The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:30 a.m., on Wednesday, February 10, 1999, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Mark Amodei

Senator Dean A. Rhoads

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

GUEST LEGISLATORS PRESENT:

Senator Mark A. James, Clark County Senatorial District No. 8

Senator Valerie Wiener, Clark County Senatorial District No. 3

Senator Raymond (Ray) D. Rawson, Clark County Senatorial District No. 6

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

John L. Meder, Committee Policy Analyst

Crystal M. Lesbo, Committee Policy Analyst

Kathy Lawrence, Committee Secretary

OTHERS PRESENT:

John P. Kelly, M.D., Board of Medical Oncology

Mark Savage, Lobbyist, American Cancer Society

Marie H. Soldo, Lobbyist, Sierra Health Services

Larry L. Georgopoulos, R.Ph., Vice President, Sierra Health Services Inc.

Kenneth J. Bykowski, M.S., Clinical Pharmacy Manager, Pacificare Secure Horizons

Ashley J. Hall, Lobbyist, Orgill Singer & Associates

Helen A. Foley, Lobbyist, Humana Healthcare Inc.

Chairman Townsend opened the meeting by introducing Senator Mark A. James, Clark County Senatorial District No. 8, who testified on Senate Bill (S.B.) 16.

Senator James presented an article to the committee from the ABA Journal (Exhibit C) which he stated was very shocking to him. The article stated the ability exists to determine essentially a person’s entire future. In the article, the genetic information is referred to as a future diary of a person’s life. Senator James stated it is very important that the government recognizes that a person has an important right to privacy in their genetic information. He pointed out that the committee should recognize that right to privacy in this legislative session in dealing with discrimination on the basis of genetic information. The task is simply a matter of bringing law up to date, relating to the techniques of science to test somebody and determine from their genetic information any possible problems they may have or will encounter in the future in terms of diseases or even traits.

Senator James clarified there are genetic tests for diseases like Huntington’s disease that indicates someone has better than a 50-percent possibility of getting or developing the disease, which is fatal. Now there is genetic testing to predict such behavioral disorders as alcoholism, manic depression, "risk-taking behavior, whatever that means." Senator James surmised that if a person is tested, every human being is estimated to carry between 8-12 "defective genes" that might trigger various medical disorders. Information is obtainable for which you could discriminate against just about anybody. The Senator expounded that back in the 1970s there were a number of companies that discriminated against black employees and job applicants who carried the sickle cell anemia gene. The sickle cell anemia gene had no bearing on the employee’s current or future health or on the employee’s ability to work. The only significance of carrying the trait was a 1-in-4 chance of passing the disease on to a child if the other parent was a carrier. There are some people that you all know very well who have diseases in their family who might pass that gene on to their children. The children might develop the disease themselves or they might not; the disease could skip a generation and then the children could have that disease. It would be a horrible thing to think those children could be discriminated against in employment or any other situation just because they have a gene that might cause them to develop a debilitating disease at some point in their life.

Senator James stated that he brought this bill forward to provide the anti-discriminatory policy into the workplace. Discrimination based upon genetic testing is outlawed in seven states such as Iowa, New Hampshire, New Jersey, New York, Oregon, Rhode Island and Wisconsin. At the time of the writing of this article, seven states prohibited insureds from discriminating on the basis of genetic testing. Nevada was not listed at the time of printing the article, but we have since been added.

William H. Stewart, Administrator, Nevada Equal Rights Commission, read his testimony (Exhibit D) which stated his support of the bill.

Senator O’Connell asked how the Nevada Equal Rights Commission handles complaints regarding genetic testing. Mr. Stewart stated the agency has not had any complaints to date. Senator O’Connell pointed out that the commission stated they had received 340 charges in 1996. Mr. Stewart answered that is how many charges the commission received during the year.

Senator Rhoads questioned why there was not a fiscal note from the Equal Rights Commission. Chairman Townsend stated his copy of the bill showed the need for a fiscal note and asked Scott Young, Committee Policy Analyst, Research Division, Legislative Counsel Bureau, if he knew if a fiscal note had been done. Mr. Young replied no.

