02/27/2024 03:00 PM House HEALTH & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| HB226 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 343 | TELECONFERENCED | |
| *+ | HB 226 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
February 27, 2024
3:05 p.m.
DRAFT
MEMBERS PRESENT
Representative Mike Prax, Chair
Representative Justin Ruffridge, Vice Chair
Representative CJ McCormick
Representative Jesse Sumner
Representative Zack Fields
Representative Genevieve Mina
MEMBERS ABSENT
Representative Dan Saddler
COMMITTEE CALENDAR
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."
- HEARD & HELD
HOUSE BILL NO. 343
"An Act relating to medical assistance coverage for
rehabilitative, mandatory, and optional services furnished or
paid for by a school district on behalf of certain children."
- HEARING POSTPONED
PREVIOUS COMMITTEE ACTION
BILL: HB 226
SHORT TITLE: PHARMACIES/PHARMACISTS/BENEFITS MANAGERS
SPONSOR(s): REPRESENTATIVE(s) SUMNER
01/16/24 (H) PREFILE RELEASED 1/8/24
01/16/24 (H) READ THE FIRST TIME - REFERRALS
01/16/24 (H) HSS, L&C, FIN
02/27/24 (H) HSS AT 3:00 PM DAVIS 106
WITNESS REGISTER
REPRESENTATIVE JESSE SUMNER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, introduced HB 226.
SARENA HACKENMILLER, Staff
Representative Jesse Sumner
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the prime sponsor,
Representative Jesse Sumner, presented the sectional analysis of
HB 226.
BRANDY SEIGNEMARTIN, PharmD, Executive Director
Alaska Pharmacy Association;
Clinical Assistant Professor
University of Alaska
Anchorage, Alaska
POSITION STATEMENT: Provided expert testimony on HB 226 and
offered a PowerPoint presentation.
PALMER WETZEL, Deputy Pharmacy Director
Tanana Chiefs Conference
Fairbanks, Alaska
POSITION STATEMENT: Provided a quick overview of data analyses
regarding HB 226 and its companion bill SB 121.
ASHLEY SCHABER, PharmD, Chair
Alaska Board of Pharmacy
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 226.
PAT SHIER, Executive Board Member
Pacific Health Coalition
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 226.
BRITTANY KEENER, representing self
Eagle River, Alaska
POSITION STATEMENT: Spoke in support of HB 226.
BRENDA SNYDER, Director
State Government Affairs
CVS Health
Olympia, Washington
POSITION STATEMENT: Spoke in opposition to HB 226.
KAREN MILLER, Director
Denali Pharmacy
Fairbanks, Alaska
POSITION STATEMENT: Spoke in support of HB 226.
GARY STRANNIGAN
Premera Blue Cross and Blue Shield of Alaska
Everett, Washington
POSITION STATEMENT: Spoke in opposition to HB 226.
BARRY CHRISTENSEN, Owner
Island Pharmacy
Ketchikan, Alaska
POSITION STATEMENT: Spoke in support of HB 226.
DIRK WHITE, President
Pharmacy Association of Sitka
Sitka, Alaska
POSITION STATEMENT: Spoke in support of HB 226.
ACTION NARRATIVE
3:05:03 PM
CHAIR PRAX called the House Health and Social Services Standing
Committee meeting to order at 3:05 p.m. Representatives
Ruffridge, McCormick, Sumner, Fields, Mina, and Prax were
present at the call to order.
HB 226-PHARMACIES/PHARMACISTS/BENEFITS MANAGERS
[Contains discussion of SB 121.]
3:06:35 PM
CHAIR PRAX announced that the only 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."
3:07:05 PM
REPRESENTATIVE RUFFRIDGE moved to adopt the proposed committee
substitute (CS) to HB 226, Version 33-LS0955\S, Wallace, 2/9/24,
as the working document.
CHAIR PRAX objected for the purpose of discussion.
3:07:55 PM
REPRESENTATIVE SUMNER presented the summary of changes to HB 226
from the original version to Version S [included in the
committee packet] which read as follows [original punctuation
provided]:
Fiduciary duty: Version S adds that the PBM has a
fiduciary duty to the plan sponsor which would lead to
the lowest possible cost for the plan and for the
patients.
Dispensing fee: The dispensing fee is the
responsibility of the Division of Insurance to set
based on a cost of dispensing survey; removes Medicaid
language from Version B.
