03/31/2016 01:30 PM Senate LABOR & COMMERCE

        SB 201-PHARMA BD & EMPLOYEES; DRUG DIST/MANUFAC                                                                     
                                                                                                                                
1:47:27 PM                                                                                                                    
CHAIR COSTELLO  announced the consideration of  SB 201. She noted                                                               
this is the first hearing.                                                                                                      
                                                                                                                                
1:48:03 PM                                                                                                                    
SENATOR CATHY  GIESSEL, Alaska State  Legislature, sponsor  of SB
,  explained that  the bill  is an  opportunity for  Alaska to                                                               
come into compliance  with the federal Drug  Quality Security Act                                                               
established in  2013. It will  create a new license  category for                                                               
out-of-state  wholesale drug  distributors. The  bill deals  with                                                               
the  safe practice  of pharmaceutical  manufacturing and  what is                                                               
shipped to  Alaska for  distribution. This  is of  utmost concern                                                               
due to an increase in prescription drug counterfeiting.                                                                         
                                                                                                                                
Currently, the  Board of  Pharmacy has  no authority  to regulate                                                               
out-of-state   wholesale   drug   distributors   or   third-party                                                               
logistics providers. Alaska  is one of few  remaining states that                                                               
does not  license out-of-state drug distributors.  The bill would                                                               
ensure  that they  comply  with the  same  regulations as  Alaska                                                               
wholesalers.  It  requires  out-of-state  drug  distributors,  or                                                               
outsourcing  facility,   to  follow  specific   guidelines.  This                                                               
includes obtaining a  license, authorizing inspection, appointing                                                               
an  agent before  shipping,  mailing  or delivering  prescription                                                               
drugs, or  advertising. An outsourcing facility  must comply with                                                               
the Drug Quality and Security Act.                                                                                              
                                                                                                                                
She  pointed out  that  SB  201 would  also  allow  the Board  of                                                               
Pharmacy to  create an executive administrator  position to serve                                                               
as the  liaison, to implement  statutes and regulations,  and aid                                                               
in managing new licensees.                                                                                                      
                                                                                                                                
1:50:37 PM                                                                                                                    
EMMIE VAN WYHE, Intern, Senator Cathy Giessel, Alaska State                                                                     
Legislature, provided the following sectional analysis for SB
:                                                                                                                            
                                                                                                                                
     Section  1:  AS  08.80.130(13):  Allows  licensing  and                                                                  
     inspecting  for  out-of-state   drug  distributors  and                                                                    
     outsourcing facilities.                                                                                                    
                                                                                                                                
     AS   08.80.130(14):   Establishes  qualifications   and                                                                  
     duties    of    executive   administrator.    Executive                                                                    
     administrator  is  delegated   authority  in  order  to                                                                    
     conduct board business.                                                                                                    
                                                                                                                                
     Section   2:   AS   08.80.03(c):   Specifications   for                                                                  
     facilities,  equipment, personnel,  and procedures  for                                                                    
     control of drugs.                                                                                                          
                                                                                                                                
     Section 3:  AS 08.80.157(k): Applies to  wholesale drug                                                                  
     distributors  and  outsourcing facilities  outside  the                                                                    
     state under AS 08.80.159, regarding licensing.                                                                             
                                                                                                                                
     Section 4:  Amends AS  08.80 by  adding a  new section:                                                                  
     Sec.   08.80.159:  Requires   that  a   wholesale  drug                                                                  
     distributor or  outsourcing facility have a  license in                                                                    
     Alaska   before   shipping,  mailing,   or   delivering                                                                    
     prescription  drugs  to  a licensee  in  the  state  or                                                                    
     before  advertising  in the  state,  an  agent must  be                                                                    
     appointed in  the state,  and a  designee of  the board                                                                    
     must authorize inspection of the facility.                                                                                 
                                                                                                                                
     An outsourcing facility, in  addition, must comply with                                                                    
     the Drug  Quality and Security  Act of 2013.  The board                                                                    
     may  require   an  inspection  of   facilities  located                                                                    
     outside of  the state,  approve a designee  to inspect.                                                                    
     The  board shall  adopt regulations  to implement  this                                                                    
     section.                                                                                                                   
                                                                                                                                
     Section 5:  Amends AS  08.80 by  adding new  section to                                                                  
     Article 2:  Sec. 08.80.270: Allows the  Board to create                                                                  
     an executive  administrator position. Defines  the role                                                                    
     of the executive administrator.                                                                                            
                                                                                                                                
     Section  6:  AS   08.80.480(37):  Defines  "outsourcing                                                                  
     facility"                                                                                                                  
                                                                                                                                
1:52:45 PM                                                                                                                    
SENATOR MEYER  asked if there's  been a problem  with counterfeit                                                               
drugs coming to Alaska.                                                                                                         
                                                                                                                                
MS. VAN WYHE said  the bill is a result of  an occurrence in 2012                                                               
when a  compounding facility in Massachusetts  shipped unsanitary                                                               
medication to  nine different states.  Alaska is one of  the only                                                               
states that hasn't come into compliance with the federal law.                                                                   
                                                                                                                                
