Legislature(2023 - 2024)BELTZ 105 (TSBldg)
03/06/2024 01:30 PM Senate LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Delivering Alaska's Technical Vocational Educational Program | |
| SB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 121 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 6, 2024
1:32 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Click Bishop, Vice Chair
Senator Elvi Gray-Jackson
Senator Kelly Merrick
Senator Forrest Dunbar
OTHER LEGISLATORS PRESENT
Representative Justin Ruffridge
COMMITTEE CALENDAR
DELIVERING ALASKA'S TECHNICAL VOCATIONAL EDUCATIONAL PROGRAM
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."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 121
SHORT TITLE: PHARMACIES/PHARMACISTS/BENEFITS MANAGERS
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST
03/31/23 (S) READ THE FIRST TIME - REFERRALS
03/31/23 (S) L&C, FIN
02/08/24 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
02/08/24 (S) L&C, FIN
02/28/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/28/24 (S) Heard & Held
02/28/24 (S) MINUTE(L&C)
03/06/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
SARA PERMAN, State Governments Relations Manager
University of Alaska
Anchorage, Alaska
POSITION STATEMENT: Co-presented "Delivering Alaska's Technical
Vocational Education Program."
DR. PAUL LAYER, Vice President
Academics, Students, and Research
University of Alaska
Anchorage, Alaska
POSITION STATEMENT: Co-presented "Delivering Alaska's Technical
Vocational Education Program."
DON ETHRIDGE, Lobbyist
Alaska Chapter
American Federation of Labor
& Congress of Industrial Organization (AFL-CIO)
Juneau, Alaska
POSITION STATEMENT: Testified by invitation on the Technical
Vocational Education Program (TVEP).
SENATOR CATHY GIESSEL, District E
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 121 by request.
JANE CONWAY, Staff
Senator Cathy Giessel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 121.
STEVE RAMOS, Acting Chief Health Administrator
Division of Retirement and Benefits (DRB)
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: Explained the fiscal note and impacts for SB
121.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community
and Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 121.
ACTION NARRATIVE
1:32:46 PM
CHAIR JESSE BJORKMAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Gray-Jackson, Merrick, and Chair
Bjorkman. Senators Bishop and Senator Dunbar arrived thereafter.
^PRESENTATION: DELIVERING ALASKA'S TECHNICAL VOCATIONAL
EDUCATIONAL PROGRAM
DELIVERING ALASKA'S TECHNICAL VOCATIONAL EDUCATIONAL PROGRAM
1:33:41 PM
CHAIR BJORKMAN announced the presentation from the University of
Alaska Anchorage (UAA) titled, "Delivering Alaska's Technical
Vocational Education Program."
1:34:06 PM
SARA PERMAN, State Governments Relations Manager, University of
Alaska, Anchorage, Alaska, co-presented "Delivering Alaska's
Technical Vocational Education Program." She expressed her
intention to discuss three topics: the current state of the
Alaska workforce; an overview of the Technical Vocational
Education Program (TVEP); and the University of Alaska's
contributions to Alaska's workforce needs.
1:34:40 PM
MS. PERMAN advanced to slide 2:
[Original punctuation provided.]
UA System
• Three Universities, One System
• University of Alaska Fairbanks (UAF)
• University of Alaska Southeast (UAS)
• University of Alaska Anchorage (UAA)
• 16+ Colleges, campuses, and extension sites
providing access statewide
• 400+ Breadth of programs from workforce
credentialing to doctoral degrees
• 21K+ Students served across all six economic
regions
• Unique Missions Offering Diverse Value
MS. PERMAN stated that UA has seen a 16 percent increase in
first-time university enrollees and noted that this is during a
time when national numbers for fist-time enrollees have shown a
downward trend.
1:35:42 PM
MS. PERMAN spoke to points on slide 3:
[Original punctuation provided.]
