Legislature(2017 - 2018)ADAMS ROOM 519

04/03/2018 01:30 PM House FINANCE

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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."                                                                           
2:34:47 PM                                                                                                                    
Co-Chair Foster invited Representative Guttenberg and his                                                                       
staff to the table.                                                                                                             
2:35:26 PM                                                                                                                    
AT EASE                                                                                                                         
2:36:19 PM                                                                                                                    
REPRESENTATIVE DAVID GUTTENBERG, SPONSOR, turned it over to                                                                     
his staff to review the changes.                                                                                                
SETH WHITTEN, STAFF, REPRESENTATIVE DAVID GUTTENBERG,                                                                           
reviewed the changes in the proposed work draft:                                                                                
     Page  6, lines  22-25:  Changes  language dealing  with                                                                    
     pharmacies'  appeals  of  pharmacy  benefits  manager's                                                                    
     reimbursements  for  multi-source generic  drugs  below                                                                    
     pharmacy acquisition cost.                                                                                                 
          Version A  (Sec. 21.27.950(c)) of the  bill states                                                                    
          "(c)  A pharmacy  benefits manager  shall grant  a                                                                    
          network pharmacy's appeal  if an equivalent multi-                                                                    
          source generic  drug is not  available at  a price                                                                    
          at or  below the pharmacy benefits  manager's list                                                                    
          price from at least  one of the network pharmacy's                                                                    
          contracted wholesalers who operate in the state."                                                                     
          Version D (Sec. 21.27.950(c)) is changed to read:                                                                     
          "(c)  A  pharmacy  benefits manager  may  grant  a                                                                    
          network pharmacy's appeal  if an equivalent multi-                                                                    
          source generic  drug is not  available at  a price                                                                    
          at or  below the pharmacy benefits  manager's list                                                                    
          price  for  purchase  from  national  or  regional                                                                    
          wholesalers who operate in the state."                                                                                
     Page  7, line  18: Version  A  of the  bill provides  a                                                                    
     definition  establishing that  "board" means  the Board                                                                    
     of Pharmacy. This  is the only place in  the bill where                                                                    
     the  terms "board"  or "Board  of  Pharmacy" are  used.                                                                    
     This language is deleted in Version D.                                                                                     
     Page  9, line  6:  Updates conforming  language in  the                                                                    
     bill.  Version   A  of  the  bill   contains  revisers'                                                                    
     instructions   to   change   "AS  21.27.900"   to   "AS                                                                    
     21.27.990" in  AS 21.97.900(26). There is  no reference                                                                    
     in AS 21.97.900(26) to  AS 21.27.900. This substitution                                                                    
     needs to be made in AS 21.97.900(27).                                                                                      
     Page 9, line  8: Updates the effective date  to July 1,                                                                    
Co-Chair Seaton asked  about the change on page  6, line 23-                                                                    
25. In the  last line, it changed from "at  least one of the                                                                    
network  pharmacy's contracted  wholesalers  who operate  in                                                                    
the  state"  to  "for  purchase from  national  or  regional                                                                    
wholesalers  who  operate  in   the  state."  He  wanted  to                                                                    
understand the impact of that change.                                                                                           
Mr. Whitten responded  that the change came  into play after                                                                    
speaking with  the Department of Administration  and hearing                                                                    
their concerns about the way  the specific provision worked.                                                                    
In  legislation in  other states,  the provision  was stated                                                                    
more generally.  As long  as it was  a national  or regional                                                                    
wholesaler  doing   business  in   the  state,   making  the                                                                    
provision broad helped alleviate  some concerns about how it                                                                    
would be interpreted.                                                                                                           
2:39:24 PM                                                                                                                    
Co-Chair   Seaton   MOVED   to  ADOPT   proposed   committee                                                                    
substitute for HB 240, Work Draft (30-LS0868\D).                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
Mr. Whitten reviewed the sectional analysis:                                                                                    
     Bill section 1. Adds  a new section concerning Pharmacy                                                                    
