Legislature(2023 - 2024)BARNES 124
03/11/2024 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB189 | |
| HB226 | |
| HB203 | |
| HB175 | |
| HB254 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 203 | TELECONFERENCED | |
| += | HB 254 | TELECONFERENCED | |
| += | HB 150 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| *+ | HB 327 | TELECONFERENCED | |
| *+ | HB 271 | TELECONFERENCED | |
| += | HB 189 | TELECONFERENCED | |
| *+ | HB 226 | TELECONFERENCED | |
| += | HB 175 | TELECONFERENCED | |
HB 226-PHARMACIES/PHARMACISTS/BENEFITS MANAGERS
3:41:30 PM
CHAIR SUMNER announced that the next order of business would be
HOUSE BILL NO. 226, "An Act relating to the Board of Pharmacy;
relating to insurance; relating to pharmacies; relating to
pharmacists; relating to pharmacy benefits managers; relating to
patient choice of pharmacy; and providing for an effective
date." [Before the committee was CSHB 226(HSS).]
3:41:48 PM
MS. HACKENMILLER, on behalf of Representative Sumner, prime
sponsor, presented CSHB 226(HSS). She shared the sponsor
statement for the bill [included in committee packet], which
read as follows [original punctuation provided]:
House Bill No. 226 aims to address critical issues
related to the Board of Pharmacy, insurance,
pharmacies, pharmacists, and pharmacy benefits
managers in the state of Alaska. This comprehensive
legislation is designed to ensure patient choice of
pharmacy, improve transparency and accountability in
pharmacy benefit management, and enhance the standards
for pharmaceutical care across the state.
HB226 emphasizes the powers of the Board of Pharmacy,
including provisions for licensing, inspection, and
regulation of pharmacies, pharmacists, and other
entities involved in the distribution of drugs. It
also seeks to establish safeguards for patient access
to pharmacy services and clinician-administered drugs,
while preventing unfair trade practices by insurers
and pharmacy benefits managers.
This legislation introduces provisions for the
reimbursement of pharmacy services, addressing issues
related to national average drug acquisition cost and
dispensing fees, with the goal of ensuring fair
compensation for pharmacies and pharmacists.
House Bill No. 226 is a critical step forward in
promoting the best interests of patients, pharmacies,
and pharmacists in Alaska. By enacting this
legislation, we strive to create an environment that
fosters quality pharmaceutical care, empowers patient
choice, and enhances the overall integrity of pharmacy
services in our state.
This legislation is scheduled to take effect on July
1, 2025, and represents a collaborative effort to
modernize and improve the pharmaceutical landscape in
Alaska.
3:44:53 PM
BRANDY SEIGNEMARTIN, PharmD, Executive Director, Alaska Pharmacy
Association, co-presented a PowerPoint, entitled "HB 226:
Transparency in Prescription Pricing & Patient Freedom of
Pharmacy Choice," [hard copy included in the committee packet].
She presented an overview of the presentation on slide 2 and
continued to slide 3, "What is a Pharmacy Benefit Manager
(PBM)," which read as follows [original punctuation provided]:
• Third-party companies that act as intermediaries
between insurance companies, drug manufacturers,
pharmacies, & patients
• Created to help insurers control drug spend, but
have become perversely incentivized to increase
drug spend
• Why are they incentivized to increase drug spend?
? Create and manage formularies
? Negotiate rebates
? Process claims
? Manage pharmacy networks
? Operate mail-order and "specialty"
pharmacies
MS. SEIGNEMARTIN turned to slide 4, "How PBMs Impact Healthcare
Costs," which read as follows [original punctuation provided]:
• How do they increase drug costs?