2024 Jobs Forecast
• Capitalizing on Federal Investment to Strengthen
Alaska's Future
• $1.2 trillion infrastructure bill workforce
needed for roads, bridges, ports, broadband,
ferry system, water, and wastewater projects
• CDL Drivers
• Construction Managers
• Heat/Air/Ref Mechanics
• General Ops Managers
• Telecommunication Install/Rep
• Engineers & Engineering Techs
• Architects
• Welders
• Surveyors
• Facilities Repair & Management
• Business Services
• Job growth also anticipated in health care,
transportation, resource extraction, and energy
development
• UA is key to meeting Alaska's workforce needs
MS. PERMAN said that the numbers contained on this slide were
pulled from the January edition of Alaska Economic Trends. She
stated that 2024 projections show a gain of 400 jobs across the
state, which is a 1.7 percent increase. This will primarily be
seen in construction, with the support of federal infrastructure
dollars. She listed several industries that will also see
growth. She explained that Alaska is experiencing a workforce
shortage, pointing out that for every one unemployed person in
the state, there are two vacant job positions. She noted that
some of this workforce loss is due to retirement while some is
due to out-migration. She suggested that this is an important
issue to consider.
1:37:00 PM
SENATOR DUNBAR joined the meeting.
1:37:40 PM
MS. PERMAN spoke to points on slide 4:
[Original punctuation provided.]
The Technical Vocational Education Program (TVEP) was
created in 2000 to adequately fund vocational and
technical education across the state. The program is
administered by the Alaska Workforce Investment Board
(AWIB).
• TVEP funds come from a percentage of employee
unemployment insurance contributions allocated to
specific institutions in accordance with Alaska
Statute 23.15.835.
• TVEP funds must be used for technical and
vocational training programs that align with
regional workforce demands and the Alaska
Workforce Investment Board's industry priorities.
MS. PERMAN said that TVEP is one way to incentivize individuals
to remain in the Alaska workforce. She explained that TVEP is
funded out of unemployment insurance.
1:38:10 PM
MS. PERMAN continued speaking to points on slide 4 (data from
Technical and Vocational Education Program Report, State Fiscal
Year 2023):
[Original punctuation provided.]
The Technical Vocational Education Program (TVEP) was
created in 2000 to adequately fund vocational and
technical education across the state. The program is
administered by the Alaska Workforce Investment Board
(AWIB).
• TVEP funds come from a percentage of employee
unemployment insurance contributions allocated to
specific institutions in accordance with Alaska
Statute 23.15.835.
• TVEP funds must be used for technical and
vocational training programs that align with
regional workforce demands and the Alaska
Workforce Investment Board's industry priorities.
1:39:41 PM
MS. PERMAN advanced to slide 5, displaying a chart of FY23 TVEP
Outcomes. She explained that ten institutions currently receive
TVEP allocations, including UA. She said that in 2023, $13.7
million dollars were distributed.
1:40:17 PM
MS. PERMAN advanced to slide 6 (data from Technical and
Vocational Education Program Report, State Fiscal Year 2023):
[Original punctuation provided.]
TVEP Supports Workforce Development
Fiscal Year 2023 UA Outcomes
• UA's 45 percent allocation trained 57 percent of
students served by TVEP
• 4,844 students trained
• 1,294 high school students received college
credit
• 80 percent employed 1-12 months after exit
MS. PERMAN said that the average cost per participant across the
state is $1600; however, UA brings this cost down to $1273.
1:41:35 PM
SENATOR MERRICK commented that according to the slide, the cost
per participant for the Amundsen Education Center is
significantly higher. She asked why this might be.
1:41:50 PM
MS. PERMAN replied that she cannot speak for Amundsen Education
Center.
1:42:13 PM
CHAIR BJORKMAN noted that SENATOR DUNBAR joined at 1:37pm.
1:42:26 PM
MS. PERMAN invited Dr. Paul Layer to join the presentation.
1:42:57 PM
DR. PAUL LAYER, Vice President of Academics, Students, and
Research, University of Alaska, Anchorage, Alaska, co-presented
"Delivering Alaska's Technical Vocational Education Program." He
advanced to slide 7:
[Original punctuation provided.]