SENATOR MEYER asked if the  federal government provides money for                                                               
implementation.                                                                                                                 
                                                                                                                                
1:54:25 PM                                                                                                                    
JANE CONWAY,  Staff, Senator  Giessel, Alaska  State Legislature,                                                               
said  the  federal government  would  impose  regulations if  the                                                               
state doesn't  come into compliance  with this federal  law. Most                                                               
other  states  have  determined  that they  would  rather  do  it                                                               
themselves.                                                                                                                     
                                                                                                                                
She noted that  John Cotter from the Board of  Pharmacy is online                                                               
to answer technical questions.                                                                                                  
                                                                                                                                
SENATOR MEYER asked if an executive administrator is necessary.                                                                 
                                                                                                                                
MS. CONWAY  said the board  doesn't have  the capacity to  do the                                                               
extra work. The licenses will cover the cost of that position.                                                                  
                                                                                                                                
1:55:55 PM                                                                                                                    
SENATOR  GIESSEL  added  that most  of  the  larger  professional                                                               
boards have an executive administrator.                                                                                         
                                                                                                                                
1:57:01 PM                                                                                                                    
JANEY HOVENDEN, Director, Division  of Corporations, Business and                                                               
Professional  Licensing, Department  of  Commerce, Community  and                                                               
Economic Development  (DCCED), presented  information on  SB 201.                                                               
She advised that  the Board of Pharmacy has  entertained the idea                                                               
of an executive administrator position for some time.                                                                           
                                                                                                                                
CHAIR COSTELLO asked her to review the fiscal note.                                                                             
                                                                                                                                
MS. HOVENDEN  said the  first year anticipates  a cost  of $124.4                                                               
thousand.  The personal  services cost  will be  $100.9 thousand.                                                               
Some travel  for the executive  administrator to attend  Board of                                                               
Pharmacy  meetings is  included. The  bill requires  a change  in                                                               
regulations at a  cost of $2.5 thousand, and there  is a one-time                                                               
overhead cost for the new position.                                                                                             
                                                                                                                                
CHAIR  COSTELLO asked  if  the fiscal  note  includes travel  for                                                               
licensing   and  inspecting   of   out-of-state  wholesale   drug                                                               
distributors. She inquired about the board's budget.                                                                            
                                                                                                                                
MS. HOVENDEN said no; those  services would be on contract within                                                               
those  states. The  Board  of Pharmacy  currently  has a  surplus                                                               
budget.                                                                                                                         
                                                                                                                                
1:59:43 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on SB 201.                                                                               
                                                                                                                                
1:59:56 PM                                                                                                                    
MOLLY GRAY,  Executive Director, Alaska  Pharmacists Association,                                                               
testified in support of SB 201.  It is vitally important to bring                                                               
all pharmacists in  Alaska into compliance with  federal law. The                                                               
bill   aligns  with   the  association's   mission  and   ensures                                                               
compliance with the federal mandate.                                                                                            
                                                                                                                                
2:01:04 PM                                                                                                                    
DIRK  WHITE, representing  himself,  testified in  support of  SB
. Speaking as  a community hospital pharmacist in  Sitka and a                                                               
former president of  the board when this issue first  came up, he                                                               
said  he supports  the bill  and  asks that  it be  moved out  of                                                               
committee. He offered to answer questions.                                                                                      
                                                                                                                                
2:01:52 PM                                                                                                                    
JOHN COTTER,  President, Board of  Pharmacy, testified  in strong                                                               
support of SB  201. Alaska is one of the  few states that doesn't                                                               
regulate 503B  pharmacies and that  is a loophole that  should be                                                               
closed  in order  to ensure  that  drugs being  brought into  the                                                               
state are  safe. The license fees  will fully cover the  costs of                                                               
doing this  business and most  of the  new position. The  cost of                                                               
inspections would  be borne  by the  pharmacy that  is inspected.                                                               
The cost of the bill is reasonable and the need is important.                                                                   
                                                                                                                                
SENATOR GIESSEL  asked for examples of  in-state and out-of-state                                                               
wholesale distributors.                                                                                                         
                                                                                                                                
MR.  COTTER said  the issue  is with  smaller companies  that are                                                               
secondary suppliers  that pick  up drugs on  the open  market for                                                               
resale.  There is  often a  problem  with the  pedigree of  those                                                               
drugs.                                                                                                                          
                                                                                                                                
SENATOR MEYER  assumed that out-of-country drug  suppliers aren't                                                               
an issue.                                                                                                                       
                                                                                                                                
MR. COTTER  said they can't ship  to the state, but  that doesn't                                                               
keep them from selling over the Internet.                                                                                       
                                                                                                                                
2:06:02 PM                                                                                                                    
SENATOR MEYER asked if Puerto Rico is considered a state.                                                                       
                                                                                                                                
MR. COTTER said yes.                                                                                                            
                                                                                                                                
CHAIR COSTELLO asked if telemedicine is affected by the bill.                                                                   
                                                                                                                                
MR. COTTER said no.                                                                                                             
                                                                                                                                
2:06:39 PM                                                                                                                    
CHAIR COSTELLO  stated she would  keep public testimony  open and                                                               
hold SB 201 in committee for further review.