAL CARE MANAGEMENT ASSOCIATION,
CALIFORNIA (via teleconference), echoed the previous
testifier. He said that his organization was against gag
clauses. He said that his association was ready to work
with legislators and stakeholders on the issue of audits
and gag orders.
10:02:57 AM
RICHARD HOLT, CHAIR, ALASKA BOARD OF PHARMACY, FAIRBANKS
(via teleconference), spoke in support of the bill. He
stated that the board was in support of the bill. He said
that given the logistical challenges of the state it was
important to preserve access to pharmacies. He hoped that
pharmacies would be preserved in the state. He felt that it
was necessary to assure that all Alaskans had access to
good quality healthcare.
10:05:20 AM
Senator Stevens asked whether the board represented
independent and corporate pharmacies.
Mr. Holt answered in the affirmative.
10:05:49 AM
AT EASE
10:06:16 AM
RECONVENED
SUE SEGGERMAN, SELF, SOLDOTNA (via teleconference),
testified in support of the bill. She believed that the
bill was necessary in placing checks and balances on PBMs.
She stated that independent pharmacies were a great benefit
to small communities.
10:08:00 AM
MICHELLE VAUGHN, PRESIDENT, ALASKA PHARMACISTS ASSOCIATION,
JUNEAU, spoke in support of the bill. The association
represented over 250 pharmacies and pharmacy technicians
across the state. She stated that independent pharmacies
had been under pressure by the mandates imposed by PBMs.
She felt that the bill allowed for a mechanism by which the
state could intervene, as of now there was no regulation of
PBMs.
Co-Chair MacKinnon asked about the issue of confidentiality
and the assertion about sharing and inappropriate list of
data.
Ms. Vaughn thought that an earlier testifier had referred
to proprietary pricing and the concern that information
would be shared amongst pharmacies. She differed the
question to Barry Christensen.
10:11:19 AM
BARRY CHRISTENSEN, ALASKA PHARMACISTS ASSOCIATION,
KETCHIKAN (via teleconference), thought the concept of
pharmacies sharing MAC lists was irrelevant. He said that
the intent was to be paid the price that the pharmacy was
paying for the drug. He did not believe that the bill
addressed the issue of pharmacies sharing MAC lists as a
negotiating arm.
10:12:22 AM
Senator von Imhof had heard from a testifier that
everything in the PBM contracts was dictated by the client.
Another testifier had asserted that there was a "take it or
leave it" contract. She requested further clarity.
Ms. Vaughn considered that Ms. Laubacher had been
disingenuous in her comment. She said that the state relied
on the PBM to create and set the details in the contracts.
10:14:02 AM
SCOTT WATTS, RON'S APOTHECARY, JUNEAU, testified in support
of the bill. He spoke to prescriptions by mail. He relayed
that under certain plans a prescription could be filled for
a client in Juneau, but when that client went home
Gustavus, the pharmacy was unable to fill the prescription
in Juneau and mail it to Gustavus. He asserted that MAC
prices were needed in the pharmaceutical environment but
when the MAC set prices were below what was attainable in
the marketplace pharmacies ended up losing money on the
prescriptions. He stated that an appropriate appeals
process was necessary. He too exception to the PMB being
dictated by the client and said that there were situations
where the PMB operated on their own regarding MAC pricing.
He said that he had been working on the issue of MAC
pricing but that PBMs would not operate fairly without
legislation.
10:17:56 AM
Senator von Imhof asked how many wholesalers were available
to purchase from; how often did pharmacies buy drugs; how
often did pharmacies negotiate with wholesalers and whether
it was the PBMs fault if pharmacies were weak negotiators.
Mr. Watts stated if the price was above the MAC price,
pharmacies did have access to cheaper choices. He said that
all he was asking in the appeals process was that PBMs show
the variety of prices.
Senator Olson asked whether the prices were per pill.
Mr. Watts replied that the prices were per prescription. He
offered an example of one PMB in which the pharmacies claim
totaled $12,542 under invoice costs.
10:20:40 AM
Senator Stevens referenced an earlier comment about a fair
playing field. He wondered how the term "which hunt" had
been used.
Mr. Watts stated that when he received MAC pricing with
unattainable prices, it was a slow bleed resulting in
business closure.
10:21:55 AM
BARBARA HUFF TUCKNESS, TEAMSTERS, JUNEAU, spoke in
opposition to the bill. She said that the job of PBMs was
to reduce costs. She relayed that her organization was
expected to pay over $1 million in pharmaceutical costs
under its health and welfare plan, the cost of which could
only be covered by the reduction of benefits for members.