Chairman Townsend asked if the Nevada Equal Rights Commission received a request from the attorney general or the Department of Administration regarding the fiscal effects on the commission. Mr. Stewart stated no.

Chairman Townsend stated jurisdiction of this committee does not reach to the equal rights commission. He queried, the number of complaints that are received, and due to fiscal restraints, wondered if complaints are prioritized in the order of their magnitude or their total impact on the current workforce.

Mr. Stewart stated the commission has always attempted to handle charges on a first-come first-served basis as a matter of courtesy. However, he pointed out, there have been some situations such as the contract with the federal Equal Employment Opportunity Commission where we have to do "x" number of cases during a particular period of time; sometimes it becomes a matter of expediency. To earn the funds that are needed to keep operating, the commission has to get in as many case closures as possible which are felt easier to resolve first, and then concentrating on those cases that are going to require a lot of time and effort.

Chairman Townsend stated that if, in fact, there was a fiscal note attached to this bill (S.B. 16) for this agency’s impact, there is a need to alert the finance committee now. There also may be a need to alert the Interim Finance Committee due to the possibility of an increased workload, or the necessity for additional training.

Carlos Romo, Assistant Administrator, Nevada Equal Rights Commission, stated all cases are accepted on a first-come first-served basis with regulations and guidelines that provide for expedient service. He pointed out that occasionally an individual might appear with a terminal illness, which is claimed to be disability-related, and that claim must be processed within 120 days.

Chairman Townsend closed the hearing on S.B. 16 and opened up the hearing on S.B. 27.

Senator Valerie Wiener, Clark County Senatorial District No. 3, read her written statement (Exhibit E) stating her support of S.B. 27.

Robert Gastonguay, Lobbyist, Nevada State Cable Telecommunications Association, testified he supported the bill. He stated the telecommunications industry has ventured forth and stated Cox Communications in Las Vegas has filed a certificate of convenience. He pointed out Tele-Communications, Inc. (TCI) is currently in the process of being acquired by AT&T.

Chairman Townsend asked Mr. Young if there was a generic legal term known as jet telecommunications, which would include telephone and cable. Mr. Young stated he thought there was a specific differentiation between the different methods of telecommunication in the statute.

Robert A. Ostrovsky, Lobbyist, Cox Communications, testified this bill does not provide authority for anyone to carry or transmit telephone conversations. This bill only protects wire or other conveniences that someone might destroy or misuse. This bill originally provided protection for telephone lines that would be misused or destroyed when placed in the street. Mr. Ostrovsky stated this bill was supposed to protect our in-ground facilities, not impact the licensing or any regulation; we do not believe this bill does that; the desire is to clean up the statute and expands it a little to cover all these conveniences. The television cable industry is now providing Internet access services such as 1-and 2-way communications. Everyday there are articles of joint ventures or purchases in the newspaper. The television industry is asking for the same protection for in- ground facilities.

Marsha L. Berkbigler, Lobbyist, TCI Cablevision of Nevada Inc., testified that this legislation is drafted specifically for the purpose of protecting cable lines that are in the same trenches.

Samuel P. McMullen, Lobbyist, AT&T, testified they supported this bill and that he would like to state for the record that the addition of the words "telephone," or any other communication types, is not really to change the existing practices where companies do interrelate, do install, and do work with the lines of other companies, and do so in an authorized fashion. Basically, the understanding of this bill is the issues where someone willfully, in an unauthorized fashion, is disrupting and destroying cable lines.

Chairman Townsend asked if the piracy of some of these information services that are available is still a major issue. He pointed out that he had seen on the news where high-tech pirates are able to sell chips or software that allow stealing of information without paying for it; such as HBO, Showtime, etc., and wondered if that is still a problem.

Mr. Gastonguay stated the attorney general’s (AG’s) office will be introducing some legislation pertaining to high-tech crimes and the cable television industry is a part of it. He stated he had personally received some information off the Internet that is titled Subject: Free Cable, which read, "Because of the cable monopoly and ever-increasing cable rates from your local cable company, why not build your cable descrambler? Our kit includes plans and parts lists that allows you to build your very own cable descrambler for under $12 in 7 easy steps."