     Benefits Managers.                                                                                                         
     Sec. 21.27.901. Registry  of pharmacy benefit managers;                                                                    
     scope  of  business  practice. Requires  that  pharmacy                                                                    
     benefits     managers    register     as    third-party                                                                    
     administrators  under  21.27  .630  and  describes  the                                                                    
     parameters  under  which  they  may  contract  with  an                                                                    
     insurer  or   network  pharmacies,  set  the   cost  of                                                                    
     multisource generic drugs and allows for appeals.                                                                          
     Sec. 21.27.905. Renewal  of registration. Establishes a                                                                    
     bi-annual renewal of a registration  fee for a pharmacy                                                                    
     benefits manager as set by the director.                                                                                   
     Sec.     21.27.910.    Pharmacy     audit    procedural                                                                    
     requirements.   Describes  the   procedural  and   time                                                                    
     requirements required of  the pharmacy benefits manager                                                                    
     and defines who  conduct an audit and  what records can                                                                    
     may be provided by the pharmacy.                                                                                           
     Sec. 21.27.915. Overpayment  or underpayment. Indicates                                                                    
     that a  pharmacy benefits manager shall  base a finding                                                                    
     of overpayment  or underpayment  on the  actual payment                                                                    
     and  not a  projection  of patients  served by  similar                                                                    
     circumstances.  It also  designates the  dispensing fee                                                                    
     Sec. 21.27.920. Recoupment.  Establishes how a pharmacy                                                                    
     benefits   manager  shall   base   the  recoupment   of                                                                    
     overpayments from a pharmacy.                                                                                              
     Sec.  21.27.925.  Pharmacy audit  reports.  Establishes                                                                    
     time  frames as  to  when preliminary  and final  audit                                                                    
     reports  shall  be  delivered to  a  pharmacy  and  the                                                                    
     response  time  for  any  discrepancies  found  in  the                                                                    
     Sec.   21.27.930.   Pharmacy   audit   appeal;   future                                                                    
     repayment.   A  written   appeals   process  shall   be                                                                    
     established  by a  pharmacy benefits  manager. It  also                                                                    
     states  that  future  repayment of  disputed  funds  or                                                                    
     other penalties imposed on a  pharmacy shall occur only                                                                    
     when all appeals have been exhausted.                                                                                      
     Sec. 21.27.935.  Fraudulent activity. Defines  what may                                                                    
     not  be  considered  fraud  by  the  pharmacy  benefits                                                                    
     Sec. 21.27 .940.  Pharmacy audits; restrictions. Adopts                                                                    
     restrictions on the requirements  of the entire Section                                                                    
     1  when applied  to an  audit in  which intentional  or                                                                    
     suspected  fraud is  demonstrated  in a  review of  the                                                                    
     claims  data.  In  addition, the  requirements  do  not                                                                    
     apply  to  any  claims   paid  for  under  the  medical                                                                    
     assistance program found in AS 47.07.                                                                                      
     Sec.   21.27.945.   Drug   pricing   list;   procedural                                                                    
     requirements.  The  methodology  and  sources  used  to                                                                    
     determine  the drug  pricing list  will be  provided to                                                                    
     each  network  pharmacy  at   the  beginning  of  their                                                                    
     contract term  and updated accordingly by  the pharmacy                                                                    
     benefits manager. Basic  contact information shall also                                                                    
     be provided.                                                                                                               
     Sec.  21.27.950.  Multi-source   generic  drug  appeal.                                                                    
     Establishes a  process by which a  network pharmacy may                                                                    
     appeal  the reimbursement  for  a multi-source  generic                                                                    
     drug and procedures if their  appeal is denied. It also                                                                    
     sets the  limitations on the pharmacy  benefits manager                                                                    
     and  the insurance  division director  as  to how  many                                                                    
     days they  have to resolve  an appeal or a  request for                                                                    
     Sec.  21.27 .955.  Definitions.  Defines all  selective                                                                    
     wording as used in Section 1.                                                                                              
     Bill section 2. Adds a  new section on Applicability as                                                                    
     it  applies to  audits  of pharmacies  as conducted  by                                                                    
