Bill Summary for Bill Number SB06-164

Date: 02/16/2006

Final
BILL SUMMARY for SB06-164

SENATE COMMITTEE ON HEALTH AND HUMAN SERVICES

Votes: View-->	Action Taken:
Adopt a conceptual amendment to strike section 2 o Adopt prepared amendment L.004 (Attachment C). Th Adopt prepared amendment L.005 (Attachment D). Th Adopt prepared amendment L.006 (Attachment E). Th Adopt prepared amendment L.008 (Attachment F). Th Refer Senate Bill 06-164, as amended, to the Commi	FAIL FAIL FAIL PASS Pass Without Objection PASS

01:59 PM -- Senate Bill 06-164

Senator Keller introduced Senate Bill 06-164. Three strike-below amendments were distributed to the committee, L.004, L.005, and L.006 (Attachments C through E) and Senator Hagedorn distributed an additional amendment, L.008, to the committee (Attachment F). Senate Bill 06-164 concerns the business practices of pharmacy benefit managers (PBMs). Senator Keller explained the provisions of amendment L.004 which require a PBM to disclose to a covered entity any ownership interest with a parent company; require the PBM to perform his or her duties exercising care, good faith, and fair dealing; specify that a PBM shall not require a pharmacist or pharmacy to participate in one contract as a perquisite to participate in another; and specify a process through which the covered entity may audit payments received by the PBM. Senator Keller responded to questions from Senator Mitchell regarding L.004 (Attachment C).

02:16 PM -- Sharon Treat, National Legislative Association on Prescription Drug Prices, distributed a handout to the committee (Attachment G) and testified in support of amendment L.006 (Attachment E). She described lawsuits against pharmacy benefits managers. She discussed the importance of transparency legislation regarding PBMs, and suggested that PBM transparency legislation should include conflict of interest disclosure requirements and the creation of a fiduciary duty on behalf of the PBM to the covered entity. She responded to questions from Senator Mitchell regarding fiduciary duties of PBMs and lawsuits against PBMs. She responded to questions from Senator Hanna and Senator Shaffer regarding the profitability of PBMs and how much revenue generated by PBMs are from publicly-funded programs.

02:34 PM -- Dr. Tom Sawyer, Health Directions Consulting, testified that many of his clients do not have confidence in PBMs and that three PBMs dominate the pharmacy benefits market. He described the activities of PBMs and stated that he does not believe that most PBMs will comply with voluntary reporting requirements. He stated that the bill must required PBMs to disclose all conflicts of interest and report to the covered entity any utilization and financial data requested by the entity. He responded to questions from the committee regarding information that a PBM should disclose to a covered entity and the amount of PBM revenue generated by public moneys.

02:47 PM -- Ralph Pollack, Business Council on Health Care Competition, testified in opposition to the bill and distributed a handout to the committee (Attachment H). He stated that there is no evidence that employers in Colorado have a problem with PBMs. He further stated that the bill interferes with an employer's ability to contract for benefits and that the bill violates basic business principles. He responded to questions from the committee regarding employer satisfaction with PBMs.

02:54 PM -- Michael Huotari, Colorado Association of Health Plans, testified in opposition to the bill. He stated that the PBM marketplace consists of sophisticated buyers and sellers and that the members of the association neither sought nor need the protections provided by the bill and do not want interference with their ability to contract with PBMs. He testified regarding the audit provisions of amendment L.004 (Attachment C). He responded to questions from Senator Mitchell.

03:01 PM -- Tom Applehans, Colorado Group Insurance Association, testified in opposition to the bill, stating that the market is already forcing PBMs to be more transparent.

03:05 PM -- Peter Harty, Medco Health Solutions, Inc., testified in opposition to the bill, stating that the marketplace is working and there is no need for interference in the contracting practices of private entities. He stated that employers and insurance companies are not asking for the bill. He responded to Senator Shaffer's question regarding PBM revenue from public moneys, stating that public funds represent about 12 percent of Medco's business. He testified that the PBM marketplace is already highly competitive and that it is ultimately the payor who decides whether or not to contract with a PBM. Mr. Harty responded to questions from the committee regarding business operations of PBMs and lawsuits against PBMs.

03:23 PM -- Allan Horne, Caremark Rx, testified regarding the differences between amendments L.004 and L.005 (Attachments C and D). He further discussed amendment L.006 (Attachment E). He responded to questions from Senator Hagedorn regarding contracts between PBMs and covered entities.