Chairman Townsend asked if the same restrictions that apply to broadcast carry over to the Internet. In other words, an illegal product or service cannot be offered across the broadcast but can be offered off the Internet. Mr. Gastonguay stated it is not illegal; the AG’s office will have to make the decision.

Margaret A. McMillan, Lobbyist, Sprint, testified support for this bill.

Larry D. McBee, Lobbyist, Nevada Bell, testified they are in support of this bill and added that the industry is changing rapidly. Nevada Bell is actively trying to pursue a competitive market in Nevada.

SENATOR SCHNEIDER SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

* * * * *

Tom Wood, Lobbyist, Wyeth-Ayerst Labs, Division Of American Home Products, testified the Wyeth-Ayerst Labs would like to change the bill and submitted his proposed amendments (Exhibit F).

Senator Raymond (Ray) D. Rawson, Clark County Senatorial District No. 6, stated this bill is a controversial issue because it appears to put a mandate into the law, but when reviewed there is a realization that there are drugs and medications that can control or cure cancer. These drugs cannot be used on people due to protocol, costs or decisions. Senator Rawson pointed out there is presently a very sophisticated group of patients that know when there is a cure for cancer available and they demand the use of those drugs. He said these same patients approach many doctors but the doctors are not able to give them the treatments preferred.

Senator Rawson clarified when doctors see a new breakthrough drug that is no longer experimental they expect good results and want to use the drug. It is heartbreaking to see that money and/or money decisions provide controversy that is unpredictable; next year cancer treatment will be even more expensive because of the new drugs becoming available. If old medications are the only ones that can be used then there is no more progress for research. Senator Rawson stated that most people do not believe there are miracles, but he has been pleasantly surprised with the results such as polio vaccine and the cure for Hepatitis B. He concluded that he wanted to amend S.B. 56 and provided his proposed amendments specifically for the treatment of cancer (Exhibit G).

Senator O’Connell stated if this bill is not passed, then new drugs cannot be used for the treatment of cancer. Senator Rawson answered there would be many people who face the decision because their insurance company does not cover it, nor can they afford it. Senator O’Connell inquired of the additional cost of which was being discussed. Senator Rawson stated there are many drugs available for which insurance companies will not pay. Senator O’Connell asked if there was any idea of the cost of treatment.

Senator Rawson stated there will be some cancer drugs that are radiation based which will be $20,000-$30,000 for a course of treatment. There will be some that are much less than that, but the fairly expensive drugs are very dangerous drugs, if used wrong. There is a very narrow therapeutic index with them. Senator Rawson emphasized that basically, with the idea of chemotherapy, you start killing cells and hope you kill the cancer before you kill the individual. The testing is dangerous and the certification of the Food and Drug Administration (FDA) approval on these drugs is probably more expensive because they are so dangerous. But the other side is that some of them are truly miraculous drugs. He remembered his first year in practice, stating that he had a young man come in with Hodgkin’s Lymphoma and appeared very swollen. "We knew within 6 months he would be dead." Today a nearly normal life span is expected and that is all because of these drugs. He pointed out that it seems almost inappropriate to say you cannot have access to this drug if you cannot afford it.

Senator O’Connell asked what constituted an off-label drug. Senator Rawson stated they are drugs labeled for treatment of a certain type of tumor or heart condition, but turn out in the process of testing and development to have a tremendous beneficial effect on another type of tumor. These drugs have been or will be approved by the FDA and are experimental. There is a knowledge of what the drugs can do, but they are listed in the drug formularies with the insurance companies, etc. for being used just for certain reasons. The insurance companies will not approve these drugs for another condition; it is important to distinguish that we are not talking about experimental drugs or ideas. Senator Rawson stated these are all proven treatments that are well known and are listed as such.

Mr. Wood stated off-label means it is used for reasons that were not intended by the FDA at the time the product was introduced.

