HB 382-INSULIN COVERAGE:INSURANCE;MEDICAID  4:55:07 PM CO-CHAIR ZULKOSKY announced that the first order of business would be HOUSE BILL NO. 382, "An Act relating to insurance coverage for pharmacy services." 4:55:44 PM CO-CHAIR SNYDER refreshed the committee on the purpose of HB 382, stating that the bill focused on the importance of preventative care and improving access to affordable healthcare. She explained that over the past few decades, the growth rate of insulin costs had greatly outpaced that of inflation and become incredibly expensive, with no generic versions of insulin available. She reported that there were 50,000 Alaskans diagnosed with diabetes, and that number increases every year. In conclusion, she explained that the legislation would cap the co-pay for insulin at $100 a month. 4:57:40 PM REPRESENTATIVE MCCARTY, acknowledging that he had missed the previous hearing, asked what the price of insulin is to the pharmacies and whether this bill would cause a negative impact in their ability to procure insulin. He mentioned that some states have had to "go out of country" to buy medicine and questioned whether those states were doing the same for insulin. CO-CHAIR SNYDER explained that insulin currently costs $200 per vial, in comparison to $20 a vial in 1994. She shared that while the typical usage for a diabetic patient is two vials a month, this can go up to as many as five a month depending on a variety of factors including severity and the ability to manage the condition through diet and other lifestyle choices. She stated that the question of going out of country for insulin was not brought up in the previous hearing. 5:00:14 PM REPRESENTATIVE PRAX voiced his understanding that HB 382 would alter the co-pay of existing policies and questioned whether the bill would also affect future policies. CO-CHAIR SNYDER confirmed that HB 382 would cap the price of current and future policies. 5:00:51 PM REPRESENTATIVE MCCARTY inquired about utilizing the ability of the Department of Health and Social Services (DHSS) to purchase large quantities of medication to reduce the cost of insulin for the state. REPRESENTATIVE FIELDS suggested that Representative McCarty refer to a letter from DHSS [included in the committee packet] which addressed this topic and then direct any further questions to Lori Wing-Heier, Director of the Division of Insurance, within the Department of Commerce, Community & Economic Development. 5:01:38 PM The committee took a brief at-ease. 5:01:47 PM CO-CHAIR ZULKOSKY asked Representative McCarty to restate his question and directed it to Coleman Cutchins from DHSS. REPRESENTATIVE MCCARTY noted that the state buys large quantities of other medications, such as hepatitis treatments, and asked whether the department could do the same with insulin. 5:02:42 PM COLEMAN CUTCHINS, PharmD, Clinical Pharmacist, Office of Substance Abuse & Addiction Prevention, Department of Health and Social Services, explained that insulin is a refrigerated and sterile product, meaning it requires more effort to store and transport than other drugs. He noted that it requires extra personnel to maintain those sorts of medicines and the department is experiencing staffing issues that could be a barrier to proper maintenance. He mentioned that there are some generic versions of insulin available to the state at prices of $25 a vial when buying in bulk quantities of at least 1,000 units. REPRESENTATIVE MCCARTY posited that because COVID-19 vaccinations have storage requirements similar to those for insulin, mainly refrigeration, Alaska had provided employee training and built up "a lot" of refrigerated facilities, which he believes put the state in the position to be able to buy insulin in bulk to reduce costs. DR. CUTCHINS explained that there are 12-13 types of insulin on the market which would present the department with the challenge of deciding which types to carry. He emphasized that implementing a system to purchase insulin would be complex. CO-CHAIR ZULKOSKY asked Lori Wing-Heier to share her perspective on Representative McCarty's question. 5:05:37 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community & Economic Development, explained that the state had supplied a letter to the committee to look into a similar question brought up in the last hearing concerning Utah's insulin distribution program, and that multiple departments would be looking into whether or not a similar program would be viable for Alaska. She reported that another option the state was investigating was whether the Vaccine Assessment Council could be amended to provide insulin. She explained that both courses of action would require answering the many logistic issues Dr. Cutchins discussed and specifically the challenge of transporting a refrigerated medication from a central distribution location to the far reaches of Alaska. She acknowledged that the state had done this for the COVID-19 vaccines; however, those vaccines were frozen at -80 degrees Fahrenheit while insulin required less intense refrigeration. She emphasized that there would need to be statute changes if the state were to amend the Vaccine Assessment Council and that the state would be looking into the options for possible insulin distribution. REPRESENTATIVE MCCARTY asked whether any of the amendments that Ms. Wing-Heier mentioned could be added to HB 382 to expedite the overall process. MS. WING-HEIER explained that it could be possible to amend HB 382, but stated that based on previous testimony, this bill would affect only the 15 percent diabetic Alaskans who are insured. She shared her understanding that the committee would want to include the uninsured in any state-wide insulin distribution programs. 5:08:11 PM REPRESENTATIVE KURKA asked whether HB 382 would cause premium increases for all those with health insurance or would be localized to only those who have diabetes. MS. WING-HEIER explained that any increase to premiums would be negligible and that there had been no reports of increased insulin costs from insurance companies dealing with this same issue in other states. CO-CHAIR SNYDER shared findings from studies on similar legislation passed in other states that showed negligible premium increases of 7-24 cents per person. She noted that a study on the Washington co-pay cap saw a 2 percent decrease in premiums. She argued that the initial increase across all beneficiaries would improve access to insulin and allow diabetic patients to better manage their health, leading to a cut in cost overall as hospitalizations and complications associated with poorly managed diabetes decrease. 5:10:43 PM REPRESENTATIVE PRAX asked why the price of insulin had gone up so much and posited that for a drug that has been around for so long, a generic version should be available. CO-CHAIR SNYDER explained that individuals with diabetes must take insulin to live and, with no alternatives available, companies "can charge whatever they want" for insulin to fill that demand. REPRESENTATIVE PRAX referred to the various forms of insulin previously mentioned and sought confirmation that there were no alternatives to insulin on the market. CO-CHAIR SNYDER explained that the varied types of insulin were due to differences in how patients administered it, as well as who was producing and supplying it. She deferred to invited expert Laura Keller for a more detailed explanation. 5:12:55 PM LAURA KELLER, Managing Director of Advocacy, American Diabetes Association, stated that there are no other replacements for taking insulin for Type 1 diabetics such as herself. She explained that the "generic" form of insulin mentioned previously is a separate type called regular insulin that is not used by most diabetic patients. She reported that the most common type of insulin is analog, which had been out for decades but has seen a massive jump in cost from $21 to over $300. She mentioned that the current standard of care recommends insulin pumps which require analog insulin and are covered by Medicare, making them the most common devices in use in Alaska. She acknowledged that regular insulin is available to patients but has not received Federal Drug Administration (FDA) approval for use in insulin pumps. REPRESENTATIVE PRAX opined that the problem seems to be regulatory and that it is "odd" that the FDA is preventing other companies from producing insulin. DR. CUTCHINS said that before working for the state he had worked as a practitioner in diabetes care. He explained that regular insulin can be used in a pump but newer drugs are longer lasting and protect against low blood sugar, which is why they are preferred for Type 1 diabetes patients. He explained that insulin, especially the analog types, is an expensive drug to manufacture and that the lower profits mean many companies are not interested in creating generic forms of the drugs. He posited that even when a generic drug is made, it is often "not much cheaper" than the brand name version. 5:17:18 PM REPRESENTATIVE SPOHNHOLZ moved to adopt Amendment 1 to HB 382, labeled 32-LS1494\A.1, Marx, 4/22/22, which read as follows: Page 2, line 6: Delete "$100" Insert "$35" CO-CHAIR ZULKOSKY objected for the purpose of discussion. REPRESENTATIVE SPOHNHOLZ reported that diabetes is one of the most expensive health conditions in the country, leading to 27 percent of patients with diabetes rationing their insulin, which can result in various complications that are even more expensive in terms of health care. She explained that regular use of insulin prevents issues like kidney failure, dialysis, and amputations, as well as reducing the number of hospital visits by 29 percent. She stated that the American Diabetes Association (ADA) recommends a co-pay cap of $35 per month, a figure that has been successfully adopted in legislation by several states with varying "operating environments." She opined that amending the cap from $100 to $35 monthly would allow "average working Alaskans" better access to their needed medication. 5:19:09 PM REPRESENTATIVE KURKA asked how much the average premium cost would increase with a $35 cap in comparison to the original $100 cap. REPRESENTATIVE SPOHNHOLZ explained that in other states with a cap of $35 there are increases as high as a dollar, but there are also states, like Washington, that had a decrease in overall cost. She explained that this was because the cost of any acute care, such as a surgery or long term care [associated with a diabetes complication], is also borne by all [policy holders on the same plan]. REPRESENTATIVE KURKA asked whether there are any other factors in the 1.8 percent decrease of premium costs in Washington. REPRESENTATIVE SPOHNHOLZ confirmed that the co-pay cap is the only factor. CO-CHAIR SNYDER added that the State of Washington passed a second bill to lower the cap to $35 after the success of the first cap. She also mentioned that there are 20 other states who have instituted a cap between $35-$100 a month. 5:21:54 PM REPRESENTATIVE MCCARTY asked whether there are any states that passed this legislation that had similar demographics to Alaska in terms of population and diabetic residents. He also questioned whether there could be a threat of insurance companies deciding not to provide insulin in Alaska due to the cut in co-pay, therein cutting off Alaska's supply of insulin. REPRESENTATIVE SPOHNHOLZ explained the demographic information available is about states like Kentucky, Washington, and Utah, which passed similar legislation. She stated that she could not make a direct comparison to a "like state," but studies have shown minimal increase to premiums. In regard to the insurance companies, she reported that the loss of income from the reduced premium is offset by a reduction of [expensive] high acuity of care cases. She opined that instituting a cap is a way to incentivize the companies to use their "significant market position" to negotiate better manufacturing and distribution costs. 5:24:48 PM REPRESENTATIVE PRAX asked whether the committee had heard any testimony from insurance companies. CO-CHAIR SNYDER replied that there is a letter from one company that had been delivered to committee members' offices. REPRESENTATIVE SPOHNHOLZ referred to a report from the Healthcare Cost Institute (HCI) on Type 1 diabetes and the increasing costs of insulin. She explained that the HCI is an insurance industry funded organization with the purpose of examining health care costs in America. REPRESENTATIVE PRAX shared that in his experience working in insurance sales, companies and employers invest in preventative care, such as buying memberships to a gym, because they believe that doing so saves money in insurance payouts overall. He posited that if putting a co-pay cap in place decreases costs, insurance companies would have done so before. He said he wished to hear directly from insurance companies for that reason. CO-CHAIR SNYDER voiced her opinion that the path of least resistance for insurance companies is going with "the status quo," and she explained that the legislation would add positive pressure for those companies to address the problem directly with insulin manufacturers. She referred to a statement from America's Health Insurance Plans (AHIP), a national insurance organization, that suggested many other forms of cost reduction with which she agreed. However, she stated that [AHIP's] argument that insurance premiums would rise substantially cited an out-of-date study from Kentucky, which gave her pause when considering how much stock to put into that testimony. 5:29:17 PM REPRESENTATIVE FIELDS recapped part of the conversation held during the previous hearing by stating that the cost savings from reducing hospital visits and expensive, long term complications through the proper use of insulin are harder to quantify than immediate premium costs, which could account for why they have not been quantified yet. 5:29:38 PM REPRESENTATIVE KURKA asked what is currently in statute to regulate the cost of co-pay and how the split of who would pay for what portion of prescriptions is structured. 5:30:42 PM MS. WING-HEIER explained that there is not anything in statute other than what was directed by the federal government in the Affordable Care Act, and that the amount of co-pay depends on the specific plan. She explained that the purpose of this bill is to rectify that. REPRESENTATIVE KURKA asked whether there are plans available on the market with higher premiums that would cover more of the cost of prescriptions. MS. WING-HEIER replied that there are plans that cost much more that would have lower co-pays. 5:32:26 PM CO-CHAIR ZULKOSKY removed her objection to the motion to adopt Amendment 1. REPRESENTATIVE KURKA objected. 5:32:32 PM A roll call vote was taken. Representatives Sponholz, Fields, Zulkosky, and Snyder voted in favor of Amendment 1 to HB 382. Representatives Prax, Kurka, and McCarty voted against it. Therefore, Amendment 1 was adopted by a vote of 4-3. 5:33:32 PM CO-CHAIR SNYDER moved to report HB 382, as amended, out of committee with individual recommendations and the accompanying fiscal notes. CO-CHAIR ZULKOSKY noted there was an [inaudible] objection. A roll call vote was taken. Representatives Sponholz, Fields, Snyder, and Zulkosky voted in favor of the motion to report HB 382, as amended, out of committee with individual recommendations and the accompanying fiscal notes. Representatives Prax, Kurka, and McCarty voted against it. Therefore, CSHB 382(HSS) was reported out of the House Health and Social Services Standing Committee by a vote of 4-3.