     pharmacy benefits managers.                                                                                                
     Bill section 3.  Adds a new section  as to Transitional                                                                    
     Provisions for adopting Regulations.                                                                                       
     Bill  section  4.  Adds  a   new  section  stating  the                                                                    
     Reviser's Instructions.                                                                                                    
     Bill  section   5.  Effective  date  clause   for  Bill                                                                    
     section 3.                                                                                                                 
     Bill  section 6.  Effective date  clause  for this  Act                                                                    
     except as provided.                                                                                                        
Co-Chair Foster relayed the list of available testifiers.                                                                       
Representative Wilson asked about appeals and how they                                                                          
would be handled.                                                                                                               
2:44:52 PM                                                                                                                    
LORI   WING-HEIER,   DIRECTOR,    DIVISION   OF   INSURANCE,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
responded that in  respect to appeals, the way  the bill was                                                                    
currently written and based on  the current statute, appeals                                                                    
would  automatically  go  to the  Office  of  Administrative                                                                    
Hearings (OAH). The department had  had discussions with OAH                                                                    
and made them aware.                                                                                                            
Representative Wilson referenced  AS 21.27.950. She wondered                                                                    
about  the  number of  days  the  pharmacy benefits  manager                                                                    
(PBM) and the insurance division  director had to resolve an                                                                    
appeal  or  a  request  for  review.  She  wondered  if  the                                                                    
division  would set  a time  frame in  conjunction with  the                                                                    
Ms.  Wing-Heier replied  that the  division  would still  be                                                                    
involved  after an  appeal was  given if  the PBM  disagreed                                                                    
with the findings of OAH. Timeliness would still apply.                                                                         
Representative  Wilson  had  heard that  the  Department  of                                                                    
Administration  (DOA) was  going to  become more  active and                                                                    
might  look at  the rebates  that  came back.  She asked  if                                                                    
there would  ever be a  circumstance where one  state agency                                                                    
went to another state and had some sort of appeal.                                                                              
Ms.  Wing-Heier responded  that a  pharmacist could  come to                                                                    
the division for  an appeal. An insured  plan provider could                                                                    
also request  an appeal of  their cost for  a pharmaceutical                                                                    
drug through the division's external  review process. It was                                                                    
a bit of a quandary as to  when the state would have its own                                                                    
appeals.  The   division  worked   for  the   insured  plans                                                                    
including the  individual market,  the small group,  and the                                                                    
large group.  The state was  self-insured with  Alaska Care.                                                                    
Many employees  were in  union trust.  The division  did not                                                                    
have  direct  authority  because  the  plans  were  Employee                                                                    
Retirement  Income  Security  Act  (ERISA)  plans  or  self-                                                                    
insured  plans. She  conveyed that  Title 21  generally only                                                                    
applied to  insured plans. It  was a much narrower  scope in                                                                    
terms of the number of people.                                                                                                  
Representative  Wilson thought  there were  2 entities.  She                                                                    
asked if  the self-insured plan providers  would be affected                                                                    
by the bill.                                                                                                                    
Ms. Wing-Heier responded that the  PBMs, even under contract                                                                    
to  a  union  trust  or  any group,  would  be  required  to                                                                    
register with  the division.  However, registration  did not                                                                    
always  give the  state regulatory  authority. The  division                                                                    
would work with the PBM, but  the state did not have control                                                                    
over the contract between the  trust or a large self-insured                                                                    
employer and  the PBM. The  state would have sight  into the                                                                    
contract between the insurance company and the PBM.                                                                             
Representative   Wilson  mentioned   that   the  state   had                                                                    
prescription  insurance. She  asked  if the  state would  go                                                                    
through the same  appeal process via OAH if it  had an issue                                                                    
similar to the issues pharmacies were having.                                                                                   
