Legislature(2013 - 2014)CAPITOL 106
03/20/2014 03:00 PM House HEALTH & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| HB324 | |
| HB319 | |
| HB356 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 319 | TELECONFERENCED | |
| *+ | HB 356 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 324 | TELECONFERENCED | |
HB 319-DRUG/DEVICE DISTRIBUTORS; COMPOUNDED RX
3:09:30 PM
VICE CHAIR KELLER announced that the next order of business
would be HOUSE BILL NO. 319, "An Act relating to wholesale drug
or device distributors; relating to prescription benefits under
the state health insurance plan; and providing for an effective
date."
3:10:25 PM
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, stated
that the proposed bill had started as a simple bill that "got a
little bit more complicated along the way," and she read from
the sponsor statement:
Currently wholesale companies of drugs and medical
devices that are outside the state of Alaska are not
required to be licensed with the State creating an
unfair disadvantage to our local businesses. This
bill will level the playing field by requiring these
out of state wholesalers to be licensed as those are
in the state. Additionally, with the potential for
the counter fitting of products by rogue companies,
this legislation will help insure Alaskans receive
quality products.
It also adds verbiage which would include "pharmacy or
pharmacist" as a "provider" under section 6 (d) which
defines those occupations in which unfair
discrimination is prohibited against a person who
provides a service within the scope of the providers
occupational license. This bill would also require
the State of Alaska to pay for and/or reimburse
compounded prescription within the same scope and
manner as manufactured prescriptions. Pharmacy
compounding is the creation of a particular
pharmaceutical product to fit the unique need of a
patient. To do this, compounding pharmacists combine
or process appropriate ingredients using various
tools. This is done for medically necessary reasons,
such as to change the form of the medication from a
solid pill to a liquid, to avoid a non-essential
ingredient that the patient is allergic to, or to
obtain the exact dose(s) needed or deemed best of
particular active pharmaceutical ingredient(s).
Currently, a compound prescription that contains at
least one legend (RX only) drug is generally covered
by most insurance plans. However, the compounding
pharmacy may only be reimbursed for the legend drug(s)
in the compounded prescription, not the other
ingredients used or for the time it took to make the
compound. (This may mean that the pharmacy is unable
to make up the medication per the designed formula
and/or unable to dispense the intended product to the
patient.) This will negatively impact our local
businesses, in-fact it could put many out of business.
Alaskans deserve to have coverage of compounded
medications for potentially life-saving indications as
well as for quality of life.
Many of these drugs were previously covered, now the
customer must bear the cost anywhere from as little as
$80.00 to as much as $800.00 depending on the
compound.
REPRESENTATIVE T. WILSON said that she had spoken with the
Department of Administration after the change of "insurance
groups for retirees." She relayed that she had received e-mails
from constituents questioning why prescriptions previously
covered were no longer being covered. She shared her prior
understanding that medication would be covered if it included a
legend drug. Subsequently, she was informed that only the
legend drug part of the prescription would be covered. She
asked that testimony from more knowledgeable sources be allowed.
3:14:17 PM
VICE CHAIR KELLER opened public testimony.
REPRESENTATIVE SEATON asked if there were other circumstances
that required wholesalers selling in Alaska to have an Alaska
business license.
REPRESENTATIVE T. WILSON deferred to Dick Holm, and other
testifiers.
MARCIA HOLT explained that she was speaking for a friend who
used compound medications, and they were both retirees. She
said that her friend received treatment for spinal stenosis
which included shots and other medications, although the most
effective treatment was "a compounded cream that includes
numerous medications." She was not able to identify each of the
medications in the cream, but pointed out that this cream was no
longer covered by her insurance.
MS. HOLT, in response to Vice Chair Keller, said that her friend
was available to testify, but was content to have Ms. Holt
testifying for her.
MEMOREE CUSHING stated that she was a retiree from the State of
Alaska, and that she was no longer able to obtain the bio-
identical hormones for her rheumatoid arthritis. She reported
that she had previously used pharmaceutical hormones, which had
been covered under her health benefits. [Due to technical
difficulties, testimony was terminated]
JAMES McCLAIN shared that he was a retired state worker, and, as
he had prostate cancer in 2004, he needed a compound mix of
medications which were made locally. He requested that these
compounds be allowed.
VICE CHAIR KELLER asked for clarification that the compound
medication had previously been covered by his insurance.
