Legislature(2023 - 2024)BELTZ 105 (TSBldg)
03/20/2024 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB196 | |
| SB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 196 | TELECONFERENCED | |
| += | SB 121 | TELECONFERENCED | |
SB 121-PHARMACIES/PHARMACISTS/BENEFITS MANAGERS
1:43:46 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SPONSOR SUBSTITUTE FOR SENATE BILL NO. 121, "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."
CHAIR BJORKMAN also acknowledged the arrival of Senator Merrick.
1:44:15 PM
SENATOR CATHY GEISSEL, District E, Alaska State Legislature,
Juneau, Alaska, moved to slide 2 of her SB 121 overview and
briefly discussed the vertical integration of insurance
companies and pharmacy benefits managers (PBMs). She directed
attention to AETNA, which has CVS as its PBM, specialty
pharmacy, preferred retail pharmacy, mail-order pharmacy, and
provider services. She then directed attention to CIGNA, which
uses Express Scripts, and United Healthcare, which uses OptumRx.
She emphasized the extent to which these insurers, PBMs, and
pharmacies are vertically integrated. She pointed out that they
are Fortune 500 companies and the three largest (AETNA, CIGNA,
and United Healthcare) control 80 percent of the pharmaceutical
market in the United States and the 3 PBMs profit over $350
billion each year. She stated that SB 121 would reign in the
control that PBMs have over the state budget and listed some of
the 39 organizations that are in support of this legislation.
She stated that Congress is investigating PBMs and 39 states
have similar legislation. The state of Alaska's PBM - Optum Rx -
has been investigated in Ohio, where $15 million in over charges
were discovered. Similarly, in Louisiana, Optum Rx was sued for
over charges believed to be in the billions of dollars.
Massachusetts discovered $5.8 million in overcharges. In West
Virginia, Express Scripts was found to be charging 110 times the
National Average Drug Acquisition Cost (NADAC) price for a
prostate cancer drug. She offered additional examples of PBMs
charging similarly inflated rates - and payments were made to
the PBM's own pharmacy (an example of vertical integration
working to their benefit). A lawsuit in Ohio calls out Express
Scripts, Humana, and others under the state anti-trust law.
1:48:59 PM
SENATOR GIESSEL directed attention to a letter from Congressman
James Comer calling out the vertical integration and leverage
that PBMs are exerting over federal and state budgets. She
stated that the Federal Trade Commission (FTC) has an anti-trust
probe into group purchasing organizations that these large PBMs
have. She noted this is yet another new issue that has not been
discussed previously. She briefly explained how these purchasing
organizations work and noted that money is kept out of view
through foreign accounts. She acknowledged that the Division of
Retirement and Benefits vigorously opposes SB 121. She expressed
confusion regarding this opposition and surmised that it may be
due to significant staff turnover in the division over the past
two years. She shared that her office has not met the person who
is currently covering this issue for the division. She expressed
concern that the division is not aware of how much money is
being given to the PBM Optum Rx.
1:50:54 PM
SENATOR GIESSEL shared that a request for access to the contract
between the state and Optum Rx was denied. However, they were
able to access a small portion of the information by submitting
a public information request. She noted that data comparing
NADAC prices to what the state is paying was presented at the
last hearing on SB 121. She explained that this only applied to
the slice of data received from the PBM. She reiterated that the
contracts are secret, which is a grave concern. She reiterated
that DRB does not know how much money is being lost and lacks
the capacity to investigate. She pointed out that DRB is
currently seeking a new PBM contract and opined that this is the
right time to make changes that will reign in PBMs and require
transparency. She acknowledged that some smaller PBMs have
transparent contracts and expressed her understanding that the
Department of Labor utilizes one of these smaller PBMs. She
listed the positive benefits of utilizing a PBM with transparent
contracts and asserted that DRB needs to be able to do this;
however, she expressed concern that the state's procurement
process creates a barrier to researching and securing new
contracts with other or smaller and transparent PBM's. She
commented that money lost to PBM contracts would be better
utilized to fund state projects.
1:53:28 PM
SENATOR BISHOP asked if DRB has provided rebate transparency by
showing the difference between what drug companies send Optum Rx
and rebate amounts.
SENATOR GIESSEL replied no and added that she is not sure
whether DRB has this information. She stated that this is not
public information.
SENATOR BISHOP clarified that he is referring to the black box
on slide 3.
