Legislature(2017 - 2018)SENATE FINANCE 532

04/13/2018 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 4:20 p.m. --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 110(L&C) Out of Committee
<Bill Hearing Rescheduled from 4/12/18 at 1:30pm>
Moved CSHB 318(FIN) Out of Committee
<Bill Hearing Rescheduled from 4/12/18 at 1:30pm>
Moved HB 323 Out of Committee
<Bill Hearing Rescheduled from 4/12/18 at 1:30pm>
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                                                                    
4:27:47 PM                                                                                                                    
AT EASE                                                                                                                         
4:28:15 PM                                                                                                                    
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                                                                    
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                                                                           
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                                                                    
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                                                                    
     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                                                                    
     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                                                                    
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                                                                    
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                                                                    
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                                                                    
Mr. Holt  did not  recall the exact  amount of  surplus from                                                                    
year  to  year.  He  thought   the  amount  of  surplus  was                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
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                                                                    
Ms. McCullough answered in the affirmative.                                                                                     
4:47:51 PM                                                                                                                    
AT EASE                                                                                                                         
4:49:16 PM                                                                                                                    
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                                                                    
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                                                                                                                    

Document Name Date/Time Subjects
HB 110 Massage Therapy Testimony.docx SFIN 4/13/2018 1:30:00 PM
HB 110