Claim limitations: Version S also adds that the PBM
may not reverse and resubmit a claim of a pharmacy
more than 30 days after the claim was adjudicated
unless there is just cause, but prior written
notification to the pharmacy is required.
Third-party licensing: Version S requires PBMs to have
their own licensing category and licensing fee;
removes third-party administrator language.
3:09:00 PM
CHAIR PRAX removed his objection. There being no further
objection, Version S was before the committee.
3:09:35 PM
REPRESENTATIVE JESSE SUMNER, Alaska State Legislature, as prime
sponsor, introduced HB 226 to the committee and explained that
the bill is designed to allow patient choice of pharmacy;
improve transparency and accountability of pharmacy benefit
management; and enhance the standards for pharmaceutical care
across the state. This bill emphasizes the powers of the Board
of Pharmacy including provisions for licensing, inspection, and
regulation of pharmacies, pharmacists, and other entities
involved in distribution of drugs. It also establishes
safeguards for patient access to pharmacy services while
preventing unfair trade practices by insurers and benefit
managers. The legislation also includes provisions for
reimbursement of pharmacy services; issues related to national
average drug pricing; drug acquisition costs and dispensing
fees; and insuring fair compensation for pharmacies and
pharmacists. The bill is a critical step forward in promoting
the best interests of patients and pharmacies in Alaska. The
legislation helps create an environment that fosters quality
care, enhances integrity in pharmaceutical care, and modernizes
the pharmaceutical landscape in Alaska.
3:11:38 PM
SARENA HACKENMILLER, Staff, Representative Jesse Sumner, Alaska
State Legislature, presented the sectional analysis of HB 226 on
behalf of the prime sponsor, Representative Jesse Sumner. The
sectional analysis [included in the committee packet] read as
follows [original punctuation provided]:
HB 226: Pharmacies / Pharmacists / Benefit Managers
Sectional Analysis Version S
Section 1. Amends AS 08.80.030(b) Powers and duties
of the board
(b)(19) establishes that the Board of Pharmacy has
authority to regulate the dispensing of drugs that are
not approved for self-administration (practices
commonly known as white bagging and brown bagging).
Section 2. Amends AS 21.27.901 Registration of
pharmacy benefit managers; scope of business practice.
- Requires a Pharmacy Benefits Manager (PBM) operating
in Alaska to register as a PBM with
the Division.
- Allows PBMs to contract with an insurer to manage
pharmacy benefits and other services and audits, and
contract with network pharmacies. PBMs must be
registered with the Division of Insurance to conduct
business in the state.
Section 3. Amends/adds new subsections to AS 21.27.901
- Registration of pharmacy benefit managers
Adds a new subsection (c) establishing that each day a
PBM conducts business in the state without being
licensed by the state is a separate violation under AS
21.97.020.
Section 4. Amends AS 21.27.905(a) - Renewal of
registration
Establishes that PBMs must biennially register with
Division of Insurance under its procedures for license
renewal.
Section 5. Amends/adds new section to AS 21.27 -
Fiduciary duty Adds that a PBM has a fiduciary
responsibility to the plan sponsor and its covered
persons, meaning it must consider impacts to the plan
sponsor as well as the insured employees; notify
conflicts of interest with its duties to the state;
shall pass on its rebates to the plan; shall respond
to requests of drug costs when requested; basically it
directs the PBM to act in good faith and transparently
with its plan sponsor.
Section 6. Amends AS 21.27.945 - Drug pricing list;
procedural requirements
(a) establishes that a PBM must keep its drug pricing
list current and electronically searchable (without
charge) and must identify each drug by its national
drug code, its national average drug acquisition cost
(NADAC) or its wholesale acquisition cost, and its
reimbursement amount; provides definitions. The PBM
must provide a current PBM employee phone number to
the pharmacy, update price list at least weekly to
reflect current national drug database pricing.
Section 7. Repeals and reenacts AS 21.27.945(b) - Drug
pricing list; procedural requirements Require PBMs to
ensure drugs on a pricing list meet certain objective
standards, are available, and are not obsolete.
Section 8. Amends AS 21.27.945 adds definitions and
adds new subsections Drug pricing list; procedural
requirements
To establish that a PBM must keep its drug pricing
list current and electronically searchable and must
identify each drug by its national drug code, its
national average drug acquisition cost or its
wholesale acquisition cost, and its reimbursement
amount; provides definitions.
Section 9. Repeals and reenacts AS 21.27.950 -
Reimbursement Establishes that PBMs shall not
reimburse pharmacies for a drug at less than the
national average drug acquisition cost, (NADAC) or, in
its absence, at less than the wholesale acquisition
cost as defined in federal law, and in addition shall
reimburse a pharmacist or pharmacies with a
professional dispensing fee set by the Director.
Subsection (c) sets out the factors the director will
consider when determining the fees.
Section 10. Amends AS 21.27 and adds 3 new sections
1. AS 21.27.951 Patient choice of pharmacy. This
subsection bars health insurers and PBMs from: (1)
prohibiting or limiting an insured person from
receiving pharmacy services from a pharmacy of that
person's choice; and (2) restricting access to drugs
through only a PBM-owned or affiliated pharmacy except
when doing so is required by USFDA standards; and
requires PBMs to treat as a network pharmacy any
qualified pharmacy that agrees to network terms;
provides definitions for "specialty drug" and
"specialty pharmacy."
2. AS 21.27.952 Patient access to clinician-
administered drugs. This subsection bars health
insurers and PBMs from denying reimbursement to, or
imposing higher fees, copayments, or penalties on,
pharmacies (other than those selected by the insurer
or PBM) who dispense to insured persons clinician-
administered drugs (drugs infused, injected, or
administered in clinical settings, typically high-cost
cancer or autoimmune therapy drugs); bars insurers and
PBMs from requiring or encouraging that clinician
administered drugs be dispensed to an insured person
in a manner inconsistent with the federal Drug Supply
Chain Security Act (practices commonly known as "white
bagging" and "brown bagging".) Adds definition of
"clinician-administered drug".
3. AS 21.27.953. Penalties. Allows the Director of
Division of Insurance to impose penalties resulting
from a filed complaint. Nothing in this section
interferes with a patient's right to choose his or her
preferred pharmacy.
Section 11. Amends AS 21.27.955 - Definitions
(4) Modifies language relating to the list of
reimbursement prices/amounts that are set by the PBMs.
Section 12. Repeals and reenacts AS 21.27.955 -
Definitions
(6) Provides a new, expanded definition of the term
"network pharmacy".
Section 13. Amends AS 21.27.955 - Definitions
This adds nine new definitions to this section (11) to
(19) Section 14.
Amends and adds a new section to AS 21.36.126 - Unfair
trade practices
(a) establishes that insurers or PBMs may not:
• violate a pharmacy's right to reimbursement under
new AS 21.27.950;
• interfere with a person's right to choose a pharmacy
under new AS 21.27.951;
• interfere with a person's right of access to
clinician-administered drugs under new AS 21.27.952;
• interfere with a pharmacy's right to participate in
a PBM's pharmacy network under new AS 21.27.951;
• reimburse a pharmacy less than it reimburses a PBM-
owned or affiliated pharmacy for the same services;
• impose any copayment, fee or condition not equally
imposed upon all in the same benefit category;
• steer insured persons to use a PBM-owned or
affiliated pharmacy;
• impose any monetary advantage or penalty that could
affect or influence a person's choice among pharmacies
that have agreed to a PBM's network terms;
• reduce pharmacy reimbursement because of a person's
choice among pharmacies that have agreed to a PBM's
network terms;
• use a person's pharmacy services data for
soliciting, marketing, or referral to a PBM owned or
affiliated pharmacy;
• condition a person's coverage or pharmacy's
reimbursement on use of a mail-order pharmacy or PBM-
owned or affiliated pharmacy;
• prohibit or limit a network pharmacy from mailing,
shipping or delivering drugs to its patients;
• condition participation in a PBM pharmacy network on
credentialing standards beyond licensing standards set
by the Alaska Board of Pharmacy or charging a fee in
connection with network enrollment;
• prohibit a pharmacy from informing patients of the
difference between the pharmacy's customary cost of a
drug versus the drug cost when using the PBM's
insurance;
• conduct spread pricing, where a PBM charges an
insurer a different price for a drug
(typically higher) than it reimburses a pharmacy;
• charge or collect any fee from a pharmacy, including
claim-processing fees, performance-based fees, network
participation fees, or accreditation fees.
The new subsection establishes that contract terms
between a pharmacy and a PBM in violation of this
subsection are null and void; that violations of the
subsection are unfair trade practices subject to
penalty under AS Chapter 21 (Insurance); and provides
that nothing in the section shall be construed to
interfere with a patient's right to know where there
is access to the lowest cost drugs, nor be construed
to interfere with a patient's right to receive notice
of changes to pharmacy networks; provides 11
definitions.
Section 15. Adds new paragraph to AS 29.10.200 -
Limitations of home rule powers Adds new (68) AS
29.20.420 health care insurance plans See below.
Section 16. Amends AS.29.20 and adds new subsection
.420 to article 5 AS 29.20.420. Health care insurance
plans. Adds that a municipality that offers a group
health benefit plan for its employees enjoys the same
protections as defined by the Division of Insurance
unfair practices guidelines.
Section 17. Amends AS 39.30.090(a) - Procurement of
group insurance
New paragraph (13) requires participating governmental
units to obtain a policy of group health insurance
that meets requirements of 21.27.901-21.27.955,
21.36.126 and requirements relating to managing
pharmacy benefits under their policies.
Section 18. Amends AS 39.30.091 - Authorization for
self-insurance and excess loss insurance
Adds that the state's self-insured group employee
medical plan and union trusts are subject to the
statutes on PBMs and unfair trade practices.
Section 19. Amends and adds new paragraph AS
45.50.471(b) - Unlawful acts and practices
Adds new paragraph (b)(58) establishes that violations
of new subsection 21.36.126(a) are violations of the
Alaska Unfair Trade Practices and Consumer Protection
Act.
Section 20. Repeals AS 21.27.955(5) and 21.27.955(8) -
Definitions
Repeals two definitions: "multi-source generic drug"
and "pharmacy acquisition cost".
Section 21. Applicability: States that this
legislation applies to contracts between PBMs and
pharmacies/pharmacists initiated after the effective
date of this bill.
Section 22. Gives Dept. of Commerce, Community, &
Economic Development (DCCED) and the Dept. of
Administration (DOA) authority to adopt regulations
necessary to implement the bill.
Section 23. Adopts immediate effective date for
purposes of regulation-making.
Section 24. Establishes that the Act takes effect July
1, 2025.
3:23:04 PM
REPRESENTATIVE SUMNER introduced invited testimony.
BRANDY SEIGNEMARTIN, PharmD, Executive Director, Alaska Pharmacy
Association; Clinical Assistant Professor, University of Alaska,
explained that the issues of transparency, prescription pricing,
patient choice, and Pharmacy Benefit Managers (PBMs) are complex
issues. She began her PowerPoint presentation [hardcopy
included in the committee packet], by defining PBMs as "third
party companies that act as intermediaries between insurance
companies and drug manufacturers." She continued her discussion
by explaining the various functions of PBMs, pointing out that
their original function was to help control drug costs, but they
are now incentivized to increase spending on prescriptions. She
listed several means by which PBMs increase drug prices
including rebates and fees, spread pricing, providing incentives
for purchasing higher cost drugs, reimbursing self-owned
pharmacies at higher rates, and re-defining the term "specialty"
pharmacy.
DR. SEIGNEMARTIN explained how PBMs are harming Alaskans by
deceptive practices, driving up drug costs, determining what
prescriptions will be covered, influencing which pharmacies a
patient can use, causing smaller pharmacies to close, and
negatively impacting tribal health systems. The PBMs' lack of
transparency, regulation, and control over competitors'
reimbursements has resulted in detrimental delays in patient
care and closure of independent pharmacies.
DR. SEIGNEMARTIN continued her PowerPoint with a slide, titled
"The Big 3 PBMs Have a Market Monopoly," which showed that
Consumer Value Store (CVS) has 33 percent, Express Scripts has
24 percent, and OptumRx has 22 percent of the market. These
three PBMs are represented by the Pharmaceutical Care Management
Association (PCMA), and all are under investigation by the
Federal Trade Commission and Congress. The next slide was
titled, "Spread Pricing" and described how the PBM charges the
sponsor of the plan one price for a prescription claim and pays
the pharmacy a lower price. The difference is pocketed by the
PBM, and that information is called "proprietary information"
and is not given out. An Ohio state investigation found that a
state plan was overcharged $223.7 million one year, and Utah was
charged an extra $8 average per prescription.
DR. SEIGNEMARTIN continued the PowerPoint presentation with
information about unfair trade practices including vertical
integration where PBMs own mail-order pharmacies, insurance
companies, offshore companies, clinics, and drug manufacturing
plants. They also steer patients to their own mail-order
pharmacies, causing poor outcomes with such issues as frozen
prescriptions, delayed deliveries, and healthcare crises due to
delivery issues.
3:39:31 PM
DR. SEIGNEMARTIN described the practices referred to as
"specialty pharmacies" in which PBMs steer patients to specialty
drugs which are small-volume but large-profit. One example
stated that a specialty pharmacy patient's drug costs were
$38,000 but a non-specialty patient's costs were $492. Although
PBMs attempt to monopolize these prescriptions, all pharmacists
and pharmacies have the expertise to handle these prescriptions
and are regulated by the Alaska Board of Pharmacy.
DR. SEIGNEMARTIN continued the presentation with a series of
charts which provided analyses of claims including
anticompetitive and unfair trade practices as well as profit
margins. She then discussed "white bagging" and "brown bagging"
which are described as follows [original punctuation provided]:
? A clinician-administered medication is required by
the PBM to be shipped from their own mail-order
pharmacy in the lower 48 and delivered via mail to the
clinic (white bagging) or patient's home and the
patient is responsible for storage and handling until
they reach the clinic (brown bagging).
? The pharmacists and providers at the clinic are then
responsible for preparing the drug outside of their
normal medication safety procedures and ensuring
integrity of the product.
DR. SEIGNEMARTIN said the impacts of these PBM practices in
Alaska include crumbling public health infrastructure, increased
costs, local pharmacy closures, and poor health outcomes due to
delayed shipping, lack of care, and lack of oversight. Tribal
health organizations (THO) are particularly impacted because
patients often can't fill prescriptions at THO pharmacies or get
coordination of care. Furthermore, the pharmacies face unfair
practices and reimbursement rates. In the meantime, she
explained, PBMs are responsible for themselves and their
shareholders rather than the patients.
3:47:06 PM
DR. SEIGNEMARTIN's PowerPoint presentation included a summary of
the provisions of HB 226 and [companion bill] SB 121. Slides
summarizing analyses and source materials concluded the
presentation.
3:51:52 PM
PALMER WETZEL, Deputy Pharmacy Director, Tanana Chiefs
Conference, explained to the committee that he was a member of a
working group along with Senator Giessel and Representative
Sumner who met to analyze data related to SB 121 and HB 226
regarding what was spent in 2022. They contacted the Division
of Retirement and Benefits and the Division of Insurance and
invited participation. Senator Giessel did public record
requests from the PBM OptumRx for specific data, finding that
much of the data requested was considered "proprietary." The
requested information was for 12 months of claims data with 13
specific fields of which 8 data fields were provided. Although
some pricing information was not included, sufficient data was
provided to allow the team to draw conclusions and make
recommendations.
MR. WETZEL presented the first of the working group's PowerPoint
slides concerning prescription spending and pricing and
concluded that if SB 121 or companion bill HB 226 were in place,
it would have saved the state $4.3 million in 2022. The working
group's second slide compared 2022 Division of Retirement and
Benefits prescriptions charged compared to SB 121/HB 226
projected spending which showed a cost saving ranging from $588
thousand to $6.6 million. The third analysis concerned removing
the PBM's mandatory mail order requirement and showed the
potential positive effects on Alaska's local economies.
3:57:07 PM
CHAIR PRAX asked why the insurance companies are not sorting it
out within their contracts if the current system is driving up
costs.
DR. SEIGNEMARTIN responded that a model where that is actually
being sorted out in contract would be a positive result.
However, because of the lack of regulation or incentivization,
insurance companies are not motivated to make that happen. She
explained that is why there is a need for legislation. The
working group also learned that pharmacies cannot negotiate in
their contracts with PBMs because the PBMs essentially dictate
the terms of the contracts.
CHAIR PRAX inquired whether there was an alternative and whether
different insurance companies or claims processers could correct
that within their contracts.
DR. SEIGNEMARTIN explained that they were allowed to build
market power, so those changes are not an option without
regulation in place. She also discussed how one system used to
adjudicate claims from the pharmacies is owned by OptimRX, and
it was hacked which resulted in an inability for pharmacies to
process claims.
CHAIR PRAX referred to the issue of drugs spoiled in shipment
and inquired about what recourse the recipients have.
DR. SEIGNEMARTIN replied that methods for dealing with that
issue depend on contract and the networks. Some plans will help
patients figure it how to get missed or spoiled prescriptions
with the nearest pharmacy, but sometimes the patient is just out
of luck and must replace those drugs out of pocket. This is how
the market power of the PBMs and by contrast the lack of
negotiating power from pharmacies, employers, and other entities
has brought about the need for legislation on this issue
4:00:38 PM
CHAIR PRAX announced the committee would hear invited testimony.
4:00:51 PM
ASHLEY SCHABER, PharmD, Chair, Alaska Board of Pharmacy, spoke
in support of HB 226, urging support and quick passage. She
explained that the situations described by Dr. Seignemartin and
Mr. Wetzel were true. Through public testimony and pharmacists
and patient input, the Alaska Board of Pharmacy became aware of
the issue. The board identified the negative impact to safety
in Alaska and has collaborated with the Alaska Pharmacy
Association to craft language addressing these practices.
Multiple other patient and healthcare organizations have been
part of the process and support the effort to insure an adequate
pharmacy infrastructure in Alaska. The board is unanimous in
its support of HB 226 because it gives patients the right to
access medications at the pharmacy of their choice; provides a
framework for transparency and fair reimbursement for
pharmacies; and protects patient access to clinician
administered medications by restricting the practices of "white
bagging" and "brown bagging." The board uses a strategic plan
for decisions and actions it pursues, and it feels that this
bill aligns with its strategic plan. She said HB 226
specifically addresses the board's fourth goal which is to grow
Alaska's economy while promoting community health and safety.
The board continues to see the negative impacts resulting from
the practices addressed in the bill and recognizes change is
needed quickly.
4:03:23 PM
CHAIR PRAX opened public testimony on HB 226.
4:03:28 PM
PAT SHIER, Executive Board Member, testified in opposition to HB
226. He said that he was an Alaska representative of "the
125,000 lives whose healthcare is curated and financed by
working families that pay for their care through expertly run
health and welfare benefit trusts. These trusts are regulated
through the Employee Retirement Income Security Act (ERISA) of
1974." The trustees elected by the workers are constrained by
ERISA to act in the sole interest of the beneficiaries or face
financial penalties or incarceration. He explained that his
employer, the Pacific Health Coalition is a "private nonprofit
trustee-governed entity that legally and ethically saved these
member trusts over $600 million in health care spending last
year alone."
MR. SHIER pointed to previous testimony stating that PBMs were
only interested in profit and were willing to do so
unscrupulously and unregulated. He opined that each of the
healthcare plans that are members of the Pacific Health
Coalition hire, fire, and manage PBMs on a regular basis. These
vital partners provide the best pharmacists in the country in
order to achieve the most effective pricing and administration
of pharmaceutical commodities possible. They also have access
to one of the "finest drug purchasing solutions in the United
States."
MR. SHIER continued by describing National CooperativeRx (NCRX),
a nonprofit coalition of healthcare plans from Wisconsin who
aggressively negotiate the best possible contracts with larger
PBMs, demand 100 percent rebates, audit PBM activity regularly,
and self-audit annually. He said NCRX saved Alaska health plans
$96 million in 2023. He said the reasons the Pacific Health
Coalition opposes HB 226 include increased costs for Alaskans,
additional spending without commensurate increase in patient
satisfaction, and impractical and ineffective planning. He
encouraged the committee to not pass HB 226 but instead work
with the industry for solutions.
4:09:09 PM
REPRESENTATIVE FIELDS asked whether Mr. Shier felt like he had a
sense of what the spread pricing is by different PBMs operating
in Alaska.
MR. SHIER explained that the contracts are so many and so
diverse that it is unknown. For the NCRX folks, the coalition
discourages spread pricing though it can be used on the front
end as a way to pay the per-member/per-month cost. For example,
a PBM may say "$10 per member per month for us to manage your
drug spend, but $9.50 if you let us use spread pricing and use
that to help pay the bills." He said he cannot say what the
oversight is on those contracts, but sometimes it is actually
"baked in."
4:10:04 PM
REPRESENTATIVE MINA referred to a comment Mr. Shier made, saying
that only one of the measures would reduce costs and asked which
measure he referred to.
MR SHIER explained that he was referring to the guaranteed fill
rates tied to Medicare and noted that the language was changed
to a rate set by the director of the Division of Insurance. He
noted that it was unlikely to remain at or lower than its
current level.
4:10:52 PM
CHAIR PRAX referred to the previous testifier who said that
approximately 75 percent of the market was controlled by three
or four PBM managers. He asked Mr. Shier to speak about the
issue of competition.
MR. SHIER responded that there are three large PBMs. There are
smaller PBMs that can be used, or a negotiating or purchasing
solution such as NCRX can be hired. He further elaborated,
explaining that some employees of NCRX had previously worked for
the large PBMs and know "where the numbers are buried, and you
can use them in their new role to do battle with some of the
features of a PBM contract that do not meet the needs of your
client." Specifically, NCRX takes direction from the
consultants that advise the various trusts about how they can
best control their drug costs. The consultants advise on such
things as proper use, efficacy, alternatives, and step
treatments. The consultants tell NCRX what must be in their
contracts in order for them to use that service. They, in turn,
"do battle with the PBMs" such as Consumer Value Store (CVS).
Then those features are hammered out between the purchasing
organization and the PBM. Many people do not directly deal with
a PBM; it's through an insurance company, a third-party
administrator (TPA), or a purchasing organization.
4:13:12 PM
REPRESENTATIVE FIELDS inquired whether NPRX is a PBM.
MR. SHIER responded that NPRX is a purchasing solution.
REPRESENTATIVE FIELDS questioned whether the Pacific Health
Coalition uses PBMs right now or NPRX instead of PBMs.
MR. SHIER explained that the coalition had only one drug
purchasing option in its array of contracts, and it's NCRX.
REPRESENTATIVE FIELDS asked whether it is accurate to say the
coalition's concern is more about pricing to fill a prescription
as opposed to regulating PBMs.
MR. SHIER responded that it's "a host of language in this bill
which has many moving parts in different parts of the Alaska
statutes that of a dozen of them we looked at, all of them
contribute to higher pricing in one way or another." He
explained that the coalition objects to the bill in general and
instead would like to find non-legislative ways to confer and
collaborate in order to find solutions.
REPRESENTATIVE FIELDS inquired what other provisions under HB
226, other than pricing to fill prescriptions, would have a
negative impact on ERISA plans and beneficiaries.
MR. SHIER responded, "Those would include any willing pharmacy."
He mentioned an eightieth percentile in terms of bringing
specialty doctors to Alaska and said it actually contributed to
a sharp increase in healthcare costs, such that specialty
services are running five times what rates in Seattle are
currently. He reiterated the phrase "any willing pharmacy" and
said that essentially it removes incentive for pharmacies to
contract and to agree to "initial or lightly negotiated
increases in PBM features," including, for example, fill rates,
reimbursement rates, and reporting requirements. He shared,
"What we would expect to see in that market is pharmacies
standing back and allowing somebody else to negotiate a rate,
and they would negotiate a rate higher than normal, and the rest
would step in the 30-day program and say, 'Okay. I'm here, now.
I'd like some of that action.'" Mr. Shier then highlighted the
importance of mail order, stating that the costs of mail order
are typically somewhat less than having a prescription filled
locally.
4:16:55 PM
BRITTANY KEENER, representing self, spoke in support of HB 226.
She explained that she is the ambulatory pharmacy manager at the
Alaska Native Medical Center (ANMC) and past president and
president-elect of the Alaska Pharmacy Association. She
referred to and agreed with the testimony of Dr. Seignemartin,
Mr. Wetzel, and Dr. Schaber. Ultimately, this bill will keep
business in Alaska, protect patient safety, increase
transparency, and allow patients to use the pharmacy of their
choice. Ms. Keener described a circumstance in which a patient
who lives in Point Hope went to Anchorage for oncology oral
therapy treatment. The PBM deemed the infusion a specialty
medication and would only mail the medication to the patient's
address in Point Hope from the Lower 48. The patient often has
delays in starting the cycle of treatment because it is time
delineated, so this patient's treatment was delayed. She urged
the representatives to move the bill from committee.
4:19:03 PM
BRENDA SNYDER, Director, State Government Affairs, CVS Health,
spoke in opposition to HB 226. She opined that the bill would
significantly increase prescription drug costs, drive up health
care costs for Alaska families, increase costs for small
businesses, and would do nothing to increase access to care for
Alaskans. She said CVS provides a menu of options to help
employers choose the best options for employee pharmacy
benefits. She suggested that HB 226 eliminates the flexibility
for employers and prohibits the use of cost control measures,
ultimately driving up costs with a "one size fits all" model.
She highlighted two measures from the bill which would affect
costs: mandatory dispensing fees and pharmacy network
restrictions. She referred to pricing structures that would be
based on Medicaid rates which would result in increased costs to
patients. Also, the restrictions on pharmacy networks inhibit
the flexibility of administration of specialized medications,
risking lower quality standards, access to care, and affordable
health care.