Ms. Wing-Heier  responded that presently the  state would go                                                                    
through  the  OAH  process.   She  suggested  directing  the                                                                    
question  to the  Department of  Revenue (DOR)  to find  out                                                                    
their intent.                                                                                                                   
2:49:13 PM                                                                                                                    
Representative Wilson asked about  the pharmacy audit appeal                                                                    
which was being  set up by the PBM. She  was curious why the                                                                    
PBM  was not  handling  all appeals  including generic  drug                                                                    
appeals.  She reviewed  the language  in  AS 21.27.930.  She                                                                    
asked for clarification.                                                                                                        
Representative   Guttenberg    relayed   that   self-insured                                                                    
entities, including  the state, hired PBMs.  The statute was                                                                    
about the relationship between the  PBM and the pharmacy. If                                                                    
a pharmacist was audited by  the PBM and they disagreed, the                                                                    
pharmacist  would  have a  place  to  file an  appeal.  Many                                                                    
different things  could be addressed in  an appeal including                                                                    
reimbursement rates. One pharmacist  had stated that in some                                                                    
instances it  was more cost-effective  to give a  client $20                                                                    
to go  to a chain  pharmacy than to fill  their prescription                                                                    
because   of  reimbursement   rates.   The   focus  of   the                                                                    
legislation was  between one contractor  like the  state and                                                                    
the pharmacy.                                                                                                                   
2:52:49 PM                                                                                                                    
Representative Wilson  highlighted her understanding  of the                                                                    
bill. An appeal  process was set up in AS  21.27.930 in case                                                                    
a pharmacy  did not  agree with  a PBM's  audit conclusions.                                                                    
The pharmacy  would go  before an OAH  judge to  present its                                                                    
case. The judge would hear from  the pharmacy and the PBM to                                                                    
decide.  She  wondered  if  the pharmacy  would  go  to  the                                                                    
Division of Insurance  if it disagreed with  the decision of                                                                    
the OAH judge.                                                                                                                  
Ms. Wing-Heier  replied that when  something went to  OAH on                                                                    
behalf of  the Division of  Insurance it came back,  and the                                                                    
director had  the final  say if  the pharmacy  continued the                                                                    
appeal. It  did not come  back to the Division  of Insurance                                                                    
if everyone  agreed with the  decision at the OAH  level. It                                                                    
was hoped  that with  this legislation  a number  of appeals                                                                    
would be worked  out between the pharmacy and  the PMB based                                                                    
on  its parameters.  She reported  that OAH  would hear  the                                                                    
first  appeal between  the two  and, if  they still  did not                                                                    
render  an  agreement,  the  director  would  make  a  final                                                                    
decision. The following step would be court.                                                                                    
Representative Guttenberg underscored that  the goal was not                                                                    
to  micromanage the  process. The  bill would  be consistent                                                                    
with what was already in place.                                                                                                 
2:54:34 PM                                                                                                                    
Co-Chair Seaton asked about page 5,  line 21 of the bill. He                                                                    
did not  see anything that  required the pricing list  to be                                                                    
updated electronically.  The bill required that  the list be                                                                    
updated once  every 7  days. He asked  if the  intention was                                                                    
for the  work to be  done electronically with  the exception                                                                    
of pharmacies without electronic  communications. He did not                                                                    
see  anything about  broadband mentioned  in  the bill.  The                                                                    
information could be sent in  the mail and there would still                                                                    
be a  disconnect in terms of  time. He wondered if  it would                                                                    
be beneficial to include language in the bill.                                                                                  
Representative Guttenberg  replied that he had  not heard of                                                                    
any pharmacies  not online. He  thought it was  necessary to                                                                    
have  online access  to look  up  insurance information  and                                                                    
pricing.  He suggested  having the  technology  was a  basic                                                                    
function of  a pharmacy. He was  unaware of an issue  in the                                                                    