UA's Competitive Grant Investment Strategies
• Aligns with high-demand and/or regional workforce
needs
• Increases access and flexibility of training
delivery
• Assists with employment, retention, or career
advancement
• Develops or enhances partnerships that strengthen
career pathways between secondary, postsecondary,
and employers
MR. LAYER explained that the three universities complete an
internal vetting process to determine which funding proposals
have priorities that are consistent with the state's workforce
needs. These proposals are then presented to a statewide
committee made up of representatives from each of the three
universities and the Alaska Workforce Investment Board (AWIB)
executive director. This committee considers the requests and
prioritizes them according to the criteria listed on Slide 5. He
said that roughly 88 percent of requests are funded, and some
programs continue from year to year. However, he explained that
after 7 years, programs are moved to alternate funding sources.
He clarified that year-to-year funding is not guaranteed.
1:45:20 PM
MR. LAYER advanced to slide 8, depicting the distribution of
funding to high-demand industries and economic regions. He said
that UA has programs throughout the state. He noted that, in
addition to these funding totals, the Fairbanks Pipeline
Training Center (FPTC) received $867,300 in pass-through funding
to support construction, oil, and gas. He emphasized the benefit
of high school dual-enrollment programs. He stated that program
success is evaluated yearly.
1:46:00 PM
SENATOR JUSTIN RUFFRIDGE joined the meeting.
1:48:31 PM
MS. PERMAN advanced to slide 9:
[Original punctuation provided.]
UA TVEP Supports Alaska's High-Demand Industries
Education pays people working jobs in Alaska that
require a high school degree earn an average of
$44,679 annually, which jumps to $63,883 for jobs that
require associate degrees, $86,140 for those that
require bachelor degrees, and $102,511 for jobs in
Alaska that require graduate or professional degrees.
- Dan Robinson, Research Chief, Alaska Department of
Labor and Workforce Development
1:49:13 PM
MS. PERMAN advanced to slide 10, depicting UA graduate outcomes.
She drew attention to the heading "Boost Alaska's Hire Rate" and
explained that of all workers in Alaska who have graduated from
any form of higher education - 94.8 percent remain in Alaska.
1:50:44 PM
MS. PERMAN advanced to slide 11, depicting the impact of TVEP
funding on Alaska's Construction Industry. She highlighted that
$570,800 in TVEP funding was invested in these programs.
1:51:22 PM
MS. PERMAN advanced to slide 12, depicting the impact of TVEP
funding on Alaska's Fisheries, Seafood, and Mariculture
Industries. She highlighted that $585,600 in TVEP funding was
invested in these programs. The average wage of graduates is $56
thousand.
1:51:29 PM
MS. PERMAN advanced to slide 13, depicting the impact of TVEP
funding on Alaska's Healthcare industry. She highlighted that
$1.9 million in TVEP funding was invested in this industry and
the average wage of graduates is $56 thousand.
1:51:48 PM
MS. PERMAN advanced to slide 14, depicting the impact of TVEP
funding on Alaska's Information Technology (IT) Industry. She
highlighted that $248,700 in TVEP funding was invested in this
industry. The average wage of graduates is $56 thousand.
1:52:01 PM
MS. PERMAN advanced to slide 15, depicting the impact of TVEP
funding on Alaska's Mining, Oil, and Gas industries. She
highlighted that $593 thousand in TVEP funding was invested into
these programs.
MS. PERMAN advanced to slide 16, depicting the impact of TVEP
funding on Alaska's Transportation industry. Over $1 million in
TVEP funds were invested in these programs. She highlighted that
UA's transportation program is the second largest (healthcare
being the largest) and includes maritime services.
1:52:23 PM
MS. PERMAN advanced to slide 17:
[Original punctuation provided.]
UA Strongly Supports the Reauthorization of TVEP that
Assists in:
• Strengthening pathways to Alaska Jobs
• Delivering programs aligned with Alaska's high-
demand workforce needs
• Providing professional development for retention
or career advancement
1:52:51 PM
SENATOR GRAY-JACKSON shared her understanding that legislation
has been introduced that would reauthorize TVEP and asked if
this is correct.
1:53:06 PM
MS. PERMAN replied yes.
1:53:29 PM
CHAIR BJORKMAN referred to slide 10 and asked what period of
time the number of graduates represents.
1:53:44 PM
MS. PERMAN replied that these numbers were pulled by the
Department of Labor and therefore she does not have this
information. She deferred to Mr. Layer.
1:54:01 PM
DR. LAYER said that they would get back to Chair Bjorkman with
this information.
1:54:21 PM
Senator Cathy Giessel joined the meeting.
1:54:29 PM
CHAIR BJORKMAN referred to slides 10-16 asked if there are
statistics available that show the percentage of graduates from
each area of study that are placed in jobs within six months. He
surmised that the potential for job placement is important to
those considering these training programs.
1:55:23 PM
MS. PERMAN replied that the Technical and Vocational Education
Program Report does have a general outcomes statistic showing
the percentage of AVTEC students who are placed in jobs within
12 months of graduation. While the report does not include
sector-specific data, she said that she may be able to provide
this information.
1:56:03 PM
DR. LAYER added that there are more in-depth workforce reports
available for each sector. These reports include statistics on
the percentage of graduates who are employed in Alaska within
one year. He said that they can provide these workforce reports
to the committee.
1:56:54 PM
CHAIR BJORKMAN noted that Representative Justin Ruffridge joined
at 1:46 p.m.
1:57:30 PM
DON ETHRIDGE, Lobbyist, American Federation of Labor & Congress
of Industrial Organization (AFL-CIO), Alaska Chapter, Juneau,
Alaska, testified by invitation on the Technical Vocational
Education Program (TVEP). He said he also represents the Alaska
Works partnership that offers high school training. He expressed
support for TVEP and emphasized the importance of making
training available to younger individuals. He expressed hope
that this program - which they have supported since its
inception - will continue. He said this program ensures that
young people are entering into the workforce - which is
important as older workers retire. He said that he has heard a
lot of comments about building trades and unions receiving TVEP
funding and clarified that, while they do receive State Training
and Employment Program (STEP) grant money, they do not receive
TVEP funding. He stated that while they do not receive the
funding, they benefit from the trained graduates who are then
able to join the workforce. He reiterated support for TVEP.
2:00:16 PM
CHAIR BJORKMAN said that he sees the value in directing funding
towards workforce development programs that are cost-effective
and provide quality training in trades, crafts, and other
professions. He stated that these are vital to the workforce and
opined that as conversations on training the workforce continue,
it is important to focus on what works rather than creating new
programs that may not work.
2:01:28 PM
At ease
SB 121-PHARMACIES/PHARMACISTS/BENEFITS MANAGERS
2:04:43 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."
2:05:11 PM
SENATOR CATHY GIESSEL, District E, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 121 by request. She said that
pharmacy benefit managers (PBM) operate under a very complicated
business model. She said that 39 states have introduced 141
pieces of legislation that shine a light on convoluted PBM
business practices. She referred to a White House listening
session on the harms caused by PBMs that is available for
viewing. She stated that in 2017 she co-sponsored PBM reform
legislation, which PBMs and their trade associations claimed
would cause drug prices to skyrocket; however, this did not
happen. She pointed out that since then, 25 percent of Alaska's
pharmacies have closed and said that SB 121 is an attempt to
help Alaska pharmacies operate free from PBMs. In response to
claims that this legislation would increase costs, she asserted
that SB 121 would decrease PBM profits. She emphasized that the
situation is critical for Alaskan pharmacies - and this
legislation is the result of a culmination of many years of
work.
2:07:29 PM
JANE CONWAY, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis
for SB 121:
[Original punctuation provided.]
Sponsor Substitute for Senate Bill 121
Pharmacies / Pharmacists / Benefit Managers
SECTIONAL ANALYSIS
Section 1: Amends AS 08.80.030 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 PBM to be registered as a PBM, no longer as
a third-party administrator with the Division.
Allows Pharmacy Benefits Managers (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.