03:29 PM -- David Smith, Great-West Life and Annuity, testified in opposition to the bill. He stated that Great-West has been able to negotiate favorable terms with its PBM and would lose this ability under the provisions of the bill.

03:32 PM -- Julia Green, Service Employees International Union, testified in support of the bill. She challenged the assertion that the market is working, stating that health care costs are rising and there are large numbers of uninsured while pharmaceutical companies and PBMs are making record profits. She stated that transparency legislation is needed for all health care purchasers.

03:35 PM -- Rex Wilmouth, Colorado Public Interest Research Group, testified in support of the bill and stated that the Colorado Mental Health Association and AARP are also in support of the bill. He testified in support of amendment L.006 (Attachment E). He stated that the bill protects consumers by ensuring that savings obtained by PBMs are passed on to covered entities and thereby consumers. He discussed lawsuits against PBMs.

03:38 PM -- Mark Kinney, Rx Plus Pharmacies, testified in support of the bill and regarding amendment L.004 (Attachment C). He testified regarding drug switching practices of PBMs. He responded to questions from Senator Mitchell regarding why the penalty provisions of the bill were under the Colorado Consumer Protection Act.

03:44 PM

Senator Hagedorn recognized persons who were not permitted to testify due to time constraints. An additional handout was distributed to the committee (Attachment I).

03:45 PM

Senator Keller gave concluding remarks regarding the bill and discussed private sector coverage for health care. She stated that the bill is one component of controlling health care costs. Senator Keller responded to comments made by Senator Mitchell regarding the business community's opposition to the bill. She responded to questions from Senator Sandoval regarding why the penalty provisions of the bill were under the Colorado Consumer Protection Act. Senator Mitchell explained the provisions of amendment L.005 (Attachment D).


BILL:	SB06-164
TIME:	03:53:35 PM
MOVED:	Mitchell
MOTION:	Adopt prepared amendment L.005 (Attachment D). The motion failed 3-4.
SECONDED:
		VOTE
	Johnson	Yes
	Mitchell	Yes
	Sandoval	No
	Shaffer	No
	Traylor	Yes
	Hanna	No
	Hagedorn	No
Not Final YES: 3 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	SB06-164
TIME:	03:59:39 PM
MOVED:	Mitchell
MOTION:	Adopt a conceptual amendment to strike section 2 of amendment L.004 (Attachment C). The motion failed 3-4.
SECONDED:
		VOTE
	Johnson	Yes
	Mitchell	Yes
	Sandoval	No
	Shaffer	No
	Traylor	Yes
	Hanna	No
	Hagedorn	No
Not Final YES: 3 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	SB06-164
TIME:	03:59:56 PM
MOVED:	Shaffer
MOTION:	Adopt prepared amendment L.004 (Attachment C). The motion failed 3-4.
SECONDED:
		VOTE
	Johnson	No
	Mitchell	No
	Sandoval	Yes
	Shaffer	Yes
	Traylor	No
	Hanna	Yes
	Hagedorn	No
Not Final YES: 3 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	SB06-164
TIME:	04:02:10 PM
MOVED:	Hagedorn
MOTION:	Adopt prepared amendment L.008 (Attachment F). The motion passed without objection.
SECONDED:
		VOTE
	Johnson
	Mitchell
	Sandoval
	Shaffer
	Traylor
	Hanna
	Hagedorn
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB06-164
TIME:	04:02:02 PM
MOVED:	Hagedorn
MOTION:	Adopt prepared amendment L.006 (Attachment E). The motion passed 4-3.
SECONDED:
		VOTE
	Johnson	No
	Mitchell	No
	Sandoval	Yes
	Shaffer	Yes
	Traylor	No
	Hanna	Yes
	Hagedorn	Yes
Not Final YES: 4 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:	SB06-164
TIME:	04:05:17 PM
MOVED:	Hagedorn
MOTION:	Refer Senate Bill 06-164, as amended, to the Committee of the Whole. The motion passed 4-3.
SECONDED:
		VOTE
	Johnson	No
	Mitchell	No
	Sandoval	Yes
	Shaffer	Yes
	Traylor	No
	Hanna	Yes
	Hagedorn	Yes
Final YES: 4 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS