HOUSE BILL NO. 240 "An Act relating to the registration and duties of pharmacy benefits managers; relating to procedures, guidelines, and enforcement mechanisms for pharmacy audits; relating to the cost of multi-source generic drugs and insurance reimbursement procedures; relating to the duties of the director of the division of insurance; and providing for an effective date." 1:48:13 PM Co-Chair Foster indicated that the bill was last heard on the previous day. There was one amendment submitted. REPRESENTATIVE DAVID GUTTENBERG, SPONSOR, relayed that the fiscal note had changed from the time the committee adopted the previous version. The fiscal note by the Department of Administration (DOA) was zeroed out when language was changed from "shall" to "may." Co-Chair Seaton asked which version of the amendment would be under consideration. 1:49:40 PM AT EASE 1:50:11 PM RECONVENED Vice-Chair Gara MOVED to ADOPT Amendment 1 (copy on file): Page 1, line l, following "Act": Insert relating to prescription prices available to consumers; relating to penalties for certain pharmacy or pharmacist violations;" Page 1, following line 6: Insert new bill sections to read: "* Section 1. AS 08.80.297 is amended by adding a new subsection to read: (b) No contract or agreement may prohibit a pharmacy, pharmacist, or pharmacy benefits manager from informing a patient of a less costly alternative for a prescription drug or medical device or supply, which may include the amount the patient would pay without the use of a health care plan. * Sec. 2. AS 08.80.297 is amended by adding new subsections to read: (c) A pharmacist or person acting at the direction of a pharmacist shall notify the patient if a known less costly alternative for a prescription drug or medical device or supply is available, which may include the amount the patient would pay without the use of a health care plan. (d) In this section, (1) "health care plan" means a policy, contract, benefit, or agreement that provides, delivers, arranges for, pays for, or reimburses any of the costs of health care services under (A) a health care insurance plan as defined under AS 21.54.500; (8) a governmental or employee welfare benefit plan under 29 U.S.C. 1001 - 1191 (Employee Retirement Income Security Act of 1974); (C) a plan offered under AS 39.30.090 or 39.30.091; (D) a federal governmental plan as defined under AS 21.54.500; (E) the Medicaid or Medicare program; or (F) a self-insured employer benefit plan; (2) "pharmacy benefits manager" has the meaning given in AS 21.27.955. * Sec. 3. AS 08.80.460(a) is amended to read: (a) Except for a violation of AS 08.80.297, a [A] person who violates a provision of this chapter is guilty of a class B misdemeanor. * Sec. 4. AS 08.80.460(b) is amended to read: (b) A person who violates the provisions of AS 08.80.295 or 08.80.297 may be punished [IS PUNISHABLE] by a civil fine in an amount established by the board in a schedule or schedules establishing the amount of civil fine for a particular violation. The schedule or schedules shall be adopted by the board by regulation. Any civil fine imposed under this section may be appealed in the manner provided for appeals in AS 44.62 (Administrative Procedure Act)." Page 1, line 7: Delete "Section l" Insert "Sec. 5" Renumber the following bill sections accordingly. Page 8, lines 21 - 23: Delete all material and insert: "APPLICABILITY. (a) AS 21.27.901 - 21.27.955, enacted by sec. 5 of this Act, apply to audits of pharmacies conducted by pharmacy benefits managers and contracts entered into or renewed on or after the effective date of sec. 5 of this Act. (b) AS 08.80.297(b), enacted by sec. 1 of this Act, applies to contracts entered into or renewed on or after the effective date of sec. 1 of this Act." Reletter the following subsection accordingly. Page 8, line 25: Delete "added by sec. l Insert "enacted by sec. 5" Page 9, line 6: Delete "Section 3 of this Act takes Insert "Sections 1, 3, and 6 of this Act take" Page 9, line 7: Delete "sec. 5" Insert "sec. 9" There being NO OBJECTION, Amendment 1 was ADOPTED. Co-Chair Foster asked Vice-Chair Gara to review the fiscal notes. Vice-Chair Gara indicated there were 2 zero fiscal notes. The first zero fiscal note was from the Department of Commerce, Community and Economic Development (DCCED). The appropriation was insurance operations, and the allocation was insurance operations. The Office of Management and Budget (OMB) component number was 354. The second zero fiscal note, OMB component number 2152, was from DOA. The appropriation was centralized administrative services and the allocation was health plans administration. Representative Wilson referred to the fiscal note with component number 2152. She referred to page 2 in the second paragraph where it stated that the actuarial analysis assumed that, with the mandate, planned costs for generic drugs filled by independent pharmacies in Alaska would increase by 20 percent. The assumed impact on chain pharmacy pricing would be an increase of 10 percent. She asked where the percentage numbers were derived. She relayed that the fiscal note had been written by the Division of Retirement and Benefits. Co-Chair Foster invited testifiers to come to the table. MICHELE MICHAUD, DEPUTY DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION, introduced herself. EMILY RICCI, HEALTH CARE POLICY ADMINISTRATOR, DIVISION OF RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION, introduced herself. Ms. Michaud reported that the assumptions that were listed were in relation to the original fiscal note, the one that had been resolved. The numbers were provided by state actuaries. They thought that the language that required an appeal "shall" be granted would not only increase the number of appeals but would likely increase the Maximum Allowable Cost (MAC) reimbursement rate for certain drugs. As a result of that and based on their analysis of utilization trends, it would increase the independents by 20 percent and the chain pharmacies by 10 percent. Representative Wilson asked why the language was not removed. Ms. Ricci relayed that it was an attempt in the fiscal note to explain why there had been a change from the previous fiscal note to the current fiscal note. The language should be corrected to reflect the prior actuarial analysis assumed. It was her understanding that there was a letter from the state's actuaries that would be accompanying the fiscal note. The updated version explained the rational why the change in language resulted in a zero fiscal note or an indeterminate fiscal note. Co-Chair Seaton MOVED to report CSHB 240 (FIN) out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 240 (FIN) was REPORTED out of committee with a "do pass" recommendation and with one new zero fiscal note by the Department of Administration and with one previously published zero fiscal note: FN1(CED). 1:55:52 PM AT EASE 1:56:36 PM RECONVENED