2:09:05 PM
CHAIR BJORKMAN asked about the benefit of PBMs registering as
PBMs instead of third-party administrators.
2:09:31 PM
MS. CONWAY answered that this change was discussed with the
division of insurance. She explained that many states have
separate registration and licensing for PBMs and added that
having a PBM license would allow the state to charge a licensing
fee that is more commensurate with their money making within the
state.
2:10:15 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
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.
2:11:46 PM
SENATOR DUNBAR asked about the enforcement mechanism for
violating the fiduciary responsibility. He surmised that this
would be enforced by the state.
2:12:14 PM
MS. CONWAY shared her understanding that there are mechanisms
for complaints to the Division of Insurance and penalties would
be set by the division director. She added that any party could
register a complaint.
2:12:40 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
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.
MS. CONWAY drew attention to the phrase "provides definitions"
and stated that this should be crossed out.
2:14:04 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
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
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
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."
2:16:38 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
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".
MS. CONWAY gave a brief description and history of the federal
Drug Supply Chain Security Act. She continued her presentation
of the sectional analysis for SB 121:
[Original punctuation provided.]
AS 21.27.953. Penalties. Allows the Director of
Division of Insurance to impose penalties resulting
from a filed complaint.
2:19:12 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
Section 11: Amends AS 21.27.955
(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
(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)
CHAIR BJORKMAN asked if SB 121 would eliminate access to network
pharmacies.
MS. CONWAY answered no. She explained that a pharmacy that
agrees to a contract would then be placed in the network. She
suggested that this concern may arise from confusion between
"local pharmacies" and retail pharmacies that are owned by PBMs.
2:21:12 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
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;
2:23:03 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
• 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.
MS. CONWAY said 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.
2:25:39 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
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
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 meet requirements of 21.27.901-21.27.955,
21.36.126 and requirements relating to managing
pharmacy benefits under their policies.
2:27:37 PM
MS. CONWAY continued her presentation of the sectional analysis
for SB 121:
[Original punctuation provided.]
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: Definitions Repeals AS 21.27.955(5) and
21.27.955(8)
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.
2:29:18 PM
SENATOR DUNBAR asked what section contains the $13 minimum
processing fee.
MS. CONWAY replied that the dispensing fee is discussed in
section 9. She explained that the division director would
determine the fee based on the criteria listed and added that
this would occur a minimum of every five years.
SENATOR DUNBAR shared his understanding that the exact fee
amount is not in statute and asked if this is correct.
MS. CONWAY replied that this is correct.
SENATOR DUNBAR referred to previous discussions of a $13
dispensing fee and questioned how proponents of SB 121 arrived
at this amount.
2:31:01 PM
MS. CONWAY answered that the dispensing fee was discussed at
length during the interim. She explained that, originally, the
dispensing fee in SB 121 was connected to the Alaska Medicaid
dispensing fee. However, after receiving push-back, it was
decided that the director of the Division of Insurance could
decide the dispensing fee amount using a variety of available
data to determine the most appropriate fee. She referred to SB
121, page 8, line 12, which addresses the dispensing fee. She
explained that the criteria included in this section would be
considered when the director determines the dispensing fee. She
noted that this would include data from dispensing fees used
across the United States as well as Medicaid dispensing fees,
among others.
2:32:50 PM
SENATOR DUNBAR commented that he appreciates that the director
would review data from a variety of sources from across the
United States when determining the dispensing fee. He indicated
that concern has been raised regarding the $13 dispensing fee
which he suggested might be significantly higher than fees in
other states. He emphasized the importance of the director being
able to survey the data and come up with a fee amount that
protects Alaskan consumers so that the fee does not become a
cost driver.
2:33:33 PM
MS. CONWAY commented that the wording on the fiscal note for SB
121 is awkward and seems to suggest that the dispensing fee
would be based on the Medicaid dispensing fee. She questioned
which version of SB 121 was used to prepare the fiscal note. She
suggested that the vague language of the fiscal note may be one
reason for the concern regarding the dispensing fee.
