HOUSE BILL NO. 323 "An Act extending the termination date of the Board of Pharmacy; and providing for an effective date." 4:25:20 PM REPRESENTATIVE COLLEEN SULLIVAN-LEONARD, SPONSOR, discussed the bill. She explained that the bill extended the termination date of the Board of Pharmacy. The bill would extend the board for four years; from June 30, 2018 through June 30, 2022. Adoption of the bill would continue existing activities by the board, and administration by the Division of Corporations, Business and Professional Licensing (DCBPL). Failure to adopt the legislation would result in a one-year wind-down of the board, with the division assuming all license responsibility in FY 20. The composition of the board was seven members including five licensed pharmacists and three members from the public. Representative Sullivan-Leonard continued to discuss the bill; informing that the board regulated admission in to the practice of pharmacy, established and enforced compliance with professional standards, and adopted regulations. The board established and maintained a controlled substance database. The board also oversaw licensing for pharmacists, pharmacy interns, technicians, licensing for drug rooms (inside institutional facilities); and also registered pharmacies located outside the state if a pharmacy shipped drugs to consumers inside the State of Alaska. 4:27:47 PM AT EASE 4:28:15 PM RECONVENED KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, reminded that the purpose of a sunset audit was to determine whether a board or commission was serving the public interest and should be extended. She referenced the document "A Sunset Review of Department of Commerce, Community and Economic Development, Board of Pharmacy (board)" (copy on file). Ms. Curtis read from the report conclusions listed on the first page: The audit concluded the board operated in the public interest by effectively licensing pharmacists, pharmacy interns, pharmacy technicians, in-state pharmacies, drug rooms, and wholesale distributors. Board meetings were conducted in accordance with applicable laws and the board was active in amending regulations to improve the industry. Ms. Curtis read from page 9 of the report, which showed licensing and registration activity. She detailed that there were 3,747 active licenses as of March 2017; which was a 33 percent increase compared to the prior 2009 sunset audit. Ms. Curtis directed attention to the schedule of revenues and expenditures on page 10 of the report and noted that the board had a surplus of approximately $275,000 as of the end of FY 17. She noted that there was a schedule of licensing fees at the bottom of page 11 and added that DCBPL management planned to do a fee analysis at the end of 2017 to examine adjustment of fees. Ms. Curtis relayed that the Division of Legislative Audit was recommending a four-year extension for the board in recognition that recent statutory changes expanded the board's responsibilities in relation to the controlled substance prescription database. She read from the background information on page 3 of the report: Senate Bill 196, passed in 2008, requires the Board of Pharmacy (board) to establish and maintain a controlled substance prescription database as provided in AS 17.30.200. The law was passed with the intent to improve patient care and foster the goal of reducing misuse, abuse, and diversion of controlled substances. The statute requires each dispenser submit to the board, by electronic means, information regarding each prescription dispensed for a controlled substance. The database electronically collects information from in- state and out of-state pharmacies as well as other dispensers of controlled substance prescriptions. The database allows pharmacists and practitioners to review prescription history prior to prescribing or dispensing a controlled substance. The database is also to be used to: • monitor prescribing practices and patterns of prescribing or dispensing; • identify practitioners who prescribe controlled substances in an unprofessional or unlawful manner; • identify individuals who may be abusing controlled substances; and • identify individuals who present forgeries or otherwise false or altered prescriptions to a pharmacy. Ms. Curtis relayed that there were quite a few structural problems when the legislation went into effect in 2008, and the problems were slow to be addressed. The report grouped the challenges into two areas, including the completeness of information, which was listed on page 4. The law did not provide a way to identify the people that were required to submit information to the database, so the board could not verify completeness. Regulations established at the time of the creation of the database called for monthly reporting; which was not timely enough to be useful. Ms. Curtis continued to discuss the requirement for the board to monitor the prescription drug database. The second area of challenge was the use of the information gathered. The law did not require practitioners and pharmacists to consult the database prior to prescribing or dispensing, rather it was totally voluntary. The board was advised by the Department of Law that information in the database could not be forwarded to practitioners or pharmacists because it was illegal to send an unsolicited report. Consequently, the board did not use the information, and it was not used to identify patterns of abuse or prescribing practices. 