Date: 03/20/2006

Final
BILL SUMMARY for SB06-164

HOUSE COMMITTEE ON HEALTH AND HUMAN SERVICES

Votes: View--> Action Taken:
Adopt L.013 (Attachment A). The motion failed 4-9
Adopt L.013 (Attachment A). The motion was withdr
Adopt L.015 (Attachment B). The motion failed 5-8
Adopt L.017 (Attachment D). The motion passed 9-4
Adopt L.019 (Attachment E). The motion passed 11-
Page 2, strike line 1. The motion failed 6-7.
Postpone the bill indefinitely. The motion passed
Refer the bill, as amended, to the Committee of th
Replace the safety clause with an effective date c
Substitute motion to adopt L.017 (Attachment D). 		FAIL
TIE
FAIL
PASS
PASS
FAIL
PASS
FAIL
PASS
TIE


01:45 PM -- Senate Bill 06-164

Representative McGihon, sponsor, presented the bill addressing the business practices of Pharmacy Benefits Managers (PBMs). The following amendments were distributed to committee members: L.013, L.015, L.016, L.017, L.019 (Attachments A through E). Representative McGihon distributed and discussed a packet of documents (Attachment F). She discussed benefits of transparent PBM contract negotiations, other states' statutory regulation of PBMs, cost-savings associated with PBM regulation, and the bill's independent audit provisions. She answered questions about "kickbacks" (financial incentives to use particular drugs). Representative Berens expressed concerns with associating reputable companies with kickbacks. Representative McGihon answered questions about the proposed audit, particularly in the event illegal activities are discovered. She stated the bill is not as strong as the introduced version and has been modified to reflect interested parties' concerns. She described the bill as allowing all parties access to the same rebates. Representative Berens discussed market place actions in other states that have improved PBM business practices. Representative McGihon stated the bill does not create regulation of PBMs but rather requires an annual audit of PBMs. Representative McGihon discussed amendments to the bill. She described L.013 as the "gold standard" of PBM regulation. She stated her support for L.017. Representative Frangas described L.019. He stated its intent is to ensure lower drug costs for employees. Representative McGihon answered questions about litigation against PBMs and PBM practices regarding decisions to substitute one drug for another.

The following persons testified:

02:23 PM -- Ralph Pollock, Business Council for Healthcare Competition, Colorado Association, for Commerce and Industry (CACI), spoke in opposition to the bill. He distributed a copy of his testimony to members (Attachment G). He stated the competitive market is currently working and SB 164 is unnecessary. He described one PBM that added greater transparency to its business dealings and has subsequently grown to be one of the biggest PBMs in the country. He described the bill as "protectionist." Mr. Pollock answered questions about the bill's impact on technology and innovation and the affect of an employees' death on business. He stated he has not heard of any case where a PBM's drug substitution resulted in a patient's death. Representative McGihon described information that will be disclosed through the proposed audit.

02:38 PM -- Peter Harty, Medco Health Solutions, Inc., spoke in opposition to the bill and stated the prescription drug market is working. He described current transparency options for PBM clients. He described a Federal Trade Commission report. He state Medco currently has approximately 1000 different licenses to operate across the country. He answered questions about Medco's current voluntary audits compared to the bill's audit requirements. Representative McGihon described a settlement agreement involving Medco. Mr. Harty stated that Medco is still allowed to substitute drugs under the agreement.

02:52 PM -- Louis Hutchinson, Health Trans, LLC, spoke in opposition to the bill. He distributed a copy of his testimony to members (Attachment H). He stated the bill is unnecessary and may restrict contracting. He stated the bill would be devastating to Health Trans. He described the differences between pharmacy benefits managers and pharmacy benefits administrators. Having both types of organizations creates beneficial competition among PBMs and PBAs. He stated the market place is already moving toward greater transparency. He described limited scenarios in which a PBM may substitute drugs. Although the bill specifically addresses PBMs and Health Trans is a PBA, he stated the bill will address his company's practices because PBAs and PBMs are so similar. Representative Green discussed her intentions to consider many different issues when voting on bills. These considerations include promoting competition among businesses and promoting public health and safety. Mr. Hutchinson stated audit costs are passed on to customers.

03:23 PM -- Monica DeGraff, Colorado Group Insurance Association, spoke in opposition to the bill. She stated employers are already able to compare PBMs and make coverage decisions.

03:24 PM -- Mike Huutari, Colorado Association of Health Plans, described the PBM market as including sophisticated sellers and buyers. He stated health plans use PBMs because they offer efficiencies. He distributed a copy of a federal General Accounting Office (GAO) study (Attachment I).

03:29 PM -- Sharon Treat, National Legislative Association on Rx Prices, spoke in support of the bill. She distributed two documents to members (Attachments J and K). She described a Maine law that has thus far withstood legal challenges. She stated the reengrossed version of SB 164 is more limited than the Maine law. She listed issues addressed in litigation against PBMs, including kickbacks and drug substituting without a physician's approval. Litigants have included pension plans and health plans. She discussed use of the term "kickback" to include side deals between PBMs and drug manufacturers that violate requirements that Medicaid get the best drug price available. She answered questions about how the bill might affect health care costs. She addressed questions about the bill's impact on PBMs' profits and trade secrets. She answered questions about funding sources and membership of her association. She stated the association does not accept grants from pharmaceutical organizations. She answered questions about the affects of similar legislation that passed in Maine. She stated the law has only recently gone into effect because of litigation which stalled its implementation. She stated Minnesota saved about $800,000 in the first year of its PBM law's implementation. She answered questions about the need for SB 164, the origins of law addressing PBMs business practices and the membership of her association. She stated it is up to each individual state as to how they pay for membership in the association.

04:11 PM -- Chris Howes, Colorado Retail Council, spoke in support of the bill but not L.015 which includes a fiduciary duty. He stated mail order pharmacies are not subject to Colorado laws prohibiting drug substitutions. He answered questions about rebates to retail pharmacies.

04:17 PM -- Mark Kinney, Rx Plus Pharmacies, spoke in support of the bill. He addressed patient issues, including drug substitutions. He stated there is currently no state or federal oversight of PBMs. He described drug manufacturers' actions which resulted in higher prescription drug costs. He addressed results of studies on PBM costs. He stated the experiences in Minnesota have shown costs savings in a state that regulates PBMs and requires transparency.

04:28 PM -- Brad Young, Rx Plus Pharmacies, spoke in support of the bill. He stated several studies show costs savings with PBM regulation. He stated his support of L.015.

04:30 PM -- Val Kalnins, Colorado Pharmacists Society, spoke in support of the bill. He addressed problems with a Price Waterhouse study on the costs associated with regulation of PBMs. He stated the findings of high costs were based upon erroneous assumptions.

04:33 PM -- Scott Wasserman, Service Employees International Union, spoke in support of the bill. He stated his support is based on the hope to reduce health care costs through transparency.

04:37 PM -- Rex Wilmouth, Colorado Public Interest Group (CoPIRG), spoke in support of the bill. He stated he was also speaking on behalf of AARP and the Mental Health Association. He stated the three largest PBMs control 80 percent of the PBM market. He distributed a document from AARP (Attachment L).
BILL:SB06-164
TIME: 04:43:17 PM
MOVED:Weissmann
MOTION:Adopt L.013 (Attachment A). The motion was withdrawn.
SECONDED:Frangas
VOTE
Berens
Cloer
Green
Kerr
Lundberg
McGihon
Riesberg
Soper
Stafford
Sullivan
Weissmann
Frangas
Boyd
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: TIE


BILL:SB06-164
TIME: 04:44:53 PM
MOVED:Cloer
MOTION:Substitute motion to adopt L.017 (Attachment D). The motion was withdrawn.
SECONDED:Stafford
VOTE
Berens
Cloer
Green
Kerr
Lundberg
McGihon
Riesberg
Soper
Stafford
Sullivan
Weissmann
Frangas
Boyd
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: TIE