4:21:54 PM
KAREN MILLER, Director, Denali Pharmacy, spoke in support of HB
226. She explained that she has been a pharmacist in Fairbanks
for approximately 30 years. She is the director of Denali
Pharmacy at Fairbanks Memorial Hospital. The pharmacy is
contracted with PBMs and cannot negotiate the terms of the
contracts. It's a take-it or leave-it situation, and if the
pharmacy chooses to leave it, then a portion of the community
cannot be served. As a staff pharmacist at the hospital, part
of her job is to send patients safely out the door with their
medications. Sometimes that is a delayed process because of
where the patients must get their medications. Another concern
is fair reimbursement to the pharmacy. Because of the PBMs
spread pricing, the pharmacy loses money on nearly every
prescription. The pharmacy's parent organization asks how to
make Denali Pharmacy sustainable. This bill will help level the
playing field concerning how the pharmacy is treated by the
PBMs. In addition, Ms. Miller spoke to the lack of safety
precautions concerning white bagging and brown bagging
medications.
4:24:57 PM
GARY STRANNIGAN, Premera Blue Cross and Blue Shield of Alaska,
spoke in opposition to HB 226. He echoed the points made by Mr.
Shier and Ms. Snyder. He was especially concerned with Section
14 of the bill which he believed would increase premiums by as
much as 10 percent. He said the bill needed a lot of work and
cautioned the committee against passing it.
4:26:26 PM
BARRY CHRISTENSEN, Owner, Island Pharmacy, spoke in support of
HB 226. He explained that he is a second-generation Alaska
family pharmacist. His father started Island Pharmacy in 1974.
He explained that the future of his pharmacy and the patients it
serves is in real jeopardy now. Island Pharmacy is the only
pharmacy in Ketchikan that provides unique services such as
compliance packaging and compounding of commercially unavailable
medications. Since 2018, 25 percent of independent pharmacies
have closed in Alaska. He expressed belief that the language in
HB 226 would allow plan sponsors to save money while at the same
time offering relief to independent pharmacies. He addressed
Mr. Schier's comments about contract negotiations and explained
that the PBM contracts are extremely complex and never favor
independent pharmacies that employ Alaskans and serve the
healthcare needs of fellow Alaskans. He thanked the committee
for this important legislation and urged its support.
4:29:20 PM
DIRK WHITE, President, Pharmacy Association of Sitka, spoke in
support of HB 226. He compared the work of his pharmacy to that
of Island Pharmacy in Ketchikan with compliance packaging and
compounding of medications otherwise not available. He
discussed how employee health insurance has risen sharply. He
then pointed to the testimony of the representatives from the
coalition and the insurances companies who warned that this
legislation would raise costs which then made him wonder how
rates could rise even more after such outrageous health
insurance costs for employees and how much insurance rates have
increased. He gave several examples of what he described as
"shenanigans" by the PBMs. He closed his remarks by encouraging
the committee to help keep Alaska small businesses open and
support HB 226.
4:32:26 PM
CHAIR PRAX after ascertaining there was no one else who wished
to testify, closed public testimony on HB 226.
4:32:34 PM
CHAIR PRAX announced HB 226 was held over.
4:32:43 PM
ADJOURNMENT
There being no further business before the committee, the House
Health and Social Services Standing Committee meeting was
adjourned at [4:33] p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 226 Med Board Resolution Support.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 PBM White Paper Draft Adopted B Committee 11-2-23_0.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 PBM-Letter-_NAAG-Letterhead-Final.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 Version B.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB226 Letter of Support. Dan Nelson. 2.14.24.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB226 Sectional Analysis Ver. B.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB226 Sectional Analysis Ver. S.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB226 Sponsor Statement.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB226 Ver. S.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 343 Fiscal Note DOH-MS.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB 343 Fiscal Note DOH-MAA.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB 343 Fiscal Note EED-SSA.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB 343 Presenter List Version A.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB 343 Sponsor Statement.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB 343 Version A.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB343 Sectional Analysis Version A.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB343 Summary Version A.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB 226 Support from AK Board of Pharmacy.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226_Support DOG_ASCO.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 Fiscal Note DCCED-CBPL.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 Fiscal Note DCCED-INS.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 Fiscal Note DOH-DRB.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 343 Presentation 2.0.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB 226 Comment Letter NACDS.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 343 Trust LOS 2.26.24.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 343 |
| HB 226 AHIP Comments AK.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 Summary of Changes Ver B to Ver S.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 Slides Updated 2.25.24 .pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 Premera StranniganTestimony.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 PCMA Opposition Letter.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |
| HB 226 Cigna Opposition Testimony.pdf |
HHSS 2/27/2024 3:00:00 PM |
HB 226 |