SENATOR GIESSEL expressed her understanding and reiterated that
she does not know if DRB has this information.
1:54:29 PM
CHAIR BJORKMAN opened public testimony on SB 121.
1:54:55 PM
JOHN ZASADA, Director, Government and External Affairs, Alaska
Primary Care Association, Anchorage, Alaska, testified in
support of SB 121. He stated that Alaska Primary Care
Association (APCA) supports the operation and development of
Alaska's 29 federally qualified community health centers and
briefly described the comprehensive care and services provided
to 1 in 6 Alaskans. He pointed out that Alaska health centers
are required to provide pharmacy services to their patients -
either in-house or contracted with outside pharmacies within the
community they serve. He explained that APCA supports SB 121
because it protects patients from harmful PBM practices and
guarantees them the choice of where they fill prescriptions. He
stated that health centers are locally governed by the patients
they serve and APCA believes that access to local pharmacies is
vital. SB 121 safeguards patients from PBM practices that limit
patient choice and threaten patient access to timely and safe
pharmacy services and treatments. He expressed appreciation that
this legislation also supports efforts to increase price
transparency and access to effective and affordable
prescriptions available.
1:56:50 PM
BALLARD SAUL, representing self, Anchorage, Alaska, testified in
support of SB 121. He is the Clinical Pharmacy Manager at
Providence Alaska Medical Center in Anchorage. He stated that
the PBMs - and the practice of "white bagging" and "brown
bagging" pose a threat to patient's wellbeing. He explained that
"white bagging" and "brown bagging" hinder the pharmacist's
ability to ensure the delivery of safe and effective therapy to
patients because they are unable to certify the integrity of the
medications given to patients and provided examples. He opined
that these practices can be problematic in any locale; however,
they pose an increased risk in Alaska, where extreme
temperatures and long delays are common.
1:59:10 PM
PATRICIA WHITE, representing self, Sitka, Alaska, testified in
support of SB 121. She has been a pharmacist for over 45 years.
She stated that over 300 pharmacies closed in the Alaska in
2023. She asserted that more are at risk of closing without
significant PBM reform. She gave an example to show the need for
local pharmacies and the unique services they provide. She
stated that Alaska patients need to be the focus - not PBM
profits. She explained that the Pharmacy Care Management
Association (PCMA) represents PBMs and spends millions on
marketing each year. She asserted that this does nothing more
than increase PBM profits while putting patients at risk. She
briefly discussed the control that PBMs hold over patients'
prescription drug benefits. She stated that limiting the
conflicts of interest that are inherent in PBM negotiations
empowers patients to make their own healthcare decisions and
decreases out-of-pocket costs while protecting access to
community pharmacy services. She asserted that this could all be
done without raising health insurance premiums. She explained
that pharmacies often lose patients as a result of PBM
requirements. She questioned what business can provide a service
for less than it costs and added that the loss of local
pharmacies will leave communities with pharmacy deserts while
ensuring PBM control. She reiterated her support for SB 121.
2:01:28 PM
MARK BOHRER, District Manager, Fred Meyer Pharmacy of Alaska,
Chugiak, Alaska, testified in support of SB 121. He stated that
Fred Meyer is deeply committed to the state of Alaska and the
wellbeing of over 3200 patients. He stated that SB 121 is a
crucial step toward safeguarding patient rights by ensuring
patient choice and empowering patients to make informed
decisions about healthcare providers. In addition, PBMs would be
subject to Alaska's Unfair Trade Practices and Consumer
Protection Act. SB 121 would require fair and transparent
reimbursement standards, thus protecting the longevity of local
pharmacies. He explained how current PBM practices negatively
impact local pharmacies. He said that SB 121 is an opportunity
to advance patient rights, improve outcomes, and promote
fairness in the industry.
2:03:56 PM
BRITTANY KARNES, representing self, Fairbanks, Alaska, testified
in support of SB 121. She said she is a lifelong Alaskan and
gave a brief family, education, and work history. She said that
she has observed how PBMs' unethical business practices destroy
local pharmacies and explained that supporters of SB 121 are
seeking fair regulation and fair business practices. She
explained how the PBMs' reimbursement schedule is causing local
pharmacies to close. She stated that drug prices have gone up,
local pharmacies have had to close, and PBMs have gotten rich.
She added that someone needs to "watch the watchdog." She
explained that pharmacies provide additional services to
patients - including when patients are forced to fill
prescriptions via mail order and they have issues - and
pharmacies do not receive reimbursement for any of these
services. She emphasized that patients should have local
prescription options and reasonable costs.