BILL:SB06-164
TIME: 04:50:39 PM
MOVED:Cloer
MOTION:Adopt L.017 (Attachment D). The motion passed 9-4.
SECONDED:Stafford
VOTE
Berens
Yes
Cloer
Yes
Green
Yes
Kerr
Yes
Lundberg
Yes
McGihon
Yes
Riesberg
No
Soper
No
Stafford
Yes
Sullivan
Yes
Weissmann
No
Frangas
No
Boyd
Yes
Not Final YES: 9 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:SB06-164
TIME: 04:52:19 PM
MOVED:Frangas
MOTION:Adopt L.019 (Attachment E). The motion passed 11-2.
SECONDED:McGihon
VOTE
Berens
Yes
Cloer
Yes
Green
Yes
Kerr
Yes
Lundberg
No
McGihon
Yes
Riesberg
No
Soper
Yes
Stafford
Yes
Sullivan
Yes
Weissmann
Yes
Frangas
Yes
Boyd
Yes
Not Final YES: 11 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:SB06-164
TIME: 04:53:54 PM
MOVED:McGihon
MOTION:Adopt L.015 (Attachment B). The motion failed 5-8.
SECONDED:Green
VOTE
Berens
No
Cloer
No
Green
Yes
Kerr
No
Lundberg
No
McGihon
Yes
Riesberg
No
Soper
No
Stafford
No
Sullivan
No
Weissmann
Yes
Frangas
Yes
Boyd
Yes
Not Final YES: 5 NO: 8 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:SB06-164
TIME: 04:55:43 PM
MOVED:Cloer
MOTION:Replace the safety clause with an effective date clause. The motion passed 11-2.
SECONDED:Stafford
VOTE
Berens
Yes
Cloer
Yes
Green
No
Kerr
Yes
Lundberg
Yes
McGihon
No
Riesberg
Yes
Soper
Yes
Stafford
Yes
Sullivan
Yes
Weissmann
Yes
Frangas
Yes
Boyd
Yes
Not Final YES: 11 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: PASS


04:57 PM

Representative Weissmann discussed L.013. Representative Cloer urged a "no" vote. Representative Weissmann answered questions about the amendment's definition of PBMs.
BILL:SB06-164
TIME: 04:59:39 PM
MOVED:Weissmann
MOTION:Adopt L.013 (Attachment A). The motion failed 4-9.
SECONDED:Frangas
VOTE
Berens
No
Cloer
No
Green
No
Kerr
No
Lundberg
No
McGihon
No
Riesberg
Yes
Soper
Yes
Stafford
No
Sullivan
No
Weissmann
Yes
Frangas
Yes
Boyd
No
Not Final YES: 4 NO: 9 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:SB06-164
TIME: 05:01:15 PM
MOVED:Stafford
MOTION:Page 2, strike line 1. The motion failed 6-7.
SECONDED:Lundberg
VOTE
Berens
Yes
Cloer
Yes
Green
No
Kerr
Yes
Lundberg
Yes
McGihon
No
Riesberg
No
Soper
No
Stafford
Yes
Sullivan
Yes
Weissmann
No
Frangas
No
Boyd
No
Not Final YES: 6 NO: 7 EXC: 0 ABS: 0 FINAL ACTION: FAIL


05:03 PM

Committee members commented on the bill. Representative Frangas noted conflicting studies regarding cost-savings associated with regulation of PBMs. Representative Stafford stated Colorado has not had the problems with PBMs that other states have experienced. Representative Lundberg stated the bill represents new regulation of PBMs.
BILL:SB06-164
TIME: 05:06:42 PM
MOVED:McGihon
MOTION:Refer the bill, as amended, to the Committee of the Whole. The motion failed 6-7.
SECONDED:Weissmann
VOTE
Berens
No
Cloer
No
Green
Yes
Kerr
No
Lundberg
No
McGihon
Yes
Riesberg
No
Soper
Yes
Stafford
No
Sullivan
No
Weissmann
Yes
Frangas
Yes
Boyd
Yes
Not Final YES: 6 NO: 7 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:SB06-164
TIME: 05:07:43 PM
MOVED:Cloer
MOTION:Postpone the bill indefinitely. The motion passed 7-6.
SECONDED:Stafford
VOTE
Berens
Yes
Cloer
Yes
Green
No
Kerr
Yes
Lundberg
Yes
McGihon
No
Riesberg
Yes
Soper
No
Stafford
Yes
Sullivan
Yes
Weissmann
No
Frangas
No
Boyd
No
Final YES: 7 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: PASS



05:08 PM

The committee recessed.