rural clinics.                                                                                                                  
Co-Chair Seaton had only brought  the issue up because of an                                                                    
unrelated  issue  having  to   do  with  the  Department  of                                                                    
Environmental    Conservation   and    sharing   information                                                                    
electronically or thorough the mail.  He thought the goal of                                                                    
the bill  was that  the PBM and  the pharmacist  had pricing                                                                    
information  simultaneously.  He suggested  a  clarification                                                                    
might be  in order  while the  bill was  still in  the House                                                                    
Finance Committee.                                                                                                              
Representative  Guttenberg   had  received   feedback  about                                                                    
updating  the list  at reasonable  intervals.  He had  heard                                                                    
concerns  about  stability  if  the  list  was  updated  too                                                                    
frequently. Prices went up and down.                                                                                            
Co-Chair  Seaton asked  Ms. Wing-Heier  if  the Division  of                                                                    
Insurance thought the legislation  was workable. He wondered                                                                    
if there was anything the division wanted to see changed.                                                                       
Ms. Wing-Heier  indicated that similar legislation  had been                                                                    
proposed  in the  past. The  concept was  not new  and other                                                                    
states were  passing PBM  models. The  division did  not see                                                                    
any problems with the bill presently.                                                                                           
Co-Chair Foster OPENED Public Testimony.                                                                                        
3:00:58 PM                                                                                                                    
MARAL  FARSI, CVS  HEALTH, CALIFORNIA  (via teleconference),                                                                    
opposed the legislation. CVS Health  believed the bill would                                                                    
be a  cost driver  to the  state. It  increased governmental                                                                    
oversight  of  private business-to-business  contracts.  The                                                                    
language  changing  the  word  "shall"  to  "may"  increased                                                                    
confusion  as  to  the  purpose  of  the  provision  in  its                                                                    
entirety. The presence  of the statute meant  that with some                                                                    
sort of  initial rule-making or  some level  of enforcement,                                                                    
the clause would stand. The  provision would still be a cost                                                                    
driver.  She believed  the audit  capacity in  the bill  was                                                                    
weakened and left the door open to fraud, waste, and abuse.                                                                     
Ms. Farsi  continued that there  was a  blanket registration                                                                    
for  PBMs   and  involvement   by  government   agencies  on                                                                    
prescription drug  prices, which was a  complex and volatile                                                                    
environment. She thought the bill  attempted to delegate how                                                                    
appeals  were settled  in  a system  that  had already  been                                                                    
agreed  to  in contracts  with  pharmacies.  It allowed  the                                                                    
state  to  involve  itself   in  private  contracts  between                                                                    
businesses in  ways it had consequences  for other business-                                                                    
to-business  contracts. She  provided an  example pertaining                                                                    
to reimbursement prices. The bill  would tie the CVS's hands                                                                    
in  multiple ways.  The bill  in  its current  form did  not                                                                    
exist in any  other state. In states where  a law addressing                                                                    
pharmacy reimbursements  and audits existed, CVS  had worked                                                                    
very  closely with  legislators and  pharmacists to  come up                                                                    
with a solution.  CVS had requested the  opportunity to work                                                                    
with the  legislature to craft  an appropriate bill  but had                                                                    
not been given the chance.  She asked for the opportunity to                                                                    
craft an appropriate policy for all involved.                                                                                   
Vice-Chair Gara asked if CVS  Health was a pharmacy benefits                                                                    
Ms.  Farsi  replied  that CVS  was  a  multi-armed  pharmacy                                                                    
innovation  company. She  elaborated  that  the company  had                                                                    
chain  pharmacies  and  a   pharmacy  benefit  manager.  She                                                                    
assured  the  committee  that  CVS  had  a  strict  firewall                                                                    
between both sides  of its business. In Alaska  CVS acted as                                                                    
the pharmacy benefit manager for the state plan.                                                                                
Vice-Chair  Gara had  learned  of a  practice that  pharmacy                                                                    
benefit managers  had prohibited  pharmacies from  telling a                                                                    
consumer  that   they  could  get   a  lower  price   for  a                                                                    
