HB 149-PHARMACY BENEFITS MANAGER;3RD PARTY ADMIN  4:00:18 PM CHAIR MINA announced that the final order of business would be HOUSE BILL NO. 149, "An Act relating to pharmacy benefits managers; relating to third-party administrators; and providing an effective date." 4:01:02 PM REPRESENTATIVE FIELDS, as prime sponsor, presented HB 149 by reading the sponsor statement [in the committee file], which read as follows [original punctuation provided]: House Bill 149 will require Third-Party Administrators (TPAs) and Pharmacy Benefits Managers (PBMs) to be licensed in the state of Alaska and outlines a licensing fee that reflects the Division of Insurance's cost of managing said licensure. Currently, the state requires only registration for these entities. Registration provides a basic level of verification; in contrast, licensure is a legally mandated process granting the right to practice a profession. Moving to licensure gives the Division of Insurance the same authority over TPAs and PBMs that they hold over any other licensed business entity. Insurers continue to out-source many core functions to external entities such as PBMs and TPAs, with staff managing vendor contracts instead of performing those functions internally. Since TPAs and PBMs operate as separate business entities, they are not regulated as an insurer under a Certificate of Authority (COA) nor a firm under a license. This shift has created pathways to circumvent Alaska insurance code, thereby increasing division staff time dedicated to clarifying legal questions from TPAs. If a TPA or a PBM is not an insurance carrier with a COA, they should be a license holder with a license. Last year the Alaska State Legislature passed House Bill 226 that pertained to PBM business practices. During the committee process, language incorporating PBMs into the examination of insurers' statutes from AS 21.06.120 AS 21.06.160 was not addressed. HB 149 addresses this omission to ensure the division is meeting the intent of the legislature in regulating PBMs, including conducting Market Conduct Exams when concerning business practices occur. In addition, the legislation certifies that PBMs are treated the same as insurance agencies, by making them responsible for the cost of these exams. Please join me in supporting HB 149 to allow the Division of Insurance to regulate Third-Party Administrators and Pharmacy Benefit Managers as licensees in the state of Alaska. 4:02:08 PM REPRESENTATIVE RUFFRIDGE noted that House Bill 226 had been sponsored by Representative Sumner. 4:02:25 PM REPRESENTATIVE GRAY asked to hear from the administration. 4:02:43 PM HEATHER CARPENTER, Deputy Director, Division of Insurance, Department of Commerce, Community & Economic Development, stated that HB 149 was a "clean-up" bill. She explained that when the legislature had considered the implementation of House Bill 226, a loophole was found where pharmacy benefits managers (PBMs) could push back if the State of Alaska were conducting a market conduct exam in response to patterns it found concerning. Enacting HB 149 would move third-party administrators (TPAs) and PBMs to full licensure and would require PBMs to pay for the cost of the market conduct exam should they be under investigation. Such categorization would provide regulatory clarity to both TPAs and PBMs since there exists a different regulatory scheme if such entities are registered as opposed to if they were licensed. REPRESENTITIVE GRAY expressed support for HB 149. 4:04:32 PM CHAIR MINA opened public testimony on HB 149. After ascertaining there was no one who wished to testify, she closed public testimony. 4:05:16 PM CHAIR MINA announced that HB 149 was held over.