MR. McCLAIN replied that this compound medication had been
covered by his state retirement insurance since 2004, but that
had changed since the state changed to AETNA at the beginning of
the current year.
3:21:54 PM
RICHARD HOLM, Pharmacist, said that his North Pole pharmacy, one
of three pharmacies that he owned, was a compounding specialty.
He noted that he was a former chair on the Board of Pharmacy.
He directed attention to the issue of wholesaler licensing, and
explained that, although the Alaska State Legislature had
revised these statutes in the mid-1990s, the licensing for out-
of-state wholesalers of drugs and medical devices had not
changed. In 2006, the Board of Pharmacy had decided to write
regulations addressing this change, but the Attorney General
informed the board that they did not have the statutory
authority for this. These proposed regulations had recently
become an issue, as a new U.S. Food and Drug Administration
(FDA) category of pharmacy, compounding manufacturers, were
dealing interstate with sterile products. He stated the
necessity for better regulations to protect the state's rights,
instead of allowing the federal government to "take it over."
He explained that pharmacies should be listed along with the
other medical providers in the insurance code, an oversight that
needed correction. He said there was no cost associated, and he
offered his belief that there was not any opposition.
MR. HOLM addressed the compounding issue in the proposed bill,
noting that the changes in insurance had brought it to bear.
Although it had been stated that there were not going to be any
changes in coverage, a purported 55,000 calls complained of
changes. He offered his belief that the majority of complaint
calls regarded compound prescriptions. He opined that the State
of Alaska could request this coverage, as [AETNA] was only the
plan administrator. He reported that this sort of thing
happened when the state changed [management], and that a change
in the statute would ensure that employees and retirees would be
able to get the necessary therapy and medications without any
break in service.
3:30:10 PM
REPRESENTATIVE TARR referenced instances where the compounding
of drugs had not been done in a safe manner, and asked if there
were any other issues related to compounding prescriptions which
should be addressed.
MR. HOLM stated that compounding was safe. However, as there
was a financial interest, especially with hormone issues,
companies would declare that some drugs were dangerous in order
to achieve financial gain. He stated that there would always be
unforeseen issues with drugs, such as sensitivity, and an
inherent danger for any drug therapy. He said that proper
handling of patient issues could mitigate a great deal of this
danger. He explained that compounding was based on the doctor,
pharmacist, and patient relationship, which he called the triad.
LIS HOUCHEN, Director, State Government Affairs, National
Association of Chain Drug Stores, said she was available to
answer any questions.
DIRK WHITE, Chairman, Board of Pharmacy, reported that he owned
a compounding pharmacy center in Sitka. He stated that the
ability to license the out-of-state wholesalers was critical to
the Board of Pharmacy. He offered his belief that Alaska was
the only state not licensing the out-of-state wholesalers.
VICE CHAIR KELLER asked if there would be an increase in the
costs to Alaskans.
MR. WHITE said that the wholesale licenses would generate more
revenue for the general fund.
VICE CHAIR KELLER asked how many people buy from unlicensed
wholesalers.
MR. WHITE listed the three largest unlicensed wholesalers,
stating that every pharmacy in Alaska purchased from them. He
noted that there was a plethora of smaller, generic unlicensed
wholesalers and there would not be any increase of costs due to
licensures to pharmacies or patients.
SUSAN ALT stated she had used compound products previously and
had no problem with repayment, but that, with the change to
AETNA, she now had to pay for each prescription. She declared
it was necessary that the state dictate to the administrator
what was covered. She questioned the concerns for the type of
form or prescription application as long as it provided the
treatment or necessary medication.
GERALD BROWN, Pharmacist, echoed the sentiments of the previous
testifiers. He said some compound products worked when some
commercial products did not work. He directed attention to page
5, line 25, [indisc.] cannot provide that service if the
insurance does not pay for the benefit. He moved on to page 6,
line 6, describing the lifetime benefit of $1 million, and he
offered his belief that the Affordable Care and Patient
Protection Act eliminated those caps. Pointing to page 6, line
18, and the maximum annual benefit of $4,000 for mental health
issues, he shared a personal anecdote for out-of-pocket costs
that were twice that amount. He stated that these maximums were
old, and needed to be updated to a more appropriate value. He
declared his support of proposed HB 319.
VICE CHAIR KELLER suggested that he contact the sponsor.
