Legislature(2017 - 2018)BELTZ 105 (TSBldg)

04/04/2017 09:00 AM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Governor's Appointees to State Boards and TELECONFERENCED
Alcoholic Beverage Control Board
-- Public Testimony --
Moved CSSB 51(L&C) Out of Committee
-- Public Testimony --
Moved SB 93 Out of Committee
Moved SB 98 Out of Committee
Heard & Held
<Bill Hearing Canceled>
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
         SB  37-PHARMA BD & EMPLOYEES;DRUG DIST/MANUFAC                                                                     
9:36:07 AM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of SB  37. She  advised  that this  is the  second                                                               
hearing,  public  testimony is  open,  and  there is  a  proposed                                                               
committee substitute (CS).                                                                                                      
9:36:23 AM                                                                                                                    
SENATOR  MEYER moved  to  adopt  the work  draft  CS  for SB  51,                                                               
labeled 30-LS0191\J, as the working document.                                                                                   
CHAIR COSTELLO objected for an explanation of the changes.                                                                      
9:36:43 AM                                                                                                                    
WESTON EILER, Staff, Senate Labor  and Commerce Committee, Alaska                                                               
State Legislature, said the changes in  the CS for SB 37, version                                                               
J,  primarily  removes  references  to establishing  a  range  23                                                               
executive   position   that   would  serve   as   a   legislative                                                               
liaison/administrator  position  for  the board.  He  listed  the                                                               
three places where the reference is deleted.                                                                                    
9:38:32 AM                                                                                                                    
SENATOR GARDNER  questioned how the record-keeping  and follow-up                                                               
for  inspection  of facilities  outside  the  state would  happen                                                               
without that position.                                                                                                          
MR. EILER said this likely would  not be a position that would do                                                               
those  site  visits. The  policy  call  to remove  this  position                                                               
reflects DCCED's  budgetary constraints and could  be reviewed at                                                               
a later date.                                                                                                                   
SENATOR GARDNER asked  who is expected to  do this administrative                                                               
work and where the funding is if the work is done by contract.                                                                  
MR.  EILER  said licensing  fees  and  inspections of  facilities                                                               
outside  the  state  will  bring   in  additional  revenues.  The                                                               
department can speak to the  structure, but the inspections don't                                                               
necessarily fall to the staff of the Board of Pharmacy.                                                                         
SENATOR GARDNER  asked if  the board has  the flexibility  to set                                                               
the licensing fees at the  appropriate level to cover contractual                                                               
MR. EILER  said his understanding  is that the bill  provides for                                                               
9:41:39 AM                                                                                                                    
SARA   CHAMBERS,  Division   Operations   Manager,  Division   of                                                               
Corporations, Businesses  and Professional  Licensing, Department                                                               
of Commerce,  Community and Economic Development  (DCCED), stated                                                               
that the  need for executive  staff to handle the  federal policy                                                               
changes  has pushed  the need  for  higher level  staff over  the                                                               
tipping point.  SB 37 reflects  an additional need the  board has                                                               
expressed  to  comply  with  federal  changes.  Right  now,  this                                                               
program has  one staff member  who is the licensing  examiner and                                                               
has  fractions  of  management  that is  shared  among  42  other                                                               
licensing programs.  Thus, there  is no  policy position  that is                                                               
assigned to  this program,  which puts  Alaska at  a disadvantage                                                               
among  states  that  do  have  an  executive  administrator.  The                                                               
position would be paid through  receipt-supported services, so it                                                               
is not supported  by UGF in any way. There  is a growing interest                                                               
in managing opioids and the  PDMP and this position would oversee                                                               
all  those  responsibilities  as  well. It  would  fill  quite  a                                                               
variety of needs  beyond a liaison to the legislature  and it's a                                                               
position that is desperately needed, she said.                                                                                  
SENATOR GARDNER  summarized that the  board has the  authority to                                                               
raise the licensing fees to cover  the cost of complying with the                                                               
federal  requirements of  licensing facilities  and dealing  with                                                               
the requirements of PDMP and the opioid crisis.                                                                                 
MS. CHAMBERS clarified that the  division works with the board to                                                               
set  fees. She  said  the fiscal  note includes  the  cost of  an                                                               
executive  administrator,   but  it  does  not   contemplate  the                                                               
additional receipt authority needed for a contract position.                                                                    
CHAIR COSTELLO noted that the  original bill says the duties will                                                               
be  established. She  asked Ms.  Chambers how  she already  knows                                                               
what the position would entail.                                                                                                 
MS. CHAMBERS said  that knowledge is based  on the administrative                                                               
functions  that   existing  boards   such  as   medicine,  public                                                               
accountancy,  nursing,  and  marine   pilots  perform,  and  this                                                               
position proposes to do. "We know  the existing needs and we know                                                               
what  the bill  will  entail to  implement."  The division  would                                                               
employ the  executive administrator  and work  with the  board to                                                               
make  certain   that  all  its   priorities  and   the  statutory                                                               
administrative priorities are met.                                                                                              
9:47:03 AM                                                                                                                    
SENATOR  MEYER asked  if pharmacy  receipt  increases are  passed                                                               
along  to the  consumer. "Is  this kind  of a  hidden tax  on our                                                               
MS. CHAMBERS  explained that all  43 licensing programs  are paid                                                               
for by receipts.  "Whether you're getting your  hair cut, whether                                                               