2:06:28 PM
LEIF HOLM, Owner, Alaska Family Pharmacy, Fairbanks, Alaska,
testified in support of SB 121. He gave a brief business history
and shared that instead of expanding, his business has had to
consolidate. He explained that closure of his telehealth
pharmacy was due to unfair reimbursement practices. He added
that his pharmacy has experienced an employee crisis as a result
of lack of capital due to consistently inadequate reimbursement.
He shared that several independent pharmacies have closed in
recent years and commented that this is an alarming trend. He
denied the PBMs' claim that proponents of SB 121 are trying to
get rich at the expense of patients. He expressed care for his
customers and community and emphasized that the issues are not
isolated to his business, but widespread throughout the state.
He explained that costs continue to increase while
reimbursements decrease and surmised that no other business has
so little power to adjust costs for inflation. He emphasized
that this unrealistic business model is forced on pharmacists
daily.
2:08:09 PM
MARIANA SOCAL, representing self, Baltimore, Maryland, testified
in support of SB 121. She said she is a physician and holds a
PhD. She explained that her research has shown the incredible
power held by PBMs in the US market, contributing both to the
high costs and low affordability prescription drugs. She stated
that PBMs can profit above the prices negotiated on behalf of
plan sponsors. They obscure prices and limit the information
available to plan sponsors. She shared an example illustrating
this. She asserted that adding transparency would help to
resolve this issue. She stated that PBMs are not liable because
they do not have fiduciary duties and added that having
fiduciary duties would help to resolve this problem. She said
that PBM - pharmacy integration further obscures prices and
limits access. She stated that ensuring local pharmacy access
and fair reimbursement would help to resolve this issue. She
emphasized the need for PBM reform to reduce cost and increase
prescription drug affordability.
2:10:16 PM
ARDIS WIEHL, representing self, North Pole, Alaska, testified in
support of SB 121. She shared a brief personal medical history
and her experience with PBMs, including negative experiences
with mail order pharmacy shipments from the east coast of the
United States. These shipments would arrive late and, on one
occasion, her medication was shipped to Kansas instead of
Alaska. She explained that the mail-order pharmacy would not
send additional medication until it had tracked down the
original shipment - and she was not allowed to have this
prescription filled at a local pharmacy. Two weeks passed before
she was able to receive her medication, at which time she
experienced a reaction due to the lapse in doses. She emphasized
that her experience with PBMs has caused her years of physical,
emotional, and financial distress. She briefly described her
experience. She urged passage of SB 121.
2:13:25 PM
SHAWNA KING, representing self, Anchorage, Alaska, testified in
support of SB 121. She said she is a pharmacist at Providence
Alaska Medical Center. She stated that the lack of PBM
regulation allows mail-order only practices by insurance
companies and results in the closure of local pharmacies. This
limits access to medications, impacting the management of
chronic diseases and limiting access to medicines needed to
treat urgent medical issues (e.g. antibiotics). She stated that
unfair trade practices mean that PBMs do not reimburse local
pharmacies. In addition, PBMs claim to reduce medication costs
but have failed to provide evidence of this. She expressed
concern about "white bagging" which has caused several local
infusion centers and infusion pharmacies to close. She stated
that the infusion center at Providence Alaska Medical Center
does not support this practice, as it compromises patient
safety. The unclear chain of medication custody violates the FDA
Drug Supply Chain Security Act and shipping issues cause delays
for patients in need of medication.
2:15:08 PM
KAREN MILLER, representing self, Fairbanks, Alaska, testified in
support of SB 121. She is a community pharmacist at Denali
Pharmacy in Fairbanks Memorial Hospital. She underscored her
support of this legislation and shared how PBMs have negatively
impacted local pharmacies in her area. She questioned how PBMs
are saving money for patients and said she has seen patient co-
pays increase. In addition, patients may be required to spend
additional time in the hospital while doctors wait for prior
authorization for medications - only to discover that the co-pay
for the patient means the patient pays the majority of the cost
for the medication. She questioned how putting the burden on the
patient saves patients money. Providers must also spend extra
time on the phone to have a pay claim approved. She stated that
the PBMs are saving themselves money but questioned where the
rebate money is going. She emphasized the need for transparency.