Lawrence P. Matheis, Lobbyist, Nevada State Medical Association, pointed out with the changes in support of this bill focusing on cancer, it is one of the most intense areas in which this issue is raised. The suggested language in section 1, subsection 1, paragraph (b), subparagraph (3) to add "appear reviewed literature or abstracts published by the appropriate medical specialties," would make it consistent with the Medicare policy. The federal Medicare program pays for a lot of cancer treatments because of the age of the patient.

Chairman Townsend asked, since the medical association has offered an amendment to limit this coverage to cancer, if there is a need to add this additional language to the bill.

Mr. Matheis stated the technical amendment will cover cancer, and even though this language is consistent with the Medicare policy the time delay in peer- review literature only provides an abstract form of information. There is a need to address public policy in terms of professional licensing and education. Having dealt with the board of medical examiners, the death with dignity groups, issues of chronic illness and the realities associated with life-threatening and terminal illness, Mr. Matheis surmised that confronting these questions is not easy but will improve the quality of life for many people. He stated the testimony from patients regarding the success of supplemental treatment is very encouraging. These people need to be covered by their insurance based on scientific evidence even though there are financial implications; their lives can be better with additional prescriptions.

Chairman Townsend questioned if the expansion of the FDA rulings would be a problem. Mr. Matheis stated as long as there is adequate evidence the FDA will subsequently change the labeling issue. The scientific evidence is fairly contained and controlled which provides for solid ground to change this bill accordingly.

Senator O’Connell inquired how many states have passed a similar law.

Christian Downs, Director, Provider of Economics and Public Safety, Association of Community Cancer Centers, testified 32 states have legislation very similar to this bill. Mr. Downs stated there are a number of studies to indicate that this same similar legislation is without negative financial implications. The Congressional Budget Office determined that the federal legislation for the Medicare patient population would have zero impact on the federal budget.

John P. Kelly, M.D., Board of Medical Oncology, testified this legislation would be quite useful due to the problems with reimbursements on patients. Typically, a drug will be found to be successful in treating lung cancer. The pharmaceutical company will get approval from the FDA to market that drug; the approval might cost 400 million-500 million dollars. After the drug is on the market, further research will then show the drug is useful for treating breast cancer; but the pharmaceutical company will not go back to the FDA and get further FDA approval, presumably because of costs. Dr. Kelly stated some insurance companies seem to use that as an excuse to not reimburse for some medications. This legislation appears to be not totally radical. It follows the guidelines of Medicare, which has been well tested and seems to work. The cost issue has shown that use of an effective chemotherapy regimen to treat cancer is less expensive than use of an ineffective measure. Effective treatment reduces the patient’s hospitalization costs and keeps them as a more productive member of society for a longer period of time. Dr. Kelly stressed that he did not think costs would be a big issue and felt this bill would be beneficial to many patients. He also testified that doctors must be allowed to use the drugs which have been tested and shown to be effective.

Mark Savage, Lobbyist, American Cancer Society, emphasized over 8,000 people in Nevada will be diagnosed with cancer this year. Mr. Savage stated:

Mr. Savage pointed out that many health insurers when refusing to provide reimbursement for the medication cause undue financial and emotional strain on cancer patients, and may cause undue pain and even death if denied. Requiring FDA approval for every new medication may add more than 5 years and millions of dollars on behalf of the drug manufacturers. In addition, once the patent for the drug expires, there is little incentive for the pharmaceutical company to seek approval for a new indication, because a company may not be able to recoup the investment in research without exclusive manufacturing and marketing capability. Therefore, the American Cancer Society concurs with the FDA position that off-label use of approved cancer drugs may be an appropriate treatment regimen for many patients as determined by medical experts and prescribed and accepted medical journals.

Marie H. Soldo, Lobbyist, Sierra Health Services Inc., presented their position statement (Exhibit H), and stated that she wanted to explain what her company’s health plans are currently covering and the fact that they do not oppose the use of off-label drugs. She explained the policies employed by her group would not be affected nor would it affect the vast majority of the insured Nevada population. This bill will not have any application to federal employees, state employees, Medicare, Medicaid, and all the self-insured plans.