2:34:50 PM
STEVE RAMOS, Acting Chief Health Administrator, Division of
Retirement and Benefits (DRB), Department of Administration
(DOA), Juneau, Alaska, explained the fiscal note and impacts for
SB 121. He said that DRB is committed to providing AlaskaCare
members with the best benefits and customer service possible. He
said that DRB works with consultants and stakeholder groups to
develop proposals that optimize value for members and administer
employee and retirement benefits that reflect the highest
standards of good stewardship. He said that the AlaskaCare
employee plans are self-insured, funded by state employer
contributions and member-paid premiums. He explained that
because AlaskaCare benefits are self-insured, they are not
considered "true" insurance plans and are therefore not subject
to title 21. He stated that bringing AlaskaCare plans under
title 21 may create unintended vested benefits that are subject
to constitutional protection under Article 12, Section 7 of the
Alaska constitution.
MR. RAMOS said that, in its current form, SB 121 creates
ambiguities that may adversely affect DRB in future litigation
and gave examples of previous litigation attempts that were
denied because title 21 did not apply to AlaskaCare. He said
that based on recent DRB reports, the AlaskaCare employee plan
pharmacy benefit claim administrator processed over 131 thousand
prescription claims for the quarter. This is approximately 525
thousand prescription claims for the year. He said that SB 121
does not apply to the AlaskaCare under age 65 retiree pharmacy
benefit plans or the AlaskaCare over age 65 employee group
waiver plans (EGWP). He noted that these are also known as
Medicare Part D plans and prescription drug plans.
2:38:02 PM
MR. RAMOS stated that DRB is also concerned about changes made
to the services and billing structure under the current
contract. These changes may require DRB to issue a new request
for proposal (RFP) - a lengthy and complex process. He explained
why the process takes time and said that it is impossible for a
new plan to be implemented prior to January 1, 2026. He said
that SB 121 includes an "any willing pharmacy provision" that
limits the plans ability to carve out pharmacies that employ
predatory practices. He stated that the DRB fiscal note explains
the anticipated pharmacy and medical claims cost impact to the
AlaskaCare employee health plan. He added that the division
anticipates that SB 121 would increase the plans prescription
drug and medical claims spend by a minimum of $2.4 million
annually.
MR. RAMOS said that dispensing fees would result in an
approximately $1.36 million increase in the AlaskaCare plan. He
stated that DRB reached out to the Division of Insurance to
discuss the dispensing fee and was told that the fee scale had
not been developed; therefore, dispensing fees contained in the
fiscal note are based on the initial proposal to use Medicaid
dispensing fees. He said that the current AlaskaCare employee
plan dispensing fees are $0.80. Medicaid dispensing fees, using
out-of-state pharmacies - would be $13.26 - almost 17 times
higher than the current fees. He stated that dispensing fees for
in-state pharmacies that connect to Anchorage by road would be
$15.86, which is 20 times higher than current fees. He added
that the dispensing fees for in-state pharmacies that do not
connect to Anchorage by road would be $23.78 - 30 times higher
than the current fees.
2:40:21 PM
MR. RAMOS turned his attention to administrative fees and said
that - regardless of whether a spread-pricing or transparent
model is used as methodology for compensating the PBM - DRB
believes that, generally, the PBM will charge the plan an
equivalent amount for their services. He explained that, in a
spread-pricing model, the PBM takes their fees from the spread.
In a transparent model, the PBM charges the plan an
administrative fee - typically a per-member, per-month charge.
He said that shifting to a transparent model for the AlaskaCare
employee plan - which covers approximately 15 thousand lives -
would result in an estimated additional administrative fee of
$500 thousand annually. With respect to standard price control
strategies, he stated that SB 121 seeks to create freedom of
choice by legislating prescription drug channels so that
network, out-of-network, and affiliate providers receive the
same reimbursement rate regardless of any discount advantages
that may be accessed by the member or the plan.
