STAND. COM. REP. NO. 560

Honolulu, Hawaii

, 2005

RE: S.B. No. 1440

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Health and Human Services and Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 1440 entitled:

"A BILL FOR AN ACT RELATING TO PRESCRIPTION DRUGS,"

beg leave to report as follows:

The purpose of this measure is to reduce the cost of prescription drugs for Hawaii residents, while maintaining high quality drug therapies.

Specifically, the bill:

(1) Adds new definitions for:

(a) "Board" or "drug utilization review board";

(b) "Department";

(c) "Director";

(d) "Health benefits plan";

(e) "Health insurer";

(f) "Participating health benefits plan";

(g) "Program" or "pharmacy best practices and cost control program"; and

(h) "State public assistance program";

(2) Establishes a pharmacy best practices and cost control program, which requires the Directors of Human Services and Health to implement a preferred statewide drug list;

(3) Establishes a drug utilization review board;

(4) Authorizes use of prescription drugs not on the preferred drug list under certain circumstances;

(5) Authorizes the Director of Human Services to contract with a third party with expertise in management of pharmacy benefits to implement all or part of the program;

(6) Establishes reporting and oversight procedures;

(7) Requires the Director to use the program's preferred drug list to negotiate with pharmaceutical companies for supplemental rebates or price discounts for medicaid and other state public assistance health benefit plans;

(8) Establishes a pharmacy discount plan to be implemented by July 1, 2006;

(9) Requires disclosures of gifts and other economic benefits provided by pharmaceutical marketers to physicians, hospitals, and similar health care providers;

(10) Requires development of criteria for standardized tamper-resistance prescription pads; and

(11) Requires the Director of Human Services to request a Section 1115 medicaid waiver or medicaid amendment to maximize federal participation in Hawaii's state pharmaceutical assistance programs; and

(12) Requires state health care policies to promote outcomes based assessment and treatment through development of a statewide quality assurance system and an effective quality improvement process.

The Hawaii State Teachers Association, Kokua Council, AARP Hawaii, and six individuals submitted testimony in support of this measure. The Department of Human Services and the Pharmaceutical Research and Manufacturers of America submitted testimony in opposition. The Board of Pharmacy, the Office of Information Practices, and the Hawaii Medical Service Association submitted comments.

Your Committees find that, according to AARP Hawaii, more money is spent on prescription drugs each year than on electricity, telephone service, and new cars. The cost of prescription drugs is soaring, rising by double digits year after year. This measure seeks to create a more balanced market and to initiate effective quality assurance and cost containment tools to reduce the high cost of providing prescription drugs while maintaining the high quality in prescription drug therapies for Hawaii's residents.

Upon further consideration, your Committees have amended this measure by:

(1) Deleting the following provisions:

(a) The proposed "Definitions";

(b) The pharmacy best practices and cost control program;

(c) The drug utilization review board;

(d) The authorization to use prescription drugs not on the preferred drug list under certain circumstances;

(e) The authority of the Director of Human Services to contract with a third party to implement the pharmacy best practices and cost control program;

(f) The reporting and oversight procedures;

(g) The requirement for the Director to negotiate with pharmaceutical companies for supplemental rebates or price discounts;

(h) The pharmacy discount plan to be implemented by July 1, 2006;

(i) The requirement for standardized tamper-resistance prescription pads; and

(j) The requirement for the Director of Human Services to request a Section 1115 medicaid waiver or medicaid amendment to maximize federal participation in Hawaii's state pharmaceutical assistance programs; and

(2) Adding the following:

(a) Clarification that the pharmaceutical manufacturers disclosures include the name of the recipient of the economic benefit; and

(b) Requirements for pharmacy benefit management disclosure and transparency.

Also, the bill's effective date was changed from July 1, 2005 to July 1, 2020 and technical nonsubstantive amendments were made for the purpose of clarity and style.

As affirmed by the records of votes of the members of your Committees on Health and Human Services and Commerce, Consumer Protection, and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1440, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1440, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Health and Human Services and Commerce, Consumer Protection, and Housing,

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SUZANNE CHUN OAKLAND, Chair

____________________________

ROSALYN H. BAKER, Chair

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RON MENOR, Chair