Larry L. Georgopoulos, R.Ph., Vice President, Pharmacy Services, Sierra Health Services Inc., stated they are not opposing the bill although they had concerns. As a pharmacist, he averred, he provided chemotherapy in an ambulatory setting and supported hospice; he also empathized with the patients, and as an oncology pharmacist used chemotherapeutics in off-label situations. He emphasized that he recognized the appropriateness for covering drugs for off-label uses because his organizations already have the processes. Managed health care clients support off-label uses of FDA drugs when medically appropriate; they are not opposed to them.

Mr. Georgopoulos stated that pharmacists realize that the FDA cannot keep up with what is happening in the clinical environment and have the processes and utilize the same criteria that are being proposed in this bill. Our benefits do not exclude off-label drugs; they are approved when medically necessary. The internal formulary process with its pharmacy and therapeutic committee has policies, procedures and provisions for our medical management team to approve off-label uses of drugs. A medical record review board is utilized when a request is made for an off-label use; for a cancer drug it is immediately sent to the medical review board who turns around the decisions within 24-48 hours. The review board also approves new drugs for off-label use, but approval of off-label use for medications require that an appropriate criteria is followed; cost is not an issue in this instance.

Mr. Georgopolous stated the company is already bearing the costs of expensive drugs, whether they are old drugs with FDA approval or off-label new drugs without FDA approval. We have an appeal process, and generally have very valid reasons in the relation to the quality of care. He pointed out this bill is very broad and needs to be more specific to its intent. The way it is written could be interpreted as opening up an anti-formulary. Sierra Health Services has a formulary that allows benefits that are affordable to the members and employers. Sierra Health Services’ formulary covers off-label use of medications, but this bill is written too broad; it eliminates the formulary. Sierra Health Services’ health plan cannot afford to have an open off-label use of all drugs because we would not be able to provide a benefit for the co-payment costs. Sierra Health Services has gone from 43 percent of our population to 77 percent of our population covered for co-payment. Sierra Health Services will be not be able to contain premiums; and as the premiums rise, we are afraid our members will not be able to buy the pharmacy benefit.

Senator Schneider queried if Mr. Georgopolous’ statement included Senator Rawson’s amendment concerning cancer. Mr. Georgopoulos stated the bill is not broad enough if written specifically for cancer and should be evaluated to make sure it cannot be interpreted broadly. Mr. Georgopolous suggested that it jeopardizes the pharmacy benefit. Senator Schneider asked if the bill jeopardizes the pharmacy benefit if it is just for cancer. Mr. Georgopoulos stated no.

Kenneth J. Bykowski, M.S., Clinical Pharmacy Manager, Pacificare Secure Horizons, stated they cover every medication that is available on their formulary for cancer patients, and those who are routinely put on a formulary, and also reimburse shots used in the doctor’s office. We realize the importance of this disease to the female population and now the male population. He pointed out that once the medication is approved by the FDA, it is up to the physician how he/she wishes to use the medication. If the medication is not on the formulary, Pacificare Secure Horizons does a thorough review and consults with the provider and with other medical review people to determine the appropriateness.

Senator O’Connell asked if the insurance industry has done any recent studies to know the cost of mandates in this state. Ms. Soldo stated not recently, but pointed out that some states are doing reviews. In fact, Maryland has just done a whole assessment of all of their mandates; they have about 32 mandates on their statutes. Our industry has many mandates already and with this new legislation will see a lot of mandates at once. The insurance industry has taken the position that the marketplace is making us offer benefits that are needed and to enable employers to keep offering affordable health insurance. We are expanding more benefits to more employers. We have not done an impact study on what the actual costs of the existing benefits are. At one time we had a bill that would look at the financial impact on each mandate that came before the state but it was not passed.

Senator O’Connell queried if the study showing 25 percent of the total insurance cost was the last one completed. Ms. Soldo did not have an answer but assured that she would return with one.

