SENATE BILL NO. 201 "An Act relating to the Board of Pharmacy; relating to the licensing and inspection of certain facilities located outside the state; relating to drug supply chain security; and creating a position of executive administrator for the Board of Pharmacy." 10:08:34 AM EMMIE VAN WYHE, STAFF, SENATOR CATHY GIESSEL, offered a sponsor statement (copy on file): Passage of SB 201 will create a more secure drug supply chain by allowing for licensing and inspection of wholesale drug distributors outside of the state. Currently, Alaska is one of the few remaining states that does not license out-of-state wholesale drug distributors. With laws and regulations varying from state to state, licensing an out-of-state wholesale distributor can prove arduous. With this legislation, Alaska can take action to eliminate wholesalers looking for loopholes in the regulatory system and ensure that all out-of-state applicants seeking licensure comply with the same regulations as Alaska wholesalers. This legislation is critical and necessary to bring Alaska into compliance with the Drug Quality Security Act (DQSA) and create a new license category for "Out- of-State Wholesale Drug Distributors. Currently, there is no authority by the Board of Pharmacy to regulate Out-of-State Wholesale Drug Distributors or third party logistic providers (3PLs). SB 201 would ensure safe delivery of controlled, non-counterfeit medications to Alaskans. SB 201 would require that any out-of-state wholesale drug distributor or outsourcing facility follow specific guidelines including obtaining a license, authorizing inspection of the facility by a designee of the board, and appointing an agent before shipping, mailing or delivering prescription drugs to a licensee in the state or advertising in the state. Additionally, this legislation allows the Board of Pharmacy to create a new position titled "Executive Administrator" to serve as a liaison to the legislative and executive branches of state government, the media, and other state pharmacy boards, as well as implement board statutes and regulations, and aid in managing current licensees. 10:11:14 AM Co-Chair MacKinnon requested a sectional analysis. JANE CONWAY, STAFF, SENATOR CATHY GIESSEL, addressed the sectional analysis (copy on file): 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" 10:13:50 AM Co-Chair MacKinnon solicited questions on the intent of the legislation. 10:14:01 AM Senator Bishop understood that the legislation was driven by the Drug Supply Chain Act of 2013. Ms. Conway replied in the affirmative. She added that Alaska would be the final state to comply with the regulations. Senator Bishop referred to section 2 of the bill, and wondered how much complying with the legislation would cost pharmacies in the state. Ms. Conway replied that the legislation should not cost pharmacies in the state any funds. She explained that the bill solely pertained to the regulation of out-of-state wholesalers in order to protect pharmacies in Alaska from receiving counterfeit, or contaminated, drugs. 10:16:04 AM Co-Chair MacKinnon OPENED public testimony. 10:16:44 AM JOHN COTTER, CHAIR, BOARD OF PHARMACY, FAIRBANKS (via teleconference), testified in support of the bill. He noted that the major component of the bill was the licensure of wholesalers, which would insure the integrity of the drugs being sold within the state. He added that the Drug Quality Security Act (2013) had secured the pedigree of drugs, and the bill would ensure that out-of-state wholesalers were compliant to that end. He said that the hope was that any revenue from the bill would offset the cost of adding an executive administrator to manage the Board of Pharmacy and the growing complexity of board business. 10:19:09 AM DIRK WHITE, SELF, SITKA (via teleconference), testified in support of the legislation. He echoed the testimony of the previous speaker. He believed the bill would bring the state in to compliance with the Drug Quality Security Act. He restated that the bill was financially neutral to pharmacies in the state. He reiterated that the bill would protect the integrity of the pedigree of the drugs that are sold to the state. 10:21:25 AM TARA RUFFNER, ALASKA PHARMACISTS ASSOCIATION, KENAI (via teleconference), testified in support of the bill. She believed that the legislation would make sure pharmaceuticals were tracked through the supply change in a transparent way. 10:22:49 AM Co-Chair MacKinnon asked whether the outsourcing facility had to be in the United States, or would the tracking reach international borders. Ms. Ruffner replied that she was not sure of the answer. She offered to get back to the committee with the information. 10:23:18 AM Vice-Chair Micciche asked whether an Alaska resident could order pharmaceuticals from outside the state, and if so, would the bill cover internet suppliers. Ms. Ruffner stated that anyone could go on the internet and order drugs, and doubted that they were regulated. Vice-Chair Micciche hoped the sponsor would address the issue. 10:24:02 AM Co-Chair MacKinnon CLOSED public testimony. Co-Chair MacKinnon asked Ms. Conway to respond to the two previous questions regarding international and internet activity. Ms. Conway stated that she would provide a response to those issues to the committee at a later date. 10:25:09 AM Vice-Chair Micciche discussed the fiscal notes attached to the legislation (copy on file). 10:26:04 AM Co-Chair MacKinnon queried the perspective of the Department of Commerce, Community and Economic Development on the estimation of receipts coming in to monitor the program. 10:26:27 AM JANEY HOVENDEN, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, stated that the cost of the fiscal note was expected to be covered by new licensees. SB 201 was HEARD and HELD in committee for further consideration. 10:27:06 AM Co-Chair MacKinnon welcomed Co-Chair Kelly to the table.