you're vising the  doctor, whether you're getting  a house built,                                                               
that's a business  decision that those professionals  make on how                                                               
they recoup their  licensing costs. But it is not  unusual in how                                                               
statute mandates these programs be paid for."                                                                                   
SENATOR  MEYER asked  if  this legislation  is  modeled on  other                                                               
MS. CHAMBERS  said yes, it's an  outgrowth of a need  the federal                                                               
government expressed  after 2012  and compounded by  the pharmacy                                                               
crisis. All but six states have adopted similar legislation.                                                                    
SENATOR  MEYER  asked  if  out  of  state  distributors  will  be                                                               
assessed a licensing fee should the bill pass.                                                                                  
MS.  CHAMBERS  said  only   instate  wholesale  distributors  are                                                               
licensed so  there is currently  a disparity between  instate and                                                               
out-of-state. Should the  bill pass, the division  will develop a                                                               
licensing process and  an associated fee to help  offset the cost                                                               
of running the program.                                                                                                         
CHAIR  COSTELLO  listed  the   individuals  available  to  answer                                                               
SENATOR STEVENS  questioned the need  for the bill if  these out-                                                               
of-state  facilities  are  already   licensed  and  inspected  by                                                               
another state or the  federal government. Concerning reciprocity,                                                               
he  asked  if  the  intention is  to  automatically  license  any                                                               
facility that already  has an inspection by another  state or the                                                               
federal government.                                                                                                             
9:50:02 AM                                                                                                                    
MS. CHAMBERS deferred the question to Leif Holm or Richard Holt.                                                                
9:50:13 AM                                                                                                                    
LEIF  HOLM, Chair,  Board of  Pharmacy,  Fairbanks, Alaska,  said                                                               
this  bill is  needed to  protect consumers  from counterfeit  or                                                               
increased costs  due to diverted  medications. He said  Alaska is                                                               
one of four states that  does not license outside wholesalers and                                                               
that  presents  a  problem.  A wholesaler  that  is  licensed  in                                                               
another  state and  doing business  in Alaska  would follow  that                                                               
other   state's  laws,   but  not   necessarily  the   rules  and                                                               
regulations that  Alaska has established.  This could  provide an                                                               
opportunity for  diverters and counterfeiters to  exploit Alaska.                                                               
"We  don't have  requirements  for transaction  data history;  we                                                               
don't  have  requirements  for inspections;  we  don't  have  any                                                               
accountability  or oversight  and it's  basically decreasing  the                                                               
confidence in our drug supply."                                                                                                 
SENATOR STEVENS  asked for confirmation  that a  drug distributor                                                               
or outsourcing facility  that is licensed in  another state would                                                               
not automatically receive a license to operate in Alaska.                                                                       
MR.   HOLM  said   that's  correct;   a   wholesaler  would   not                                                               
automatically be granted a license  to operate in Alaska based on                                                               
licensure  in  another  state.  Rather,  the  board  would  write                                                               
regulations for  wholesalers to follow  based on  FDA guidelines.                                                               
The intent is to require  inspections, but the board would accept                                                               
outside third-party inspections upon review.                                                                                    
SENATOR STEVENS  asked how  many facilities  will be  licensed in                                                               
MR.  HOLM  said  a  recent  National  Association  of  Boards  of                                                               
Pharmacy (NABP)  presentation stated  that about  1,163 wholesale                                                               
distributers are licensed in other  states. and could potentially                                                               
be licensed  in Alaska. If each  of those paid $500  to apply for                                                               
licensure in Alaska, that would generate just under $600,000.                                                                   
9:54:43 AM                                                                                                                    
SENATOR GARDNER  asked, should the  original bill pass: 1)  if he                                                               
anticipates   that   Alaska   would  establish   some   sort   of                                                               
reciprocity;  and 2)  the number  of  licensed distributers  that                                                               
would want to participate in Alaska's licensing process.                                                                        
MR.  HOLM said  most  facilities  accept that  they  must have  a                                                               
license  from any  state  in which  they  operate. The  executive                                                               
administer position would  help make the process  more fluid, but                                                               
he didn't  have an estimate  for the number of  distributors that                                                               
would apply  for licensure.  He reiterated  that 46  other states                                                               
have passed similar legislation with no reported issues.                                                                        
SENATOR GARDNER  asked how it  would be possible to  move forward                                                               
if the  committee substitute  were to  pass with  the requirement                                                               
but no funding for the position to handle the licensing.                                                                        
MR.  HOLM  said  it  would  be difficult  for  the  one  existing                                                               
licensing examiner to handle 1,100 additional licenses.                                                                         
CHAIR COSTELLO  asked what impact  the increased fees  would have                                                               
on licensed pharmacists.                                                                                                        
MR. HOLM  replied there probably  would not be any  licensing fee                                                               
increase for  pharmacists. Should  wholesalers be  licenses, that                                                               
would be more than enough to cover any extra costs.                                                                             
9:58:35 AM                                                                                                                    
CHAIR COSTELLO  stated that,  based on  the testimony  today, she                                                               
would hold SB 37 and continue to work with the sponsor.                                                                         

Document Name Date/Time Subjects
CS SB 37 (L&C) - Ver. J.pdf SL&C 4/4/2017 9:00:00 AM
SB 37
SB 51 - Support Letter - State Veterinarian Dr Gerlach.pdf SL&C 4/4/2017 9:00:00 AM
SB 51
CS SB 51 (L&C) - Ver. O.pdf SL&C 4/4/2017 9:00:00 AM
SB 51