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 201, 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 201: 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 201. 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.