Legislature(2007 - 2008)BELTZ 211
03/27/2008 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB113 | |
| HB289 | |
| SB305 | |
| SJR18 | |
| SB286 | |
| HB357 | |
| HB413 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 286 | TELECONFERENCED | |
| + | HB 357 | TELECONFERENCED | |
| + | HB 413 | TELECONFERENCED | |
| += | SB 113 | TELECONFERENCED | |
| += | SB 118 | TELECONFERENCED | |
| = | SJR 18 | ||
| = | HB 289 | ||
| = | SB 305 | ||
SB 286-PHARMACY BENEFITS MANAGERS
1:54:38 PM
CHAIR ELLIS announced SB 286 to be up for consideration.
SENATOR ELTON, sponsor of SB 286, said he hoped to begin and
refine a dialogue. This bill is based on model legislation that
has been done elsewhere and they already know of a few alignment
issues need to occur between this bill and the existing
structure.
He said pharmacy benefit managers (PBM) are groups of businesses
that people contract with to manager pharmacy and prescription
drug insurance plans. These plan managers include the State of
Alaska, the federal government and union groups. He said that
PBMs are largely unregulated. The purpose of this bill is to
provide transparency into their business model.
SENATOR ELTON related that PBMs negotiate with drug
manufacturers and pharmacies on behalf of health insurance
plans, but those negotiations and arrangements aren't
transparent. The danger is that PBMs receive financial
remuneration from drug manufacturers and because those
transactions aren't transparent, they don't pass any information
to the contractor - information like allocation and
recommendations on what drugs should be used. It doesn't allow
the contractor, the state for instance, to know what kind of
other profits the PBM is getting based on the contract it has
with the state.
He said another major concern is how PBMs might increase their
profit margins. For instance, in many cases PBMs also have mail
order drug stores and it's to their benefit to try and shift
business from a pharmacy that may be located down the street
that has a relationship with both the doctor and the person who
is getting the drugs to the mail order firms.
1:58:36 PM
SENATOR ELTON said the bill allows the Board of Pharmacy to
regulate the terms of an agreement and lets the Division of
Insurance access the PBM's books and records that are pertinent
to the contract they have with the person providing the drug
benefit. This gets back to the issue of alignment, and he didn't
know if what worked in other states would work in Alaska. They
need to discuss whether or not they want the Board of Pharmacy
to get into this kind of business; it might be more appropriate
for the Division of Insurance to fill this role.
1:59:25 PM
He said 20 other states' attorney generals have sued PBMs to try
and get the information; eight states plus the District of
Columbia have adopted a similar transparency bill. He clarified
that when he is talking about transparency, he is not talking
about the state or any other contractor posting this
information. He is talking about transparency between the
contractor and the PMB itself. This information is proprietary
and is not shared with the public.
SENATOR ELTON said another important provision does not allow
"extrapolation audits" by PBMs. He explained that PBMs or their
agents can now go to a local pharmacy and audit its books, and
if they find an error, even a keystroke error - and that may be
a $25 error one way or the other - an extrapolation audit allows
the PBM to charge for the prescription of the one drug. If the
pharmacy has done 150 or 1,500 other prescriptions for this
drug, the extrapolation audit allows the PBM to charge the
pharmacy for an error on each transactions a single $25 or $50
error can cost a pharmacy $75,000 to $80,000. So this bill
doesn't allow extrapolated audits; but it doesn't disallow
audits.
2:03:00 PM
SENATOR BUNDE asked if this bill in any way prohibited online
purchases.
SENATOR ELTON replied nothing in this bill prohibits people from
shopping on line. He tried to convey that some PBMs have a
business imperative to try and to create a situation in which
they make it easier for people to buy their drugs through their
subsidiary online, and because of that they might not have a
business incentive to try to keep their local pharmacy going. He
meant to suggest that there is no way the contractor could know
something has happened without being able to pull back the veil
that PBMs now have.