2:41:29 PM
MR. RAMOS said that SB 121 takes the perspective that member
freedom of choice should be provided at plan expense, rather
than providing the member with a baseline benefit and allowing
members to choose to spend their money on more expensive
options. He stated that SB 121 would eliminate the plan's
ability to employ many standard prescription drug cost-control
strategies, which would have additional cost impacts. He
explained that AlaskaCare plans do not require mandatory use of
mail-order pharmacies; however, SB 121 would prevent the plan's
ability to tell members about PBM mail order program, which
saves the member - and the plan - money. This would increase
plan cost by $80 thousand per year. He said that discontinuing
the variable co-pay program would increase plan cost by $300
thousand per year. Additionally, having an open specialty
benefit would increase plan costs by $290 thousand per year. He
noted that SB 121 would also remove management strategies for
clinician-administered drugs and add $580 thousand in additional
costs. He reiterated that the AlaskaCare plan should not be
subject to AS title 21, that dispensing fees in SB 121 are 17-30
times greater than current fees, and the AlaskaCare employee
plan currently uses a spread-pricing strategy that has an
estimated savings of $2.4 million per year compared to the
changes made by SB 121.
2:43:00 PM
CHAIR BJORKMAN commented that some have suggested that the DOA
fiscal note was heavily influenced by the PBM. He asked if the
PBM and Optum Insurance were involved in creating the fiscal
note.
2:43:27 PM
MR. RAMOS answered that DRB has not spoken to Optum regarding SB
121 and Optum did not contribute in any way to the content of
this presentation.
2:43:40 PM
CHAIR BJORKMAN said that he spoke with the chief financial
officer (CFO) of the Statewide Health Trust, who shared that
PBMs are the number one cost driver of the Trust's plan as a
percentage of plans spent, with the most secrecy and games in
the industry. He asked if this is a fair characterization of
PBMs.
2:44:06 PM
MR. RAMOS replied that his is not able to parse out this
relationship in order to determine whether the issue is the drug
manufacturer or the PBM.
2:44:33 PM
SENATOR GRAY-JACKSON expressed confusion about how SB 121 went
from saving money for both the State of Alaska and employees to
one that does the opposite.
2:44:52 PM
SENATOR DUNBAR commented that SB 121 impacts more than just
AlaskaCare and asked if DRB has proposed language that would
exempt AlaskaCare and/or alleviate DRB concerns.
2:45:32 PM
MR. RAMOS replied that the solution would be to remove
AlaskaCare (AS 39.30.090 and AS 39.30.091) from SB 121.
2:46:20 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
Alaska, answered questions on SB 121.
2:46:42 PM
CHAIR BJORKMAN referred to section 2 and asked what the benefit
would be of having PBMs register as PBMs rather than as third-
party administrators.
2:47:05 PM
MS. WING-HEIER replied that the Division of Insurance (DOI)
believes that current statute requires PBMs to register as a
third-party administrator. However, over the last 18 months, DOI
found that most PBMs operating in Alaska have not registered
because they do not agree with DOIs interpretation of the
statute. She explained that changing the statute would give a
clear direction that requires PBMs to register in order to do
business in Alaska.
2:47:31 PM
CHAIR BJORKMAN asked Ms. Wing-Heier to discuss section 5 and to
explain "fiduciary duties" as they pertain to PBMs.
2:47:52 PM
MS. WING-HEIER explained that "fiduciary duties" indicates an
agreement to uphold professional duties. She stated that SB 121
defines the professional duties that PBMs must adhere to. This
includes reporting, transparency, pricing, etc. She explained
that if this fiduciary duty to members is not upheld, DOI would
perform a market conduct examination and would apply the
appropriate fines and penalties.
2:48:32 PM
CHAIR BJORKMAN asked if section 5 clarifies this duty or if it
makes the fiduciary duty more difficult.
2:48:40 PM
MS. WING-HEIER replied that she is neutral on this issue. She
stated that throughout SB 121, DOI is given circumstances to
regulate PBMs and added that while the fiduciary duty does not
help DOI, it does give a degree of comfort to the pharmacies.
2:48:57 PM
CHAIR BJORKMAN expressed his understanding.
2:49:03 PM
SENATOR DUNBAR questioned whether the PBM's fiduciary duty would
be directed to the plan, the pharmacy, the consumer - or to all
of these.
2:49:22 PM
MS. WING-HEIER replied that the PBM's fiduciary duty would be to
all of these.
2:49:29 PM
SENATOR DUNBAR expressed his understanding that the enforcement
mechanism is through DOI and would primarily be a "complaint
driven" process. He asked if there would be a private right of
action and, more specifically, if anyone would be precluded from
bringing a suit as a result of needing to first exhaust the
administrative options.
2:50:04 PM
MS. WING-HEIER replied that she does not see anything in SB 121
that would preclude a third-party from having an independent
cause of action against a PBM.
2:50:13 PM
SENATOR DUNBAR asked how this is played out in other states and
whether successful actions have been brought by Divisions of
Insurance in other states.
2:50:38 PM
MS. WING-HEIER replied that she is aware of two court cases -
one in Arkansas and one in Oklahoma. She shared her
understanding that in these cases, the feeling is that DOI is
"overstepping its bounds" with respect to Employee Retirement
Security Act (ERISA) plans. She explained that ERISA plans are
essentially union plans and are therefore governed by federal
law. She said that there has been some action in the courts
around these plans. She explained that DOI is able to regulate
the third-party administrator but cannot regulate the ERISA plan
design as it would an insurance company. She clarified that the
courts have considered this issue and determined that, as long
as the PBM legislation only controls costs, it is not regulating
the plan. However, there is a dispute because ERISA
representatives believe that controlling costs does, in fact,
impact the plan.
2:51:31 PM
SENATOR DUNBAR asked if this is in federal or state court.
2:51:37 PM
MS. WING-HEIER replied that these cases are in federal court,
with one being heard by the United States Supreme Court.
2:51:46 PM
SENATOR DUNBAR shared his understanding that in both of these
cases, there were attempts to regulate and the plans brought
suit against these attempts.
2:51:57 PM
MS. WING-HEIER replied that this is correct.
2:52:00 PM
SENATOR DUNBAR asked if DOI is aware of any penalties or
successful actions taken against PBMs for violating the
fiduciary duty.
2:52:09 PM
MS. WING-HEIER replied no and pointed out that legislation
broadly regulating PBMs is still relatively new.
2:52:22 PM
SENATOR DUNBAR clarified that he is not trying to speak against
SB 121; rather, he is attempting to envision what it would look
like in action. He commented that DOI is much smaller - and has
fewer resources at its disposal - than many of the PBMs and
associated companies. He surmised that enforcement of the
provisions would present a challenge; however, he added that
this does not mean that the provisions should not exist.
2:52:52 PM
SENATOR BISHOP asked if there have been cases in which a plan
has pushed back against a PBM to negotiate a lower rate.
2:53:23 PM
MS. WING-HEIER replied that it is the plan's job to negotiate
the best rate for their members.
2:53:37 PM
SENATOR BISHOP asked if DOI currently has the ability to audit
PBMs.
2:53:51 PM
MS. WING-HEIER replied no. She explained that the biggest
concern is PBM transparency. She shared her understanding that
neither DOI nor the Division of Corporations, Business, and
Professional Licensing (DCBPL) have this ability.
2:54:09 PM
SENATOR BISHOP asked if SB 121 would allow DOI to audit PBMs.
2:54:12 PM
MS. WING-HEIER replied that SB 121 would allow the director of
the division to conduct a market conduct examination once the
PBM is licensed.
2:54:58 PM
SENATOR BISHOP asked if there are business made up of former PBM
employees that advise individuals of how to negotiate and do
business with PMBs.
2:55:40 PM
MS. WING-HEIER shared her understanding that pharmacists have an
organization that allows them to negotiate with PBMs. She
explained that this organization acts as a "middle man" between
the pharmacies and the PBMs.
2:56:08 PM
CHAIR BJORKMAN held SSSB 121 in committee.
2:57:03 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:57 p.m.