? Rebates and fees demanded of manufacturers
for formulary placement - responsible for
42% of every dollar spent on brand medicines
in the commercial market
? Incentivize spend on higher-cost drugs in
order to maximize profit margin
? Reimburse self-owned pharmacies at higher
rates than other pharmacies
? Invented the fallacy of "specialty" pharmacy
as a guise to increase spend on higher-
profit margin prescriptions that they steer
to their owned pharmacies
? Spread pricing- charging the plans more for
a claim and underpaying the pharmacies
3:47:08 PM
DANIEL NELSON, PharmD, Director of Pharmacy, Tanana Chiefs
Conference, moved to slide 5, "PBMs are Harming Alaskans," which
read as follows [original punctuation provided]:
Pharmacies across Alaska are closing crumbling
public health infrastructure due to deceptive
practices by Pharmacy Benefit Managers
• 25% of independent pharmacies have closed since
2018
• Even more chain and independent pharmacies have
limited staffing and hours
• Tribal health systems feel the impact on overall
care
3:48:14 PM
MR. NELSON proceeded to slide 6, which featured Alaska news
headlines about pharmacy closures, staffing shortages, and
cyber-attacks on pharmacy benefit managers (PBM). He moved to
slide 7 to discuss the vertical relationship among insurers,
PBMs, specialty pharmacies, retail pharmacies, mail-order
pharmacies, and providers in 2022. Slide 8 showed a pie chart
of the big 3 PBMs that have market monopoly power: OptumRx, CVS,
and Express Scripts.
3:52:46 PM
MS. SEIGNEMARTIN continued the presentation on slide 9 to
discuss price spreading; anti-competitive, unfair trade
practices; and patient steering. She said price spreading is
dangerous because plan sponsors are charged significantly more,
and pharmacies are paid significantly less.
3:54:52 PM
MR. NELSON shared a spread pricing example from one Alaska
pharmacy on slide 10.
3:56:25 PM
MS. SEIGNEMARTIN moved to slide 11, "Spread Pricing," which read
as follows [original punctuation provided]:
• Harms Alaskan employers, patients, and pharmacies
• Alaskan Employer Example
• AlaskaCare
• In other states, investigations have found that
PBMs were overcharging their plans by millions of
dollars
? $223.7 million in Ohio in one year
? Utah uncovered $8 per prescription average
spread
3:57:15 PM
MS. SEIGNEMARTIN advanced to slide 12, "Anti-competitive, unfair
trade practices," which read as follows [original punctuation
provided]:
• Monopolistic practices lead to artificially
inflated drug costs
• Anti-competitive practices to discourage or
squash competition
• As PBMs grow in power and continue to have lack
of oversight, they are crushing Alaska pharmacies
with non-negotiable contracts and forcing them
out of business
• Reports show that PBMs reimburse their affiliated
pharmacies at much higher rates than local
pharmacies
3:58:48 PM
MS. SEIGNEMARTIN turned to slide 13, "Patient Steering," which
read as follows [original punctuation provided]:
PBMs steer patients to their own high-cost, low
quality lower 48 mail-order pharmacies
• Causes delays in patient care, poor outcomes,
increased healthcare costs
• Patients deserve the right to choose where they
get their medications
3:59:46 PM
CHAIR SUMNER passed the gavel to Vice Chair Ruffridge.
4:01:06 PM
MR. NELSON moved to slide 14, "To Whom are PBMs responsible?"
Slide 14 read as follows [original punctuation provided]:
Currently, the big PBMs are only beholden to their
shareholders
• Should PBMs have a responsibility to the health
of Alaskans?
This is not only an issue for the private sector
Tribal Health Organizations are heavily impacted
? THO pharmacies are forced to either send
prescriptions out to PBM-owned mail-order
pharmacies
? Or, they "eat" 100% of the cost of what
should be a covered prescription
4:02:13 PM
REPRESENTATIVE FIELDS asked which section of statutes affect
tribal health organizations (THO).
MR. NELSON said there's not a specific reference to THOs in the
bill; nonetheless, the bill would positively impact THO's bottom
line and the patients they serve.
4:03:07 PM
MS. SIEGNEMARTIN continued the presentation on slide 15, "HB 226
Provisions," which read as follows [original punctuation
provided]:
Gives patients the right to access medication at a
pharmacy of their choice
- Bans patient steering to PBM-owned or
affiliated pharmacies
Ensures safe access to physician-administered
medications
- Bans PBM-required white bagging and brown
bagging
Requires a transparent reimbursement model
- Saves money for patients and plan sponsors
on prescription drug spend
- Gets rid of complicated and opaque
reimbursement methodologies
HB226 will:
• Ban spread pricing
• Require reimbursement floor of NADAC + dispensing
fee
• Require payment parity between PBM-owned
pharmacies and local pharmacies
• Fiduciary responsibility from PBMs to plan
sponsors
4:04:40 PM
REPRESENTATIVE SADDLER asked Ms. Stiegnemartin to explain "white
bagging" and "brown bagging."
