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SPONSOR SUBSTITUTE FOR SENATE BILL NO. 121
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - SECOND SESSION
BY SENATORS GIESSEL BY REQUEST, Bjorkman, Myers, Tobin, Gray-Jackson, Claman
Introduced: 2/8/24
Referred: Labor and Commerce, Finance
A BILL
FOR AN ACT ENTITLED
1 "An Act relating to the Board of Pharmacy; relating to insurance; relating to
2 pharmacies; relating to pharmacists; relating to pharmacy benefits managers; relating
3 to patient choice of pharmacy; and providing for an effective date."
4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
5 * Section 1. AS 08.80.030(b) is amended to read:
6 (b) In order to fulfill its responsibilities, the board has the powers necessary
7 for implementation and enforcement of this chapter, including the power to
8 (1) elect a president and secretary from its membership and adopt rules
9 for the conduct of its business;
10 (2) license by examination or by license transfer the applicants who are
11 qualified to engage in the practice of pharmacy;
12 (3) assist the department in inspections and investigations for
13 violations of this chapter, or of any other state or federal statute relating to the practice
14 of pharmacy;
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1 (4) adopt regulations to carry out the purposes of this chapter;
2 (5) establish and enforce compliance with professional standards and
3 rules of conduct for pharmacists engaged in the practice of pharmacy;
4 (6) determine standards for recognition and approval of degree
5 programs of schools and colleges of pharmacy whose graduates shall be eligible for
6 licensure in this state, including the specification and enforcement of requirements for
7 practical training, including internships;
8 (7) establish for pharmacists and pharmacies minimum specifications
9 for the physical facilities, technical equipment, personnel, and procedures for the
10 storage, compounding, and dispensing of drugs or related devices, and for the
11 monitoring of drug therapy, including independent monitoring of drug therapy;
12 (8) enforce the provisions of this chapter relating to the conduct or
13 competence of pharmacists practicing in the state, and the suspension, revocation, or
14 restriction of licenses to engage in the practice of pharmacy;
15 (9) license and regulate the training, qualifications, and employment of
16 pharmacy interns and pharmacy technicians;
17 (10) license and regulate the qualifications of entities and individuals
18 engaged in the manufacture or distribution of drugs and related devices;
19 (11) establish and maintain a controlled substance prescription
20 database as provided in AS 17.30.200;
21 (12) establish standards for the independent prescribing and
22 administration of vaccines and related emergency medications under AS 08.80.168,
23 including the completion of an immunization training program approved by the board
24 and an epinephrine auto-injector training program under AS 17.22.020(b);
25 (13) establish standards for the independent prescribing and dispensing
26 by a pharmacist of an opioid overdose drug under AS 17.20.085, including the
27 completion of an opioid overdose training program approved by the board;
28 (14) require that a licensed pharmacist who dispenses a schedule II, III,
29 or IV controlled substance under federal law to a person in the state register with the
30 controlled substance prescription database under AS 17.30.200(n);
31 (15) establish the qualifications and duties of the executive
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1 administrator and delegate authority to the executive administrator that is necessary to
2 conduct board business;
3 (16) license and inspect the facilities of pharmacies, manufacturers,
4 wholesale drug distributors, third-party logistics providers, and outsourcing facilities
5 located outside the state under AS 08.80.159;
6 (17) license Internet-based pharmacies providing services to residents
7 in the state;
8 (18) adopt regulations pertaining to retired pharmacist status;
9 (19) prohibit, limit, or provide conditions relating to the dispensing
10 of a prescription drug that the United States Food and Drug Administration or
11 the prescription drug's manufacturer has not approved for self-administration to
12 ensure the effectiveness and security of a prescription drug to be administered by
13 infusion or in a clinical setting.