2:17:29 PM
SAMATHA IRVIN, representing self, Tok, Alaska, testified in
support of SB 121. She said she works as a pharmacist and shared
a brief history of her work at the local pharmacy in Tok, which
opened in 2021. She expressed concern with PBM practices. She
emphasized the importance of local pharmacy access for patients
in rural areas. She shared some of the challenges residents
faced prior to the local pharmacy opening. She stated that mail
order medications and devices do not come with the necessary
counseling. Residents from local and distant communities have
expressed gratitude for the local pharmacy. She said that PBM
practices pose a threat to local pharmacies. She stated that
some PBMs require the use of their own mail order pharmacy and
charge members a co-pay when they utilize the local pharmacy.
She explained that Tok has an aging population, many of whom
take multiple medications, and co-pays add up, forcing some
residents to use mail-order pharmacies.
2:20:08 PM
ED MARTIN, Co-owner, Kee Construction LLC, Kenai, Alaska,
testified in support of SB 121. He stated that Alaska Medicaid
has a long list of preferred drugs. These drugs are provided by
the state, through Medicaid, with Federal money. He said that
this effects the State's bottom line, as Alaska has a large
group of Medicaid recipients. He shared that he is on Medicare
due to his age.
2:21:52 PM
CHAIR BJORKMAN closed public testimony on SB 121.
CHAIR BJORKMAN encouraged the submission of additional drug
spend data and testimony. He has not received any additional
data for 2023 or 2022. He explained that the committee would
like to compare actual drug spend to the National Average Drug
Acquisition Cost (NADAC) to get an idea of the impacts of SB
121. He emphasized that all testimony is welcome - whether in
support of legislation or against. He pointed out that no one
testified against SB 121 at this hearing - nor did anyone submit
comments.
2:23:29 PM
SENATOR DUNBAR commented that opponents of SB 121 have testified
that some portions conflict with the Employee Retirement Income
Security Act of 1974 (ERISA) and that those portions are likely
to be struck down in federal court. He asked whether the entire
bill would be struck down in this case - or if only those
portions that conflict with ERISA would be impacted. He
requested an answer before the next hearing of SB 121.
2:24:54 PM
SENATOR GIESSEL replied that she would inquire with the
Department of Law and Legislative Legal Services.
SENATOR DUNBAR shared his understanding that, at the federal
level, a severability provision is included in legislation that
may have portions struck down. He opined that it would be worth
asking the Department of Law if something like this is necessary
for SB 121.
2:25:44 PM
CHAIR BJORKMAN held SB 121 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SSSB121 Public Testimony-Letter_NABIP 03.20.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Public Testimony-Letter_PHC 03.09.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 DCCED-DOI Applicable Court Cases in Oklahoma and Arkansas 03.12.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Mulready 10th Circuit Decision.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Public Testimony-Dianne Holmes 03.14.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SB196 ver A.pdf |
SL&C 3/8/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 196 |
| SB196 Sponsor Statement Version A.pdf |
SL&C 3/8/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 196 |
| SB196 Sectional Analysis Version A.pdf |
SL&C 3/8/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 196 |
| SB196 Fiscal Note-DOLWD-WH 03.02.24.pdf |
SL&C 3/8/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 196 |
| SSSB121 Sectional Analysis ver H 02.12.24.pdf |
SL&C 2/28/2024 1:30:00 PM SL&C 3/11/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Sponsor Statement 02.11.24.pdf |
SL&C 2/28/2024 1:30:00 PM SL&C 3/11/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Fiscal Note-DCCED-CBPL-02.23.24.pdf |
SL&C 2/28/2024 1:30:00 PM SL&C 3/11/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Fiscal Note-DCCED-DOI-02.23.24.pdf |
SL&C 2/28/2024 1:30:00 PM SL&C 3/11/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 ver H.pdf |
SL&C 2/28/2024 1:30:00 PM SL&C 3/11/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Fiscal Note-DOA-DRB 02.24.24.pdf |
SL&C 2/28/2024 1:30:00 PM SL&C 3/11/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SB196 Public Testimony-Letter-RDC 02.29.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 196 |
| SSSB121 Public Testimony APRN Alliance 03.17.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Public Testimony Nat. Psoriasis Foundation 03.15.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Public Testimony Albertsons 03.19.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Intro Slides Giessel 3-20-24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Public Testimony-CVS Brenda Snyder 03.20.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |
| SSSB121 Public Testimony ACPA 03.11.24.pdf |
SL&C 3/20/2024 1:30:00 PM |
SB 121 |