MS. SIEGNEMARTIN defined white bagging and brown bagging as
practices in which PBMs use their monopolistic power to steer
the flow of prescription commerce away from local pharmacies and
clinics into their own hands to allow for remuneration at a
higher level. More specifically, white bagging is when the drug
is sent to the mail room of the patient's clinic, as opposed to
being sent through the proper supply chain, which circumvents
certain protective systems. Brown bagging is when the drug is
sent directly to the patient's home, which adds extra layers of
product integrity issues and other safety concerns.
4:07:29 PM
REPRESENTATIVE PRAX questioned which U.S. Supreme Court decision
determined that PBMs are okay.
MS. SIEGNEMARTIN answered Rutledge v. PCMA, which was a 2020
decision.
4:09:34 PM
REPRESENTATIVE SADDLER how the state got to this point.
MS. SIEGNEMARTIN analogized the Kudzu plant and explained that
PBMs were intended to be an adjudication point between
pharmacies and insurance companies; however, over time, their
vertical integration model amassed monopolistic wealth and power
that is used to steer the flow of prescription commerce. She
added that many insurance companies are beholden to state laws,
but third-party administrators are not regulated in the same
way.
4:12:29 PM
REPRESENTATIVE FIELDS said the fiscal note from the Department
of Administration (DOA) reflects a $2 million dollar cost
increase. He asked Mr. Nelson why he disagrees with the
department's analysis.
MR. NELSON confirmed that he strongly disagrees with DOA because
there was no consideration for the cost savings that would occur
from changing the model for ingredient costs. He resumed the
presentation on slide 18 which featured a bar graph of the
Division of Retirement and Benefits (DRB) spend in 2022 versus
the potential cost impact of HB 226. DRB spent $277 million in
2022 [on prescriptions]. If HB 226 were to pass, Mr. Nelson
estimated that the bill would save the state somewhere between
$.7 million and $7.9 million at an average of $4.3 million in
costs savings.
4:16:53 PM
MR. NELSON shared several examples of how the bill might impact
Dimethyl Fumerate and Copaxone prescription costs on slides 19-
20.
4:18:47 PM
REPRESENTATIVE SADDLER asked whether HB 226 would eliminate the
opportunity for specialty pharmacy cost increases.
MR. NELSON answered yes, because more local pharmacies would
qualify as "specialty pharmacies" under the bill. He shared an
example of how HB 226 would save the state money on the cost of
filling Ampyra prescriptions on slide 21. Slide 22 projected
overall cost savings for Alaska employers of anywhere between $4
million and $44 million based on the National Average Drug
Acquisition Cost (NADAC) high and low. He moved to slide 23,
which read as follows [original punctuation provided]:
HB 226 is Pro-Alaska economy by preventing forced mail
order and patient steering/coercion
HB226 would allow patients to fill prescriptions
locally if they would like to
Potential to infuse $34-$36 million annually into
Alaska's local economy for state employee/retiree
prescriptions alone (based on 2022 data)
Overall positive financial impact on Alaska economy is
much larger
MR. NELSON emphasized that the bill would not prevent the
allowance of mail order prescription services. On slide 14, he
estimated that based on the NADAC low and high, the overall
gross economic infusion for Alaska without forced mail and
dispensing fee would range from savings of between $190 million
to $200 million.
4:24:09 PM
MR. NELSON concluded on slide 25 with an example of benefits
that could be gained through a transparent PBM, such as OreadRx,
as presented by the owner, Dr. Dared Price, at a White House
listening Session.
4:25:59 PM
REPRESENTATIVE FIELDS questioned the admin fee of OreadRx.
MS. SIEGNEMARTIN did not know the answer; nonetheless, she said
it is "flat and transparent," which is in direct opposition to
current PBMs that use spread pricing.
REPRESENTATIVE CARRICK asked whether the flat administrative fee
is statutorily set.
MR. NELSON said the flat fee is negotiated between the plan
sponsor and the PBM.
4:27:15 PM
REPRESENTATIVE SADDLER sought to better understand the meaning
of spread pricing.
MR. NELSON defined the "spread" as the difference between the
amount negotiated between the pharmacy and the plan sponsor.
4:28:48 PM
REPRESENTATIVE PRAX asked why everyone hasn't switched to
OreadRx.
MS. SIEGNEMARTIN said the answer is vertical integration. She
explained that plans must sometimes pay a large fee to opt out
of using the vertically integrated PDM services, which speaks to
their monopolistic power. She explained that if more employers
moved towards transparent PBMs any of the 74 outside of the
big three everyone would be much better off.