14 * Sec. 2. AS 21.27.901 is amended to read:
15 Sec. 21.27.901. Registration of pharmacy benefits managers; scope of
16 business practice. (a) A person may not conduct business in the state as a pharmacy
17 benefits manager unless the person is registered with the director [AS A THIRD-
18 PARTY ADMINISTRATOR UNDER AS 21.27.630].
19 (b) A pharmacy benefits manager registered under this section
20 [AS 21.27.630] may
21 (1) contract with an insurer to administer or manage pharmacy benefits
22 provided by an insurer for a covered person, including claims processing services for
23 and audits of payments for prescription drugs and medical devices and supplies; and
24 (2) contract with network pharmacies [;
25 (3) SET THE COST OF MULTI-SOURCE GENERIC DRUGS
26 UNDER AS 21.27.945; AND
27 (4) ADJUDICATE APPEALS RELATED TO MULTI-SOURCE
28 GENERIC DRUG REIMBURSEMENT].
29 * Sec. 3. AS 21.27.901 is amended by adding new subsections to read:
30 (c) A pharmacy benefits manager
31 (1) shall apply for registration following the same procedures for
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1 licensure set out in AS 21.27.040;
2 (2) is subject to hearings and orders on violations; denial, nonrenewal,
3 suspension, or revocation of registration; penalties; and surrender of registration under
4 the procedures set out in AS 21.27.405 - 21.27.460.
5 (d) Each day that a pharmacy benefits manager conducts business in the state
6 as a pharmacy benefits manager without being registered is a separate violation of this
7 section, and each separate violation is subject to the maximum civil penalty under
8 AS 21.97.020.
9 * Sec. 4. AS 21.27.905(a) is amended to read:
10 (a) A pharmacy benefits manager shall biennially renew a registration with the
11 director following the procedures for license renewal in AS 21.27.380.
12 * Sec. 5. AS 21.27 is amended by adding a new section to read:
13 Sec. 21.27.907. Fiduciary duty. (a) A pharmacy benefits manager owes a
14 fiduciary duty to a plan sponsor. A pharmacy benefits manager shall adhere to the
15 practices set out in this section.
16 (b) A pharmacy benefits manager shall
17 (1) perform the manager's duties with care, skill, prudence, and
18 diligence and in accordance with the standards of conduct applicable to a fiduciary in
19 an enterprise of a like character and with like aims; and
20 (2) notify the plan sponsor in writing of any activity, policy, or practice
21 of the pharmacy benefits manager that directly or indirectly presents any conflict of
22 interest with the duties imposed by this chapter.
23 (c) A pharmacy benefits manager that receives from a drug manufacturer or
24 labeler a payment or benefit of any kind in connection with the use of a prescription
25 drug by a covered person, including a payment or benefit based on volume of sales or
26 market share, shall pass that payment or benefit on in full to the plan sponsor. This
27 provision does not prohibit the insurer from agreeing by contract to compensate the
28 pharmacy benefits manager by returning a portion of the benefit or payment to the
29 pharmacy benefits manager.
30 (d) Upon request by a plan sponsor, a pharmacy benefits manager shall
31 (1) provide information showing the quantity of drugs purchased by
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1 the covered person and the net cost to the covered person for the drugs; the
2 information must include all rebates, discounts, and other similar payments; if
3 requested by the plan sponsor, the pharmacy benefits manager shall provide the
4 quantity and net cost information on a drug-by-drug basis by National Drug Code
5 registration number rather than on an aggregated basis; and
6 (2) disclose to the plan sponsor all financial terms and arrangements
7 for remuneration of any kind that apply between the pharmacy benefits manager and a
8 prescription drug manufacturer or labeler, including formulary management and drug-
9 substitution programs, educational support, claims processing, and data sales fees.
10 (e) A pharmacy benefits manager providing information to a plan sponsor
11 under (d) of this section may designate that information as confidential. Information
12 designated as confidential may not be disclosed by the plan sponsor to another person
13 without the consent of the pharmacy benefits manager, unless ordered by a court.
14 (f) If a pharmacy dispenses a substitute prescription drug for a prescribed drug
15 to a covered person and the substitute prescription drug costs more than the prescribed
16 drug, the pharmacy benefits manager shall disclose to the plan sponsor the cost of both
17 drugs and any benefit or payment directly or indirectly accruing to the pharmacy
18 benefits manager as a result of the substitution. The pharmacy benefits manager shall
19 transfer in full to the plan sponsor a benefit or payment received in any form by the
20 pharmacy benefits manager as a result of a prescription drug substitution.