prescription  drug by  paying cash  than they  could through                                                                    
their  co-pay through  their insurance.  It  was a  national                                                                    
problem. He asked if such  gag orders preventing pharmacists                                                                    
from  revealing  certain   information  to  their  customers                                                                    
existed in Alaska.                                                                                                              
Ms. Farsi indicated  that CVS Health did  not participate in                                                                    
that practice.  The company  permitted pharmacists  to offer                                                                    
the lowest price  drug to their patients whether  it was the                                                                    
price under their cost share or  the cash price of the drug.                                                                    
She indicated  CVS would  have no objection  to a  bill that                                                                    
addressed  that  particular  practice. There  were  probably                                                                    
PBMs that  allowed that practice.  However, CVS was  not one                                                                    
of them.                                                                                                                        
3:06:35 PM                                                                                                                    
BILL  HEAD,  PHARMACEUTICAL   CARE  MANAGEMENT  ASSOCIATION,                                                                    
GLENDALE,  CALIFORNIA  (via   teleconference),  opposed  the                                                                    
bill.  He   indicated  he  had  provided   information  with                                                                    
specific details of the bill.  He suggested that he would be                                                                    
willing  to come  to  Juneau to  further  discuss in  detail                                                                    
those items that  were problematic. He wanted to  add to the                                                                    
response already  made about  pharmacists not  being allowed                                                                    
to  share  pricing  information with  their  customers.  His                                                                    
company  did not  support such  practices and  would support                                                                    
language to  ensure that  pharmacists could  provide pricing                                                                    
information  to their  customers. He  thanked the  committee                                                                    
for its time.                                                                                                                   
3:08:40 PM                                                                                                                    
CATHERIN KOWALSKI,  PETERSBURG REXALL DRUG,  PETERSBURG (via                                                                    
teleconference),  had  been  in the  family  business  since                                                                    
1965.  She disagreed  with CVSs  information regarding  cost                                                                    
drivers.  She opined  that if  it was  really an  issue, she                                                                    
would  be seeing  it and  she  had not.  She indicated  that                                                                    
there  were bills  with similar  language across  the state.                                                                    
She reported  that 40  states had  adopted them.  She argued                                                                    
that there  had already been  discussions on the  issue. She                                                                    
thought it  was time for the  state to move on.  She thought                                                                    
it was important to get back to serving customers.                                                                              
Representative Ortiz  asked if he  knew Ms. Kowalski  as Ms.                                                                    
Warhatch. Ms. Kowalski responded positively.                                                                                    
Representative Ortiz  asked if  her family had  operated its                                                                    
business  as   an  independent  pharmacy  since   1969.  Ms.                                                                    
Kowalski indicated he was correct.                                                                                              
Representative  Ortiz asked  if she  was calling  in support                                                                    
and  need  of  the  bill  in  order  to  help  maintain  the                                                                    
existence  of  independent  pharmacies  in  the  state.  She                                                                    
responded in the affirmative.                                                                                                   
3:11:41 PM                                                                                                                    
JUSTIN   RUFFRIDGE,   SOLDOTNA   PHARMACY,   SOLDOTNA   (via                                                                    
teleconference),  spoke in  support of  the legislation.  He                                                                    
had provided testimony  in the last hearing of  the bill. He                                                                    
supported HB 240 and relayed  that it was absolutely needed.                                                                    
Much of what  the PBM presence had been  stating had already                                                                    
been tried. As a pharmacist, he  had attempted to be an easy                                                                    
person  to work  with  He  liked to  be  able  to operate  a                                                                    
business  that  offered great  care  and  great services  to                                                                    
people in rural areas. He felt  the issue was at risk due to                                                                    
some  unfair practices  that have  been  left unchecked.  It                                                                    
will  drive  independent pharmacies  out  of  the state.  He                                                                    
wanted some  sideboards around what  was allowed.  He wanted                                                                    
to have  a means in  which to  be heard. He  appreciated the                                                                    
efforts  in   putting  the   legislation  forward.   He  was                                                                    