4:31:58 PM Ms. Curtis continued discussing the new requirements regarding the drug database. She described that there had been recent significant changes in the law to address the problem areas. Changes included that prescribers and dispensers must register with the database, and the board of pharmacy could notify other occupational boards that licensees had registered. The change provided a way to identify incompleteness and noncompliance. In 2018, beginning in July, dispensers would be required to submit information to the database daily. Dispensers and practitioners would be required to check the database prior to dispensing or prescribing or administering medication with controlled substances (with some exclusions). The board was also able to provide unsolicited reports. Ms. Curtis noted that on page 12 of the report there was a conclusion that with the statutory changes the board was empowered to help combat the abuse of controlled substance. Given that the changes were very recent, the audit was unable to evaluate the degree to which the board would use the new authority to serve the public's interest. The conclusion furthered that DCBPL management did not believe the board should proactively analyze data to meet public health objectives. Further, Department of Commerce, Community, and Economic Development (DCCED) management indicated that additional resources were needed if the legislature intended for the board to analyze data and become proactive in helping enforce prescription drug laws. Ms. Curtis continued discussing the recommendations of the audit. She noted that the report included two recommendations that began on page 14: Recommendation 1: DCBPL's chief investigator should work with the director to improve the timeliness of investigations. The audit identified and reviewed 13 of 20 cases opened for over 180 days between July 2014 and March 2017. Six of the 13 (46 percent) cases were found to have unjustified periods of inactivity ranging from 51 to 184 days. Ms. Curtis explained that the periods of inactivity were largely due to competing priorities, specifically oversight of the controlled substance prescription database. Ms. Curtis read recommendation 2 from page 14 of the report: DCBPL's director should improve procedures to ensure required licensure documentation is appropriately obtained and retained. Three of 25 facility applications tested as part of the audit did not include the required regulatory documentation. Ms. Curtis reported that in one case, a self-inspection report was not provided, in one case a background check report was not obtained, and in one case DCBPL staff did not follow up when an application disclosed that a citation was issued on a pharmacist out-of-state license. The board was not held responsible for the errors, as it did appropriately approve the license pending receipt of key documentation. The oversight was due to lack of follow- through by DCBPL staff in obtaining the documentation. Further, the division tested 25 individual licenses tested found that one pharmacy intern's license application file did not include evidence of the applicant meeting the educational requirement. 4:35:03 PM Ms. Curtis informed that responses to the audit began on page 45. The governor's office agreed that the board served the public's interest and should be extended and did not comment regarding the controlled prescription drug database. The department's response was on page 47. It agreed with both recommendations of the audit. Regarding recommendation 1, DCCED stated that it had implemented new procedures to address the finding. Regarding recommendation 2, the department agreed that additional checks and balances were needed to make sure that administrative record was complete. The department stated that additional resources were needed to ensure that standards were being met. The board chair's response was on page 49, and the chair agreed with both recommendations. 4:35:53 PM Vice-Chair Bishop asked about Exhibit 1 on page 1; and asked if the board was fully staffed. Ms. Curtis deferred the question to the board chair. She stated that the audit was dated August 2016. Co-Chair MacKinnon planned on bringing up the department staff to address questions. She addressed the excess receipt authority in the amount of $275,000. She wondered why there a request had not been made to hire the necessary personnel. Representative Sullivan-Leonard was pleased to see that the board extension was recommended for four years rather than six or eight. She thought it was important to follow the board closely with regard to new statutory requirements; as well as ensure that the board had the necessary resources to accomplish its goals. 4:37:30 PM RICHARD HOLT, CHAIR, AK BOARD OF PHARMACY, ANCHORAGE (via teleconference), stated that the board worked diligently in the protection of Alaskan patients and serving communities. The board had worked hard in adapting to ever-changing pharmacy practice and licensing, in addition to the controlled substance prescription database. He supported the extension of the board, in order for the board to continue serving the needs of patients and populations that were reliant upon the board as subject matter experts in the field of pharmacy. Co-Chair MacKinnon asked if Mr. Holt had heard the comments from Ms. Curtis regarding the department's assertion that the board needed more personnel to complete its duties. Mr. Holt informed that the board had a new employee that split duties between board functions and monitoring of the prescription drug database. He referenced SB 37, which had proposed to give the board authority to hire an executive administrator using licensing receipts services fees for out of state entities. Co-Chair MacKinnon asked how the board was trying to gain authority. Mr. Holt explained that SB 37 was heard in the House Finance Committee the previous day and would provide the board with authority to hire an executive administrator. 4:40:18 PM Senator Stevens asked about the board's $275,000 of surplus funds. Mr. Holt did not recall the exact amount of surplus from year to year. He thought the amount of surplus was cumulative. Co-Chair MacKinnon informed that according to the Legislative Finance Division (LFD) the carry-forward for FY 12 to FY 13 was $29,896; for FY 14 to FY 15 the carry- forward was $201,479; and in FY 16 to FY 17 the carry- forward surplus was $275,216. 4:41:25 PM Vice-Chair Bishop asked Mr. Holt if the board was at full strength. Mr. Holt answered in the affirmative. 4:41:56 PM LEIF HOLM, BOARD OF PHARMACY, NORTH POLE (via teleconference), agreed with the remarks of the previous testifier. Co-Chair MacKinnon OPENED public testimony. Co-Chair MacKinnon CLOSED public testimony. 4:42:43 PM Vice-Chair Bishop discussed FN 1 from Department of Commerce, Community and Economic Development. The fiscal note had a cost of $27,900 annually if the bill passed. There would be $26,400 of expenses would be incurred for travel for members to attend four board meetings. Advertising the board meetings would cost $400, and $1000 in expenses would be incurred for training and conference fees. There would be $100 stipends for board members attending. Co-Chair MacKinnon noted that the fiscal note did not reflect the full cost to the state or the board members. The board's total revenue was $1,014,241 and its total expenditures was $940,504. Vice-Chair Bishop stated that the funds were Designated General Funds (DGF) of receipt supported services. Co-Chair MacKinnon noted that the members of the profession were providing the state with resources to continue the administration of the pharmacy profession. 4:44:34 PM JANEY MCCULLOUGH, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, stated that the board had a level of pharmacy expertise that was needed in the division. She recommended extension of the board. Senator Micciche asked about a gap of $75,000 between funds received and the cost to run the program. Ms. McCullough asked if Senator Micciche was talking about revenues and expenditures listed in the report. She informed that the excess funds were carried forward for the program to be used in years of non-renewal of licenses. Senator Micciche asked if Co-Chair MacKinnon could repeat the figures associated with the cost of operating the board. Co-Chair MacKinnon specified that in FY 16 and FY 17, the board's total expenditures were $940,504. The information came from an LFD review. 4:46:24 PM Senator Micciche asked who covered the costs. Co-Chair MacKinnon asked if those who were licensed under the board paid a fee and supported the DGF. Ms. McCullough stated that the licensing fees paid by all licensees supported the program and paid all the expenses. There was no other revenue received to support the expense of the board. Senator Micciche considered the actual cost of the programs was being discussed. He thought it was helpful for the public to understand that all the costs were covered by licensees. Ms. McCullough answered in the affirmative. 4:47:51 PM AT EASE 4:49:16 PM RECONVENED Co-Chair MacKinnon stated that there were 72 hours remaining in session. The committee had discussed the bill and the associated funding. She wanted to make sure that the bill would pass both bodies before the legislature adjourned. Vice-Chair Bishop MOVED to report HB 323 out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 323 was REPORTED out of committee with a "do pass" recommendation and with one previously published fiscal impact note: FN 1(CED). 4:51:01 PM AT EASE 4:52:52 PM RECONVENED