MR. NELSON, in response to a follow up question from
Representative Prax, added that Mark Cuban testified at the
White House Listening Session about this intentionally
complicated system.
4:32:28 PM
REPRESENTATIVE CARRICK asked how PBMs aren't violating Antitrust
laws at the federal level if they are acting as pharmacies and
manufacturers in some cases and working vertically integrated
with insurance companies. She said she had seen many local
pharmacies go out of business as a result of this structure and
agreed that something needs to be done; however, she asked why
the state is the most appropriate entity to take action.
MS. SIEGNEMARTIN said the PBMs built their vertical integration
slowly over time. She explained that the Federal Trade
Commission (FTC) launched an investigation into the big PBMs and
sent out compensatory orders about 18 months ago. Two weeks
ago, the FTC reported that the PBMs are not complying with those
orders. She added that Alaska is behind the curve compared to
other states.
4:34:53 PM
REPRESENTATIVE FIELDS said he is still struggling to understand
the impact on Tribal health providers. If the bill were to
pass, he asked whether Tribal members who are state employers
would receive their medication through a Tribal pharmacy that
would receive an additional dispensing fee paid through Alaska
Care.
MR. NELSON characterized Alaska Medicaid as a blessing because
it does not use a PBM model. However, Tribal health providers
also serve tons of patients with private insurance or no
insurance at all. He said the bill would still apply to these
patients and make it a fair playing ground.
REPRESENTATIVE FIELDS sought to confirm that privately insured
individuals using Tribal pharmacies are the primary reason that
Tribal health pharmacies are interested in this bill.
MR. NELSON said that's correct.
4:37:15 PM
ASHLEY SCHABER, Chair, Alaska Board of Pharmacy, gave invited
testimony in support of CSHB 226(HSS). She said the Board of
Pharmacy is in unanimous support of the bill because it gives
patients the right to access medications at the pharmacy of
their choice if it's contracted with the PBM; provides a
framework of transparency and reimbursement for pharmacies and
patients; protects patient access to clinician administered
medications by restriction the practices of white bagging and
brown bagging; and aligns with the board's strategic plan to
grow the state's economy by promoting community health and
safety. She explained since the work on HB 226 began, multiple
Alaska pharmacies have closed, including those providing
specialized services. She said the bill would ensure that
Alaska's pharmacies can continue to safely serve Alaskans.
4:39:55 PM
REPRESENTATIVE FIELDS asked Ms. Schaber whether she had
reflected on how to most efficiently support community
pharmacies without wasting money on larger corporations.
MS. SCHABER said the premise of the bill is to allow Alaskans to
choose, so putting a limitation on that would go against the
original intent of the legislation.
4:41:08 PM
DESIREE MOLINA, Pharmacist, Three Bears Pharmacy, gave invited
testimony in support of CSHB 226(HSS). She shared examples of
how unethical PBM practices harm Alaskans. In addition to
harming Alaskans by restricting their access to lifesaving
medications, PBMs are contributing to the closure of Alaska
pharmacies. She said this is a health crisis and urged members
to support HB 226.
4:44:05 PM
REPRESENTATIVE RUFFRIDGE announced that HB 226 would be held
over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB226 Sponsor Statement.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 226 |
| HB226 Sectional Analysis Ver. S.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 226 |
| HB226 Summary of Changes Ver B to Ver S.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 226 |
| Pat Shire clarification on 2.27.24 testimony (HSS HB226).pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 226 |
| HB 189 State by State.xlsx |
HL&C 3/11/2024 3:15:00 PM |
HB 189 |
| HB189 Sponsor Statement.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 189 |
| SB 121HB 226 Revised Slides.pptx |
HL&C 3/11/2024 3:15:00 PM |
HB 226 |
| S.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 189 |
| HB189 Explanation of Changes.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 189 |
| HB189 Sectional Analysis Ver. S.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 189 |
| HB327 Support.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 327 |
| SB121 & HB226 DCCED-DOI Applicable Court Cases in Oklahoma and Arkansas 3.12.24.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 226 SB 121 |
| HB226 Letter of Support.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 226 |
| HB 226 Letter of Support - Albertsons.pdf |
HL&C 3/11/2024 3:15:00 PM |
HB 226 |