Robert A. Ostrovsky, Lobbyist, Nevadans for Affordable Health Care, read his mission statement (Exhibit I). He stated their coalition in Nevada has a number of businesses, about 40,000 employees that are covered under various health plans.

Chairman Townsend stated that the committee is more interested in discovering why the uninsured working population does not have insurance coverage. He expounded the need to review smaller employers to collect information relating to the insurance-providing issue.

Mr. Ostrovsky stressed that for every percentage increase in the cost of health care, a certain percentage of Americans lose their insurance coverage. The figure is 400,000 losses for each 1-percent increase. He suggested the cost of health care was growing at a rate of 4-7 percent per year.

Ashley J. Hall, Lobbyist, Orgill Singer & Associates, testified that 65-68 percent of the population is in the health insurance area, and the question to this bill initially was the mandated aspect and the impact on the affordability of health care. She stated nationally, 1 percent increase in health care costs knocks out about 400,000 people. Ms. Hall stressed that her company was the "broker of record" for the Las Vegas Chamber of Commerce to supply insurance to small business employers. The biggest question everyday is the affordability. Due to their size the smaller companies do not reap the benefit of competition from many insurance providers. Ms. Hall stated concern for an appropriate amendment to help the small businesses with the availability of insurance; she pointed out the support would be there if the bill was improved.

Chairman Townsend questioned Ms. Hall’s statement of "broker of record" for the chamber and inquired if that statement referred to their employees. Ms. Hall stated:

Senator O’Connell suggested the possibility of an insurance menu that would allow a person to possibly accept or reject coverages that did not pertain to their particular situation. People’s lives change and their insurance needs also change accordingly. Ms. Hall stated that her problems of affordability were customers; not necessarily in the private sector. Some small municipal governments have health plans they could not afford to provide. There is a need to reorient and regenerate a process to allow for affordable insurance for all concerns.

Mr. Ostrosvsky stated the affordable health care advocates would like to see the amendments and review the impact of the bill before it is processed; they want to make sure it is narrowly focused. There are flex-benefit plans available in some marketplaces; however, there is always a base health care benefit. Part of that base health care benefit has to contain all the mandates, as there is no way to avoid the mandates the legislative body has imposed.

Ms. Hall stated that one of their clients was a mobile homeowners association, and without a pool plan, the members of that association could not afford health care.

Helen A. Foley, Lobbyist, Humana Healthcare Inc., stated the formulary management process is a very delicate one where physicians, pharmacists and other health care professionals get together. It is a very dynamic process because of the introduction of new drugs and the determination whether older drugs may be useful for other illnesses. She stressed that Humana Healthcare does not have a problem with specifically the cancer exception; but because of technical amendments would encourage a subcommittee or, as this committee works with the amendments, allow their participation. Ms. Foley emphasized that their members are very pleased that they only have to pay a $5 or $10 co-payment, which is different than what used to be the case; a case they do not want to erode in any way. She stated she believed that most of the managed care organizations do provide excellence service with off-label drugs for cancer; and if this is the desire of the committee and Senator Rawson, then her group would support the bill.

Chairman Townsend told the committee that Senator Schneider’s subcommittee could at least get an amendment for the sponsor of the bill and the technical amendments that have been recommended. He recommended at least getting it drafted, then the subcommittee can meet and determine if it is drafted the way the proponents have desired. Then Senator Schneider can bring it back to this committee.

Scott Young, Committee Policy Analyst, Research Division, Legislative Counsel Bureau, asked if that amendment would include both testimonies represented by Mr. Wood and by Senator Rawson. Chairman Townsend agreed and stated since this is a unique situation, they should get a chance to review it and then allow the committee a chance to respond.

Chairman Townsend introduced a letter from a private citizen, Adan Sosa III, R.Ph., (Exhibit J) requesting that his letter be used in the minutes.

Chairman Townsend closed the hearing on S.B. 56 and introduced bill draft requests for a second hearing. No discussion occurred.

There being no further discussion or testimony, Chairman Townsend adjourned the meeting at 9:40 a.m.

RESPECTFULLY SUBMITTED:

Kathy Lawrence,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

DATE: