Legislature(2025 - 2026)BUTROVICH 205
04/01/2025 03:30 PM Senate HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| SB134 | |
| SJR15 | |
| Confirmation Hearing(s): | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 134 | TELECONFERENCED | |
| += | SB 122 | TELECONFERENCED | |
| += | SB 88 | TELECONFERENCED | |
| += | SJR 15 | TELECONFERENCED | |
SB 134-PHARMACY BENEFITS MANAGER;3RD PARTY ADMIN
3:35:53 PM
VICE-CHAIR GIESSEL announced the consideration of SENATE BILL
NO. 134 "An Act relating to pharmacy benefits managers; relating
to third-party administrators; and providing for an effective
date."
3:36:15 PM
VICE-CHAIR GIESSEL speaking as sponsor introduced SB 134. She
stated SB 134 relates to Third Party Administrators (TPAs). TPAs
do business as part of a network related to insurance. TPAs also
relate to pharmacy benefit managers often collecting profits
from them and then relocating them to use outside of the state
of Alaska and sometimes overseas. TPAs are not regulated by the
Division of Insurance. SB 134 endeavors to have TPAs regulated
for the purpose of transparency and accountability.
3:37:24 PM
JANE ROHR, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, provided the sectional analysis for
SB 134:
[Original punctuation provided.]
Senate Bill 134
Sectional Analysis (vsn A)
"An Act relating to pharmacy benefits managers;
relating to third-party administrators; and providing
for an effective date."
Section 1. Amends AS 21.06.120(a): Examination of
insurers.
This section adds pharmacy benefits managers to the
list of licensed and formerly licensed groups the
affairs of which the director may examine.
Section 2. Amends AS 21.06.120(d): Examination of
insurers.
This section adds third-party administrators and
pharmacy benefits managers to the list of groups in
which the director may examine through multi-state
participation with the National Association of
Insurance Commissioners.
Section 3. Adds a new subsection to AS 21.06.120:
Examination of insurers.
This section adds a new subsection allowing the
director to examine third-party administrators or
pharmacy benefits managers at any time that the
director deems necessary.
Section 4. Amends AS 21.06.160(a): Examination
expense.
This section removes an exemption for third-party
administrators and makes them responsible for paying
costs associated with a market conduct examination.
3:37:45 PM
MS. ROHR continued with the sectional analysis for SB 134:
Section 5. Amends AS 21.27.010(a): License required.
This section adds Third-Party Administrators and
Pharmacy Benefits Managers to the list of people
required to be licensed under this chapter to do
business in this state.
Section 6. Amends AS 21.27.010(c): License required.
This section makes conforming changes by replacing the
term "registered" with "licensed" on line 22.
This section also replaces the statute number with the
verbiage "this chapter" since TPA will now be subject
to licensing requirements throughout the chapter
Section 7. Adds a new subsection to AS 21.27.010
License required.
This section adds a new subsection (l) clarifying
third-party administrators and pharmacy benefits
managers are also subject to specific licensing
requirements under the AS 21.27.630 21.27.660 (TPA)
and AS 21.27.901 21.27.955 (PBM).
3:37:58 PM
MS. ROHR continued with the sectional analysis for SB 134:
Section 8. Amends AS 21.27.060(d): Examination of
applicants and licensees. This section exempts a
compliance officer for a third-party administrator or
pharmacy benefits manager from taking an exam from the
division before a license is issued.
Section 9. Amends AS 21.27.380(b): License renewal,
expiration, and reinstatement.
This section pertains to license expiration and adds
third-party administrators and pharmacy benefits
managers to the list of entities who may not operate
in the state with an expired license.
3:38:15 PM
MS. ROHR continued with the sectional analysis for SB 134
stating sections 10 through 24 require designated compliance
officers to be licensed. She stated that it's required for
exempt TPA's to file a certification with a director annually on
or before February 1st as well as make conforming changes by
replacing registered with licensed.
Section 10. Amends AS 21.27.630(a): Registration
required.
This section makes conforming changes by replacing the
term "registered" with "licensed" on lines 24 and 27.
Section 11. Amends AS 21.27.630(b): Registration
required.
This section makes conforming changes by replacing the
term "registered" with "licensed" on line 30.
Section 12. Amends AS 21.27.630(c): Registration
required.
This section makes conforming changes by replacing the
term "registered" with "licensed" on line 2.
This section also replaces the statute number with the
verbiage "this chapter" since TPA will now be subject
to licensing requirements throughout the chapter.
Section 13. Amends AS 21.27.630(d): Registration
required.
This section makes conforming changes by replacing the
term "registration" with "license" on line 7. This
section is about fraudulent use of a name.
Section 14. Amends AS 21.27.630(e): Registration
required.
This section makes conforming changes by replacing the
term "registered" with "licensed" on line 12. This
section is about entities must be licensed not the
individual.
This section also replaces the verbiage "section" with
"chapter" since TPA will now be subject to licensing
requirements throughout the chapter.
Section 15. Amends AS 21.27.630(g): Registration
required.
This section makes conforming changes by replacing the
term "registered" with "licensed" on line 18. This
section pertains to credit unions banks or other
financial institutions.
Section 16. Amends AS 21.27.630(h): Registration
required.
This section makes conforming changes by replacing the
term "registered" with "licensed" on line 24. This
section pertains to credit card companies.
Section 17. Amends AS 21.27.630(i): Registration
required. This section makes conforming changes by
replacing the term "registered" with "licensed" on
line 29. This section pertains to ERISA plans which
are exempted from licensure.
Section 18. Amends AS 21.27.630(j): Registration
required. This section makes conforming changes by
replacing the term "registration" with "license" on
lines 8 and 9. It also removes duplicative language no
longer needed since TPA will be required to be
licensed. This section is relating to suspensions and
revocations of license.
Section 19. Amends AS 21.27.630(k): Registration
required. This section makes conforming changes by
replacing the term "registered" with "licensed" on
line 12. This section is regarding an exemption for
insurers who hold a certificate of authority from the
director.
Section 20. Amends AS 21.27.630(l): Registration
required. This section makes conforming changes by
replacing the term "registered" with "licensed" on
lines 15.
Adds the requirement that any entity that meets the
qualifications of an exempt TPA file a certification
with the director annually on or before February 1st
of each year.
Section 21. Amends AS 21.27.630(m): Registration
required.
This section pertains to exempting employees of third-
party administrators from licensing requirements and
makes conforming changes by replacing the term
"registered" with "licensed" on line 22.
This section also adds language requiring designated
compliance officers to be licensed.
Section 22. Amends AS 21.27.640(a): Third-party
administrator qualifications.
This section makes conforming changes by replacing the
term "registration" with "license" on lines 27 and 28.
This section relates to untrustworthy and incompetent
licensees.
Section 23. Amends AS 21.27.640(b): Third-party
administrator qualifications.
This section makes conforming changes by replacing the
term "registration" with "license" on line 2 and the
term "registrant" with "licensee" on lines 3, 23, and
26. This section lists criteria relating to licensee
qualifications
Section 24. Amends AS 21.27.640(d): Third-party
administrator qualifications. This section makes
conforming changes by replacing the term "registrant"
with "licensee" on lines 1 and 2, the term
"registration" with "license" on line 3. This section
pertains to license approval by director.
3:38:33 PM
MS. ROHR continued with the sectional analysis for SB 134:
Section 25. Amends AS 21.27.650(a): Operating
requirements for third-party administrators.
This section makes conforming changes by replacing the
term "registered" with "licensed" on line 9. Removes
an exemption for a TPA registered in their home state
applying for a non-resident Alaska license. By
eliminated the exemption, we are now requiring all TPA
who are operating in Alaska to be licensed regardless
of their resident state status.
Section 26. Amends AS 21.27.650(q): Operating
requirements for third-party.
This section makes conforming changes by replacing the
term "registration" with "license" on line 17. This
section outlines criteria by which a director may
revoke a license.
Section 27. Amends AS 21.27.901: Registration of
pharmacy benefits managers; scope of business
practice.
This section makes the following conforming changes:
• Replaces the term "registration" with "license"
in the statute title.
• Replaces the term "registered" with "licensed" on
page 12, line 30 and page 13, lines 1 and 14.
• Replaces the term "registration" with "license"
on page 13, lines 8, 11, and 12.
3:38:47 PM
MS. ROHR continued with the sectional analysis for SB 134:
Section 28. Adds new sections AS 21.27.903, 904.
This section adds 21.27.903 Pharmacy benefits manager
qualifications which outlines the following
qualifications:
? Disclosures; including information concerning
owners, officers, directors and partners, action
taken against them by a financial industry
regulatory authority (including the government),
and criminal prosecution.
? Identified a designated compliance officer.
? A complete application, which includes:
o Application fee
o Organizational documents, including regulatory
documents.
o Contact information for the people responsible
for the conduct of affairs for the pharmacy
benefit manager.
o Certified financial documents for the last two
years, or for the last year and partial year
if the applicant has been in business for less
than two years.
This section adds 21.27.904 Pharmacy benefit manager
required notifications. Outlines that PBMs must notify
the director of the following:
? Change of information i.e. place of business,
email, address, telephone number.
? Change in compliance officer and contact
information.
? Any administrative action taken against the
licensee.
? Conviction of misdemeanor or felony.
Failure to provide the above information may result in
denial, revocation or suspension or license.
3:39:02 PM
MS. ROHR continued with the sectional analysis for SB 134:
Section 29. Amends AS 21.27.905: Renewal of
registration.
This section makes the following conforming changes:
? Replaces the term "registration" with "license"
in the statute title.
? Replaces the term "registration" with "license"
on lines 24 and 26.
Regarding procedures for biennial renewal of license,
and renewal fees established by the director that are
self-supporting for the division.
Section 30. Adds a new subsection to AS 21.27.905:
Renewal of registration.
This section adds a new subsection requiring the
licensing fees of pharmacy benefit managers to cover
the cost of:
? Salaries and benefits paid to the personnel of
the division tasked with enforcement.
? Reasonable technology costs related to the
enforcement process of pharmacy benefits manager
licensing, including cost of software, hardware
and related training for use of said software and
hardware.
? Reasonable education and training costs to the
division for the enforcing personnel.
3:39:15 PM
MS. ROHR continued with the sectional analysis for SB 134:
Section 31. Amends AS 21.27.975(15): Definitions.
This section adds "regardless of ownership of the
pharmacy benefits manager" to the definition of
pharmacy benefits manager.
Section 32. Repeals AS 21.27.630(f):
Sec. 21.27.630(f). Registration required.
This provision is no longer needed because they now
must be licensed rather than registered.
Section 33. Sets an effective date for January 1,
2026.
3:39:34 PM
VICE-CHAIR GIESSEL asked Ms. Carpenter to review the bill.
3:40:03 PM
HEATHER CARPENTER, Deputy Director, Division of Insurance,
Department of Commerce Community and Economic Development
(DCCED), Juneau, Alaska, provided a review of SB 134 and stated
that after the last session, the division closely reviewed House
Bill 226, sponsored by Representative Sumner and Senator
Giessel. The intent was to strengthen oversight of pharmacy
benefit managers (PBMs) and ensure compliance. She said after
consulting legal counsel and reviewing statutes, the division
determined that a registration framework did not provide the
same oversight authority as full licensure. She said SB 134
makes conforming changes to update examination statutes,
allowing the division to conduct market exams of PBMs when
complaint patterns arise. Previously, PBMs were treated as
third-party administrators, were not clearly included in
examination statutes, and were sometimes exempt from exam costs,
which were instead borne by insurers. SB 134 corrects these
issues. She concluded that the legislation is a cleanup measure
that aligns Alaska with other states by moving PBMs and third-
party administrators from registration to full licensure. This
addressed concerns about vertical integration, regulatory
confusion, and attempts to circumvent licensure, while also
making requirements clearer and easier for licensing staff to
administer.
3:42:23 PM
SENATOR CLAMAN asked for clarification of the term "vertical
integration," including what it means in this context, whether
it is a problem, and why, noting that the term can have
different meanings for different audiences.
3:42:41 PM
MS. CARPENTER replied that the issue with vertical integration
is largely a lack of transparency. Insurers may own third-party
administrators, pharmacy benefit managers, and pharmacies,
sometimes under exemptions that avoid registration. She said
this makes it difficult for the division to determine
responsibility when complaints arise. Without clear disclosure
of ownership and operations, vertical integration can create
confusion and hinder effective oversight and accountability.
3:43:51 PM
SENATOR CLAMAN explained that in this context, vertical
integration creates challenges for the division's oversight. An
insurer may own multiple third-party administrators and
pharmacies that are not licensed, making it difficult to
determine what is happening within the overall organization. He
said as a result, the division lacks visibility into the
activities of related but unlicensed entities when investigating
the insurer.
3:44:20 PM
SENATOR TOBIN arrived at the meeting.
3:44:33 PM
MS. CARPENTER explained that this is why the division proposed
updating the definition of pharmacy benefit manager to include
the phrase "regardless of ownership.She said this ensures the
division can carry out legislative intent and anticipate how
insurers, TPAs, and PBMs might structure themselves to avoid
oversight.
3:44:54 PM
SENATOR CLAMAN asked whether this proposed change expands the
division's regulatory authority, or does it simply ensure that
entities providing services in Alaska are clearly subject to the
division's existing oversight and regulatory authority.
3:45:15 PM
MS. CARPENTER replied that the changes accomplish both goals:
they clarify the division's authority to examine pharmacy
benefit managers by removing statutory ambiguity, and they
expand oversight by eliminating exemptions and moving to full
licensure, resulting in more licensed entities and better
consumer protection.
3:45:50 PM
SENATOR HUGHES referenced Marty Makary's book The Price We Pay,
which discusses pharmacy benefit managers, and asked whether SB
134 aligns with those recommendations. She also asked whether
the legislation builds on prior PBM reforms and helps rein in
the system to improve oversight and control costs.
MS. CARPENTER stated that she was not familiar with the book but
agreed SB 134 meets that intent. She explained that the statues
on examinations and the information the PDM must supply the
division, such as the designation of a compliance officer and
provisions that ensure registration fees cover oversight costs,
provide the division the necessary tools to carry out the
legislature's direction.
3:47:19 PM
SENATOR HUGHES asked if page 6, line 15 of the sectional
analysis, is narrow enough or does there need to be a more
detailed explanation.
MS. CARPENTER replied that the division has previously worked
with legal counsel on the definition of "person," which is
broadly defined in Alaska statute to include companies and
individuals, such as a compliance officer, and offered to follow
up with additional clarification.
3:48:20 PM
SENATOR HUGHES commented that the broad definition possibly
means every Alaskan.
MS. CARPENTER replied that this provision is found in the third-
party administrator statutes AS 21.27.630 and applies only to
third-party administrators within that chapter.
3:49:06 PM
VICE-CHAIR GIESSEL held SB 134 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 134 Sponsor Statement 03.18.25.pdf |
SHSS 4/1/2025 3:30:00 PM |
SB 134 |
| SB 134 Sectional Analysis 03.18.25.pdf |
SHSS 4/1/2025 3:30:00 PM |
SB 134 |
| SB 134 Fiscal Note DCCED DOI 3.28.25.pdf |
SHSS 4/1/2025 3:30:00 PM |
SB 134 |
| SJR 15 Fiscal Note LEG SESS 3.19.25.pdf |
SHSS 4/1/2025 3:30:00 PM |
SJR 15 |
| Samantha Smith Testimony Rec'd 03.28.25.pdf |
SHSS 4/1/2025 3:30:00 PM |
State Medical Board - Samantha Smith |
| Samantha Smith Testimony Rec'd 03.31.25.pdf |
SHSS 4/1/2025 3:30:00 PM |
State Medical board - Samantha Smith |
| Brent Taylor Medical Board Resume_Redacted.pdf |
SHSS 4/1/2025 3:30:00 PM |
State Medical Board Appointee - Brent Taylor |
| Samantha Smith Medical Board Resume_Redacted.pdf |
SHSS 4/1/2025 3:30:00 PM |
State Medical Board Appointee - Brent Taylor |
| State Medical Board Fact Sheet 2025 Final.pdf |
SHSS 4/1/2025 3:30:00 PM |
|
| CSSJR 15 Version N Summary of Changes 4.1.25.pdf |
SHSS 4/1/2025 3:30:00 PM |
SJR 15 |
| SJR 15 Version N 4.1.25.pdf |
SHSS 4/1/2025 3:30:00 PM |
SJR 15 |
| ASMB Fact Sheet 2025.pdf |
SHSS 4/1/2025 3:30:00 PM |
Alaska State Medical Board |