2:05:33 PM
BARRY CHRISTIANSON, Co-chair, Legislative Committee, Alaska
Pharmacy Association, said he is a practicing community
pharmacist in Ketchikan and supported SB 286. It will help
insure that Alaska patients, employers and pharmacists are being
fairly treated by an industry that manages the processing of
prescription drug benefits. The PBM industry started out simply
acting as a conduit for claims processing between pharmacies and
insurance companies. However, this simple model has ballooned
into a myriad of other services that has made this industry a
very profitable middle man in managed health care. The
Association believes this profitability has come at the expense
of patient care and has not lowered overall drug costs. It has
been estimated that it takes 25-30 percent of pharmacy staff
time every day to try to navigate the maze of "pharmacy benefit
manager audits." This time is usually spent on the phone talking
to a claims representative in another state or country. Yet for
all of their efforts, their members every day bear the brunt of
public comment about higher drug costs.
They believe the transparency called for in SB 286 will help
insure the manufacturer rebates negotiated by the PBMs will flow
back to the plans' sponsor or employer. They also believe that
the authorized substitution sections of the bill will help
ensure that patients know they are receiving the most cost
effective medication as approved by their prescriber. Far too
often they see instances of drug substitutions being made by
PBM-owned mail order pharmacies. While these substitutions are
legal, they are not communicated to the patient. This can result
in the patient continuing to take the original prescribed
medication along with a substitute medication simply because
they sound or look alike. An example is blood pressure drugs
called Ramipril and Lisinopril. Lastly, he said SB 286 does not
pad the pockets of Alaska pharmacies, but it sets up pricing
guidelines based on national standards and time limits for
pharmacy audits and payments.
2:09:00 PM
MR. CHRISTIANSON said most Alaska pharmacists don't believe
legislation is needed for every health care ill; since they are
a heavily regulated profession. However, now is the time to
consider regulating the PBM industry because it has had too many
instances of unfair business practices.
2:09:37 PM
REGINA BENJAMIN, Senior Director, Public Policy, National
Community Pharmacists Association, Alexandria, VA, said some of
her members are in Alaska and they support SB 286. She said her
concern is that PBMs are the only entities that are involved in
a variety of functions that impact the delivery and the cost of
prescription drug benefits to the consumer, but they are largely
unregulated.
She said the most stringent regulation to date was found in a
law passed in Maine. The PBMs were successful in tying that law
up in court for several years, but it succeeded at every level
of court action. Pharmacy Care Management Association (PCMA) is
the trade association for the PBMs that challenged the law. The
law finally became effective in June 2006. Now PCMA is also
suing District of Columbia for a similar law.
MS. BENJAMIN stated that now they have regulation by litigation
and settlement. There have been two large settlements, one by 22
states attorneys general against Medco in 2004 and last month by
PBS Caremark with 28 states and the District of Columbia. These
settlements with consent orders involved substitutions and lack
of transparency which this bill tries to regulate in Alaska.
She said that 15 states over the last 3 or 4 years have passed
some kind of legislation that has some minimal oversight of PBMs
and states continue to look at the industry and debate whether
it should be regulated. Some of the supporters of legislation
are the National Legislative Association on Prescription Drug
Prices, a group of bi-partisan legislators, Consumers Union,
AARP, National Mental Health Association and in some cases the
Medical Societies. She said this industry has a large impact on
the cost of health care in this country, and with transparency
employers will save money because they will realize mail order
is not as cheap as they think it is based on the limited
information they are given.
2:14:05 PM
MS. BENJAMIN said SB 286 provides consumer protection especially
in the area of substitution, which is a major problem. She
explained the reason PBMs substitute medication is because they
get a higher rebate on one drug than they do on another and they
don't consider the medical ramifications for the person taking
the drug.
CHAIR ELLIS thanked her for her testimony and closed the public
hearing saying he would hold the bill for further work.
| Document Name | Date/Time | Subjects |
|---|