3:43:22 PM
BARRY CHRISTENSEN, Pharmacist, Co-Chair, Legislative Committee,
Alaska Pharmacists Association, stated his support of the
proposed bill. He mentioned that the compounding issue had
already cost a lot of time and energy, issues that the proposed
bill now addressed.
MS. CUSHING surmised that presently there was only coverage
between April and December, and that the problems arose during
the changes in providers. She offered her belief that there was
an attempt to chip away at the long promised health insurance
coverage, and there was a national problem with health insurance
companies doing away with benefits. She stated that AETNA had
claimed that it was not evidence based practice to use bio-
identical hormones. She listed a number of synthetic hormones
which were harmful to women, and stated that bio-identical
hormones, which exactly matched human hormones, had been used in
Europe for fifty years. She stated that the real crux of the
issue was money. She said that, as 2 million women were using
these hormones today, it would be known if there was a problem.
She said that compound hormones have been made for decades, and
the business was growing. She offered her belief that insurance
companies were dictating our medical care, instead of the
doctor, the patient, and the pharmacist making those decisions.
SCOTT WATTS, Pharmacist, testified in support of the proposed
bill. He said that allowing the board to license the wholesale
distributors was a safety issue for Alaskans as it allowed for
some oversight, and it leveled the playing field with those who
were already licensed and regulated by the Board. He said the
decisions since January 1, 2014 regarding compounds made in the
pharmacy for an individual patient had made it difficult to get
the medications to customers. He said these prescriptions were
written by all types of prescribers, and that many people were
either not able, or struggling, to get those medications. He
supported any necessary change to statute.
REPRESENTATIVE REINBOLD expressed her concern that none of the
medical device distributors had testified. She asked for the
outcome of an operation that used a pacemaker that was not
licensed or registered in Alaska.
MR. WATTS replied that it was only necessary for the provider,
not the device, to be licensed. In response to Representative
Reinbold, he expressed his inability to respond for the impact
if the wholesale distributor of the pacemaker was not licensed.
VICE CHAIR KELLER suggested that the sponsor or the Department
of Administration could respond. He expressed his concern for
any unintended consequences.
3:52:26 PM
DON HABEGER, Director, Division of Corporations, Business, and
Professional Licensing, Department of Commerce, Community &
Economic Development, clarified that a fiscal note had been
forwarded with the proposed bill requesting $36,000 for a half
time position to process new licenses and the required annual
reports. He said that it was "hard to divine the number of
licensees that might take advantage of a new license category."
He offered an estimate of 400 potential licensees.
REPRESENTATIVE TARR asked for the fiscal note.
VICE CHAIR KELLER said that the fiscal note would be
distributed.
3:54:42 PM
MIKE BARNHILL, Deputy Commissioner, Office of the Commissioner,
Department of Administration (DOA), said that the DOA
administered one of the state employee health care plans and the
health care plan for the public employee, teacher, judicial, and
elected public official retirement systems. These plans covered
84,000 people, with 67,000 in the retirement system. He said
that, as the plan was subject to the Alaska Procurement Code, an
RFP [Request for Proposal] had been issued for claims
administrators about every five years, since 1998 when the state
self-insured for its health plans. He listed the various claims
administrators which had included Premera, Wells Fargo, Health
Smart, and AETNA. There were about 30,000 medical and pharmacy
claims each week. During the claims administrator transition
process, there were hundreds of details to be transitioned
appropriately, and in this last process, a professional project
manager had been hired to help with the transition. He
acknowledged that the compounds medications issued had been
missed in the transition. He offered his belief that the prior
list of compounds that were being processed had been passed to
AETNA, the current claims administrator, but that there had not
been any discussion regarding it. He acknowledged that those
compound medications had been denied since January 2, and that
there had been 50,000 calls in January, with half that number in
February, which, although in decline, was still too high.
Directing attention to compound medications specifically, he
opined that one percent of pharmacy script was compound
medication. He relayed that DOA became concerned and had
internal discussions, as well as discussions with AETNA. These
discussions revealed a variety of issues pertaining to compound
medications that were worthy of additional discussion and
scrutiny. He stated that those discussions should have been had
last fall in the run-up to the transition. DOA instructed AETNA
to cover the compound medications, and AETNA agreed to recode
its pharmacy claims system to include the process of compound
medications at the point of service beginning on April 1, 2014.