available for questions.                                                                                                        
Vice-Chair Gara  understood that  there was a  practice that                                                                    
did not allow  some pharmacists who had  contracts with PBMs                                                                    
to tell a  consumer that there was a  lower cost alternative                                                                    
than to pay  the co-pay for a pharmaceutical  drug. He asked                                                                    
Mr. Ruffridge if he was aware of it.                                                                                            
Mr.  Ruffridge felt  that he  was an  appropriate person  to                                                                    
ask. He  had a contract  in front  of him which  contained a                                                                    
type of gag order. It stated  that pricing as a whole had to                                                                    
be kept  a secret  in a  black box.  The pharmacist  was not                                                                    
allowed to share the information  with any other pharmacy or                                                                    
patients. In  the case of  driving up healthcare  costs, the                                                                    
lack of transparency was driving  up costs. He reported that                                                                    
when  he was  asked  what a  customer's  insurance paid,  he                                                                    
responded that  he did not  provide the  information because                                                                    
he could be  in violation of a contract.  He indicated there                                                                    
were a number of PMB's that had a gag order in place.                                                                           
Vice-Chair  Gara expressed  concerns  about  gag orders.  He                                                                    
asked  if  there  was  a circumstance  that  would  allow  a                                                                    
pharmacist to  tell a client  about a  cheaper way to  buy a                                                                    
pharmaceutical than through their  insurance. He wondered if                                                                    
there would be an opportunity  to offer a different price to                                                                    
patients if gag orders did not exist.                                                                                           
Mr.  Ruffridge responded  that  if his  staff  noticed if  a                                                                    
cheaper   price  was   available,   they   would  fill   the                                                                    
prescription for cash  for the patient and  not inform them.                                                                    
It was  his goal  to offer  the cheapest  price. He  did not                                                                    
want  to  overcharge  for  medications  and  knew  what  the                                                                    
pharmacy was paying for them.  He let patients know that the                                                                    
pharmacy  actively sought  to give  patients the  best price                                                                    
3:17:33 PM                                                                                                                    
CINDY  LAUBACHER,  EXPRESS SCRIPTS,  SACRAMENTO,  CALIFORNIA                                                                    
(via teleconference),  had traveled  to Juneau to  talk with                                                                    
legislators to discuss the bill.  There were many provisions                                                                    
in  the  bill  that  were acceptable.  However,  there  were                                                                    
several  problematic  provisions  as well.  Express  Scripts                                                                    
would like  to sit down  to discuss those areas  of concern.                                                                    
The company  was committed  to the process  of coming  to an                                                                    
agreement.  She relayed  that Express  Scripts did  not have                                                                    
gag  clauses in  their  contracts.  The company's  contracts                                                                    
require pharmacies to dispense at  the lessor of cash or the                                                                    
patient  co-pay   and  would   be  supportive   of  language                                                                    
reflecting this policy. She  reiterated that Express Scripts                                                                    
was  committing  to  sitting down  to  further  discuss  the                                                                    
Representative  Ortiz  asked if  Ms.  Laubacher  if she  was                                                                    
familiar  with   a  letter  from  the   Pharmaceutical  Care                                                                    
Management Association dated, March 2, 2018.                                                                                    
Ms. Laubacher responded that she could pull up the letter.                                                                      
Representative Ortiz relayed  that on page 1  of that letter                                                                    
the  organization  showed  concern  with  the  section  that                                                                    
addressed  AS 21.27.910.  The section  required entities  to                                                                    
provide pharmacies with advanced  written notice 10 business                                                                    
days  before an  audit. According  to the  letter, it  would                                                                    
give individuals  ample time to hide  evidence of fraudulent                                                                    
activities or  to evade authorities altogether.  He asked if                                                                    
it was the position of  Express Scripts and fellow PBMs that                                                                    
independent pharmacists would hide fraudulent evidence.                                                                         
Ms. Laubacher  responded that  as a  general rule  PBMs were                                                                    
looking  for  fraud,  waste,  and abuse  on  behalf  of  its                                                                    
clients. Typically,  there were concerns about  giving prior                                                                    
notice of  audits. However, Express  Scripts did not  have a                                                                    