She said that if a PBM was not reducing costs as expected
under the Teamsters health and welfare trust the
organization would rebid for another PBM. She wanted
assurances that the PBMs hired by the would be able to
continue to do their work. She believed that the auditing
issue in the bill should be considered further.
10:25:12 AM
Senator Olson said that attempts to keep healthcare costs
down were not being rewarded and that healthcare costs in
the state were rising at an alarming rate. He gave an
example of his experience buying prescription drugs at a
local pharmacy where the cost was $100 per pill. He thought
those rates were extreme.
10:26:57 AM
JASON TAPLEY, SELF, JUNEAU, spoke in support of the bill.
He was a pharmacist at Southeast Alaska Regional Health
Consortium in Juneau (SEARHC). He offered several examples
of pharmacies attempting to negotiate PBM contracts and the
restrictions involved. He informed that SEARHC worked
mostly with Native Alaskans. He spoke to patients filling
prescriptions from their insurance benefits. He said that
the legislation would allow pharmacists to provide clients'
money saving information pertaining to the cost of drugs.
Senator von Imhof understood the concept of giving the
customer a choice. She appreciated the example provided by
the testifier.
10:30:56 AM
Senator Olson asked Mr. Tapley how the bill would affect
Alaska Native beneficiaries.
Mr. Tapley stated that the bill would assist the pharmacy
should it be audited by insurance companies that provided
someone else being seen at SEARHC, which would remove
dollars that could be used for the purchase of medications
for Native Alaskans.
10:31:54 AM
CATHERINE KOWALSKI, SELF, PETERSBURG (via teleconference),
testified in support of the bill. She said that her
family's pharmacy had served the city of Petersburg for
generations. She lamented that her business could no longer
afford to operate without some form of PBM legislation. She
said that prescription drug prices had increased along with
the power allowed to PBMs at the expense of pharmacies. He
stated that 40 other states had passed similar legislation
without appeals.
10:35:28 AM
JERRY BROWN, SELF, FAIRBANKS (via teleconference), spoke in
support of the bill. He echoed the concerns of previous
testifiers. He lamented the negative revenue for pharmacies
because of the PBM contracts. He said that his pharmacy
lost 10 to 15 percent on each inhaler sold because of the
prices set by the PBM.
10:39:11 AM
TOM HODEL, ALASKA PHARMACISTS ASSOCIATION, SOLDOTNA (via
teleconference), testified in support of the bill. He
believed that bill addressed the issues between pharmacies
and PBMs. He said that the effort of dealing with PBMs had
forced him into early retirement. He said that dealing with
audit requests had hindered his ability to provide quality
care to customers.
10:40:38 AM
TOM WADSWORTH, PHARMACIST, WASILLA (via teleconference),
testified in support of the bill. He related his history as
a pharmacist in the state. He echoed the remarks of
previous testifiers. He said that all pharmacists currently
working in the state had been trained outside of Alaska. He
worried that the attractiveness of the profession was
hindered by the sustainability of businesses in rural areas
because of the reimbursement strategies deployed by PBMs.
He believed that PBMs engaged in backroom practices such as
spread pricing, negotiating and keeping manufacturing drug
rebates, requiring patient co-pay claw-backs, and
reimbursing pharmacies below acquisition costs. He added
that PBMs could expel pharmacies from their network at any
time with no explanation. He believed that these practices
had diminished patient access by pushing small businesses
into closure. He said that students in the state that are
interested in serving small areas were concerned about
sustainability. He expounded on the many areas in which
pharmacists benefitted communities.
10:46:29 AM
JUSTIN RUFFRIDGE, SELF, SOLDOTNA (via teleconference),
testified in support of the bill. He worked in an
independent pharmacy. He stated that independent
pharmacists in Alaska worked in the community in different
and positive ways. He disagreed with previous testimony
that suggested collusion and conflict would be a result of
the legislation. He thought that the idea that transparency
would lead to collusion was erroneous. He related that the
MAC pricing appeal would remain the same under the
legislation. He categorized the proprietary algorithms that
created MAC pricing as an arbitrary method that created
prices "out of thin air." He concluded that the loss of
local pharmacy business was bad for the state's economy.
10:50:48 AM
LORI MORTON, SELF, JUNEAU, spoke in support of the bill.