He suggested that pharmacists should currently enter an
override, which AETNA would accept. He said that DOA had only
agreed to make the change through December, and it was necessary
for some serious scrutiny to determine the next stage. He
shared some of the issues arising from the internal inquiry. He
reported that, as the FDA did not regulate compounding by local
pharmacies, it was administered by state pharmacy organizations,
although he was not clear to what extent the Board of Pharmacy
provided regulation and oversight of the fabrication of compound
medications within a pharmacy. He opined that the proposed bill
was going in the opposite direction of many state legislatures,
which were discussing the addition of more oversight and
scrutiny for local compounding practices by state regulators,
rather than less. He said there was no evidence indicating
safety oversight in the compounding pharmacies in Alaska, and
that this was worthy of investigation. He raised a question for
some of the substances used in compounding, and he pointed to
earlier testimony for bio-identical replacement therapy. He
shared that there was some controversy, with concern from the
Mayo Clinic, the FDA, the Endocrine Society, and the American
College of Obstetricians and Gynecologists, for marketing bio-
identical replacement therapy as safe. He pointed out that the
FDA required a cautionary insert with these, and that all the
aforementioned groups had agreed that pharmacies should not
declare things are safe, when there was evidence that suggested
there were risks and should only be consumed after informed
consent. He declared that there were instances when compounding
was necessary, as some people were allergic to legend substances
and dyes, and there may not be a commercially available
medication. He stated that, as these patients needed access to
an active ingredient that was only available in a compounded
form, this piece of compounding needed to be preserved, no
matter the outcome for compounding as a whole. This would
ensure access to compound medications with no available
alternative for an FDA legend drug. He stated that these
concerns would be reviewed during the upcoming year, and that
any limit to compound drugs would be preceded by education and
communication for the alternatives.
4:04:40 PM
MR. BARNHILL directed attention to the proposed bill, and stated
that, as drafted, it did not apply to the Alaska Care health
insurance program. He reported that Section 7 only applied to
the Alaska Comprehensive Health Insurance Association (ACHIA)
high risk insurance program. He offered his belief that the
intent of the proposed bill was to target Alaska Care, and that
Version O, not yet proposed to the committee, better attempted
to target AS 39.30.090 and required the coverage of compound
medications, although it "doesn't quite get us there because
we're no longer fully insured, we do not buy group insurance."
He said that this version would also need additional work to
have it applicable to the Alaska Care plan. He directed
attention to a list of Frequently Asked Questions (FAQ) on
compound medications. He said that the aforementioned changes
for compound medications would go into effect on April 1.
VICE CHAIR KELLER said that the proposed bill would be held
over. He asked if the compounding of medications was
increasing, and he asked if insuring this coverage would
increase future expenses.
MR. BARNHILL replied that, currently, one percent of the script
volume was for compound medications. He stated that his
research indicated that some pharmacies had marketed themselves
as compounding pharmacies and used compounding to expand profit
margins, and he acknowledged that some individuals needed access
to some active ingredients that were not available through
commercially available medications.
REPRESENTATIVE TARR asked for more information about his earlier
reference to the group plan in Version O [not yet proposed to
the committee].
MR. BARNHILL replied that the state stopped buying commercially
available insurance in 1998, when the state became self-insured,
under the authority of AS 39.30.091.
4:09:09 PM
VICE CHAIR KELLER held over HB 319.
REPRESENTATIVE T. WILSON, as the bill sponsor, said that she
intended to introduce a committee substitute which would remove
the issue of compounding. She requested a continuance of
coverage for compound medications until April, 2015, which would
allow legislation to be introduced in the following legislative
session. Addressing the proposed bill, she declared that
Section 1 was necessary "to make sure that we level the playing
field so that we're not charging our people who have businesses
in Alaska differently than those who are out-of-state." She
declared a need to continue promised coverage to retirees.
Addressing an earlier question by Representative Reinbold, she
noted that "device" was already defined in statute.
REPRESENTATIVE REINBOLD expressed her concern that there was not
any testimony from those distributors impacted by the proposed
bill.
REPRESENTATIVE T. WILSON, in response, stated that the proposed
bill did not request to license any devices, but only those
selling the devices. She declared that the state was already
liable as it was "letting anything come into the state with no
regulation whatsoever, while we regulate only the in-state."
VICE CHAIR KELLER asked that the committee submit its questions
to the sponsor. He held over HB 319.