problem with  the provision  in the  bill. The  only problem                                                                    
the  company  had  with  the  section  was  that  it  wanted                                                                    
additional   clarification   about   on-site   audits.   She                                                                    
explained  that   there  were  two  types   of  audits  that                                                                    
occurred.  There  were  on-site  audits  where  the  company                                                                    
looked at a large batch over  a long period. They were full-                                                                    
scale  audits  conducted  by  the company  for  all  of  its                                                                    
clients at the same time.  There were also desk audits which                                                                    
occurred regularly. The purpose of  desk audits was to let a                                                                    
pharmacy know  about potential mistakes. Any  issue would be                                                                    
resolved immediately so  that it would not  resurface in the                                                                    
larger audit.  Express Scripts did  not have a  problem with                                                                    
the 10-day notice as long as  there was language in the bill                                                                    
that  indicated  the notice  would  not  apply in  cases  of                                                                    
suspected fraud in AS 21.27.940.                                                                                                
3:23:05 PM                                                                                                                    
RICHARD  HOLT,  ALASKA  BOARD OF  PHARMACY,  ANCHORAGE  (via                                                                    
teleconference),  supported the  legislation. The  board saw                                                                    
it as an  opportunity to have open  and honest conversations                                                                    
with  pharmacists   and  patients.  He  was   available  for                                                                    
3:23:53 PM                                                                                                                    
JERRY BROWN, SELF, FAIRBANKS  (via teleconference), spoke in                                                                    
support of  the bill.  He owned  an independent  pharmacy in                                                                    
Fairbanks. He thought  the bill provided side  boards to the                                                                    
auditing process  and gave pharmacists a  method of recourse                                                                    
for any appeal that was  unfairly determined. He provided an                                                                    
example  having  to  do with  reimbursement  rates.  He  had                                                                    
appealed  his  case  but was  denied.  The  appeal  decision                                                                    
claimed he  could find  the drug  somewhere else  that would                                                                    
cost  him  less. It  was  a  multiple  source item  but  not                                                                    
available through the manufacturer.  In his example, he lost                                                                    
$23 filling the  prescription. He wanted to be  able to have                                                                    
some recourse  because the PBM  ends up becoming  the judge,                                                                    
jury, and prosecutor in the appeal process.                                                                                     
3:25:32 PM                                                                                                                    
BARRY CHRISTENSEN, ALASKA  PHARMACIST ASSOCIATION, KETCHIKAN                                                                    
(via  teleconference), reported  the association's  priority                                                                    
was to see the bill pass. He  had been at the table with the                                                                    
PBMs.  He  appreciated  the efforts  of  the  committee.  He                                                                    
supported the bill and the amendments.                                                                                          
3:26:54 PM                                                                                                                    
Co-Chair Foster CLOSED Public Testimony on HB 240.                                                                              
Co-Chair Foster  indicated amendments were due  on Wednesday                                                                    
April 4th by 5:00 pm.                                                                                                           
Co-Chair  Foster  indicated  that  committee  would  not  be                                                                    
hearing HB  129. The  bill would be  taken up  on Wednesday,                                                                    
April 4, 2018 at 1:30 p.m.                                                                                                      
Representative Wilson  asked about another bill  coming back                                                                    
up in committee.                                                                                                                
3:28:29 PM                                                                                                                    
AT EASE                                                                                                                         
3:28:44 PM                                                                                                                    
Co-Chair Foster  would let the committee  know the following                                                                    
day. He discussed the agenda for the following day.                                                                             

Document Name Date/Time Subjects
HB 129 Sectional Analysis ver J 2.18.2018.pdf HFIN 4/3/2018 1:30:00 PM
HB 129
HB129 Additional Document-ACS FY18 Q2 Collections Memo 2.5.18.pdf HFIN 4/3/2018 1:30:00 PM
HB 129
HB 129 Summary of Changes ver D to J 2.18.2018.pdf HFIN 4/3/2018 1:30:00 PM
HB 129
Capital Budget and Economic Recovery Overview (House Finance) -.pdf HFIN 4/3/2018 1:30:00 PM
HB 282
HB 284
HB 240 CS WORKDRAFT vD.pdf HFIN 4/3/2018 1:30:00 PM
HB 240
HB240 Explanation of Change ver D 3.28.18.pdf HFIN 4/3/2018 1:30:00 PM
HB 240
HB240 Sectional Analysis ver D 3.28.18.pdf HFIN 4/3/2018 1:30:00 PM
HB 240
HB 240 Supporting Document News Article 4.3.18.pdf HFIN 4/3/2018 1:30:00 PM
HB 240
HB 240 Supporting Document NASHP Response.pdf HFIN 4/3/2018 1:30:00 PM
HB 240
OMB Responses to 4-3-18 HFIN Meeting.pdf HFIN 4/3/2018 1:30:00 PM
HB 284 HB 282 Overview Response OMB