21 * Sec. 6. AS 21.27.945(a) is amended to read:
22 (a) A pharmacy benefits manager shall
23 (1) provide [MAKE AVAILABLE] to each network pharmacy at the
24 beginning of the term of the network pharmacy's contract, and upon renewal of the
25 contract, the methodology and sources used to determine the [DRUG PRICING] list;
26 (2) provide the list to a network pharmacy without charge;
27 (3) [(2)] provide and keep current a telephone number at which a
28 network pharmacy may contact an employee of a pharmacy benefits manager [TO
29 DISCUSS THE PHARMACY'S APPEAL];
30 (4) [(3)] provide a process for a network pharmacy to have ready
31 access to the list specific to that pharmacy;
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1 (5) [(4)] review and update [APPLICABLE] list information at least
2 once every seven [BUSINESS] days to ensure [REFLECT MODIFICATION OF] list
3 pricing reflects current national drug database pricing;
4 (6) [(5)] update list prices within one business day after a significant
5 price update or modification provided by the pharmacy benefits manager's national
6 drug database provider; and
7 (7) [(6)] ensure that dispensing fees are not included in the calculation
8 of the list pricing.
9 * Sec. 7. AS 21.27.945(b) is repealed and reenacted to read:
10 (b) Before placing or maintaining a specific drug on the list, a pharmacy
11 benefits manager shall ensure that
12 (1) if the drug is therapeutically equivalent and pharmaceutically
13 equivalent to a prescribed drug, the drug is listed as therapeutically equivalent and
14 pharmaceutically equivalent "A" or "B" rated in the most recent edition or supplement
15 of the United States Food and Drug Administration's Approved Drug Products with
16 Therapeutic Equivalence Evaluations, also known as the Orange Book;
17 (2) if the drug is a different biological product than a prescribed drug,
18 the drug is an interchangeable biological product;
19 (3) the drug is readily available for purchase by each pharmacy in the
20 state from national or regional wholesalers operating in the state; and
21 (4) the drug is not obsolete or temporarily unavailable.
22 * Sec. 8. AS 21.27.945 is amended by adding new subsections to read:
23 (c) The list a pharmacy benefits manager provides to a network pharmacy
24 under (a) of this section must
25 (1) be maintained in a searchable electronic format that is accessible
26 with a computer;
27 (2) identify each drug for which a reimbursement amount is
28 established;
29 (3) specify for each drug
30 (A) the national drug code;
31 (B) the national average drug acquisition cost, if available;
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1 (C) the wholesale acquisition cost, if available; and
2 (D) the reimbursement amount; and
3 (4) specify the date on which a drug is added or removed from the list.
4 (d) In this section,
5 (1) "interchangeable biological product" has the meaning given in
6 AS 08.80.480;
7 (2) "pharmaceutically equivalent" means a drug has identical amounts
8 of the same active chemical ingredients in the same dosage form and meets the
9 standards of strength, quality, and purity according to the United States Pharmacopeia
10 published by the United States Pharmacopeial Convention or another similar
11 nationally recognized publication;
12 (3) "pharmacy acquisition cost" means the amount that a
13 pharmaceutical wholesaler or distributor charges for a pharmaceutical product as listed
14 on the pharmacy's invoice;
15 (4) "significant price update or modification" means
16 (A) an increase or decrease of 10 percent or more in the
17 pharmacy acquisition cost from 60 percent or more of the pharmaceutical
18 wholesalers doing business in the state;
19 (B) a change in the methodology in which the maximum
20 allowable cost for a drug is determined; or
21 (C) a change in the value of a variable involved in the
22 methodology used to determine the maximum allowable cost for a drug;
23 (5) "therapeutically equivalent" means a drug is from the same
24 therapeutic class as another drug and, when administered in an appropriate amount,
25 provides the same therapeutic effect as, and is identical in duration and intensity to,
26 the other drug;
27 (6) "therapeutic class" means a group of similar drug products that
28 have the same or similar mechanisms of action and are used to treat a specific
29 condition.
30 * Sec. 9. AS 21.27.950 is repealed and reenacted to read:
31 Sec. 21.27.950. Reimbursement. (a) A pharmacy benefits manager shall
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1 reimburse