She was a consumer of medication. She stated that CareMark
did try and mandate that patients purchase medications at
their in-house pharmacy via their mail services. She
believed that this drove customers away from using local
pharmacies. She said that she intentionally sought local
pharmacies for her drug needs. She felt that the peace of
mind that came from working with a local pharmacy
outweighed the savings from using a mail order option from
a corporate entity. She expressed concern that in the bill
hearing process, people had used language in a way that had
been disingenuous about the intent of the legislation.
Co-Chair MacKinnon CLOSED public testimony
10:54:52 AM
Vice-Chair Bishop discussed the Statement of Zero Fiscal
Impact:
The following agencies request no funding for this
legislation for FY2019 through FY2024; they anticipate
absorbing any increases in workload (using existing
staff and resources) without fiscal impact. This
includes capital and supplemental appropriations.
Additionally, no impact to state revenue is projected
and the bill will not result in regulation changes.
Department of Administration
Centralized Administrative Services
Health Plans Administration (OMB Comp Num 2152)
Approved by: Leslie Ridle - 04/04/18
Department of Administration
Updated to reflect changes to the CS.
Department of Commerce, Community and Economic
Development
Corporations, Business and Professional Licensing
Corporations, Business and Professional Licensing (OMB
Comp Num 2360)
Approved by: Catherine Reardon, Director - 04/06/18
Division of Administrative Services, DCCED
Insurance Operations
Insurance Operations (OMB Comp Num 354)
Approved by: Catherine Reardon, Director - 01/19/18
Division of Administrative Services, DCCED
Updated to 2018 fiscal note form.
Co-Chair MacKinnon informed the committee that floor
session would be delayed by 15 minutes.
LORI WING-HEIER, DIRECTOR, DIVISION OF INSURANCE,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
spoke to the bill. She acknowledged that the bill was
lengthy and complex. She spoke to Senator von Imhof's
question about contracts. She stated that there were two
contracts; the PBM would contract with the state or a large
employer, or with an insurer. The contract terms were
negotiated much like insurance policies. Secondly, the PBM
would negotiate with pharmacists and she understood that
those contracts were less than flexible. She stressed that
no one was interested in raising the cost of healthcare.
She said that her division had investigated the issue of
appeals. She said that after discussions with the Office of
Administrative Hearings (OAH) it had been determined that
there would not be enough appeals to warrant a fiscal note.
She said that she had worked closely with the State of
Washington, which had implemented similar legislation,
about their appeals process. She said most appeals in that
state had been settled for less than $300.
10:57:40 AM
Ms. Wing-Heier thought that the law itself had led to some
appeals going back and forth between PBMs and pharmacists
without having to go to a third party such as OAH.
11:00:32 AM
Senator von Imhof discussed auditing standards and wondered
whether there was a set of such standards that were
understood by all parties involved.
Ms. Wing-Heier assumed that she was speaking of the audit
between the pharmacists and the PBM. She said that she did
not know was the nature of the standards.
Senator Olson referenced the State of Washington, and the
fact that they were approaching $1 billion in appeals. He
wondered how the zero fiscal note was justified.
Ms. Wing-Heier informed that much of the fiscal note from
the State of Washington legislation was for the platform
that had been built to handle the appeals. She said that
additional staff had also been hired. She reiterated that
the appeals had not manifested.
Co-Chair MacKinnon solicited further discussion of moving
the bill without the amendment process.
Senator Micciche stated that he supported the bill as
written.
Co-Chair MacKinnon wanted to see the language suggested by
those in opposition of the current bill version.
Vice-Chair Bishop MOVED to report CSHB 240(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 240(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one Statement of Zero Fiscal
Impact by the Office of the Governor for the Department of
Administration and the Department of Commerce, Community
and Economic Development.
11:03:33 AM
AT EASE
11:05:47 AM
RECONVENED
Co-Chair MacKinnon discussed housekeeping.
ADJOURNMENT
11:06:10 AM
The meeting was adjourned at 11:06 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 240 Public Testimony Brown.msg |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |
| HB240 Links to Further Reading.pdf |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |
| HB240 Sectional Analysis Version J.pdf |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |
| HB240 Sponsor Statement.pdf |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |
| HB240 Supporting Document Capitol Forum Article January 2018.pdf |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |
| HB240 Supporting Document Modern Healthcare Article_CVS PBM Unit Sued for False Claims.pdf |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |
| HB240 Supporting Document New York Times Article February 2018.pdf |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |
| HB240 Supporting Document PBM Legislation Map.pdf |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |
| HB240 Letters of Support.pdf |
SFIN 4/20/2018 9:00:00 AM |
HB 240 |