Report Title:

State Pharmacy Assistance Program.

 

Description:

Creates a Hawaii State Pharmacy Assistance program by merging the current State Pharmacy Assistance program which coordinates the Medicare Part D drug benefit and the Hawaii Rx plus program under a single comprehensive Hawaii State Pharmacy Assistance program umbrella.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1359

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO THE STATE PHARMACY ASSISTANCE PROGRAM.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  Prescription drugs have become an increasingly important part of health care, especially among older adults.  Prescription drugs have also become the most expensive component of health care, accounting for approximately two-thirds of health care costs.

     In 2002, the legislature adopted the Hawaii Rx program, intended to help a large population of Hawaii residents better afford their prescription drugs through a discount program, thereby increasing the overall health of Hawaii residents, promoting healthy communities, and protecting public health and welfare.  In 2004, the program was amended to become the Hawaii Rx plus program.  Implemented in July 2005, Hawaii Rx plus has enabled thousands of Hawaii residents, regardless of age, to take advantage of discounted prices for their prescription drug needs when no other insurance or payor are available to them.

     In 2005, in anticipation of the new Medicare Modernization Act's Part D program which took effect on January 1, 2006, the State medicare part D state pharmacy assistance program was created.  The State medicare part D program covers the co-payments for medicare and medicaid dual eligible clients to ensure a smooth transition of prescription drug coverage from medicaid to medicare.

     The federal Medicare Modernization Act of 2005 also provides special relief for qualified state pharmacy assistance programs.  Both the Hawaii Rx plus program and the State Medicare part D program are recognizable under federal law as state pharmacy assistance programs and, if they are combined under an umbrella program and approved as a single federally recognized program, could receive enhanced benefits from the federal Centers for Medicare and Medicaid Services.

     This bill would consolidate the provisions of both the Hawaii Rx plus program and the State Medicare part D program into a single state pharmacy assistance program for which the State could then seek approval from the federal Centers for Medicare and Medicaid Services to recognize this newly consolidated program as a federally qualified state pharmacy assistance program to receive enhanced benefits.

     Through this consolidation, the State Medicare part D program would remain the same and its enrollees would be identified as "tier one enrollees" and the Hawaii Rx plus program would remain the same and its enrollees would be identified as "tier two enrollees".  In addition, this bill would provide prescription drug assistance for a subset of the Hawaii Rx plus population, identified as the "tier three enrollees", who may be at risk of becoming medicaid eligible and for whom the State will seek approval from the federal Centers for Medicare and Medicaid Services to allow the mandating of rebates from drug manufacturers resulting in greater discounts.

     The State of Hawaii will continue to receive pharmacy discounts for individuals in the Hawaii Rx plus program with incomes up to 350 per cent of the federal poverty level.  With federal Centers for Medicare and Medicaid Services approval, the State will also be able to begin mandating rebates from pharmaceutical companies for prescription drugs purchased by individuals in the Hawaii Rx plus program who are at risk of qualifying for medicaid with incomes equal to or less than 300 per cent of the federal poverty level as approved by the federal Centers for Medicare and Medicaid Services.

     The State of Hawaii may also be able to combine the purchasing power of these two programs to negotiate larger discounts, similar to federal government and private health insurers, as approved by the federal Centers for Medicare and Medicaid Services.  Finally, combining both programs into a federally qualified state pharmacy assistance program streamlines operations and promotes effective administration.

     The federal Centers for Medicare and Medicaid Services is requiring a State statute before they will consider a request for approval of the income eligibility for the medicaid at-risk population and set the percentage of State contribution that will be required towards the cost of the prescription drugs for the at-risk population which will allow the mandating of rebates for this group.

     This bill, to be known as the "Hawaii Prescription Drug Affordability Act of 2007", seeks to further drive down the cost of prescription drugs for Hawaii's uninsured, underinsured, low-income, elderly and disabled residents.

     SECTION 2.  Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§346-  Program goals.  The legislature finds that affordability is critical in providing Hawaii residents with access to prescription drugs.  This part is enacted by the legislature to enable the State to make prescription drugs more affordable for qualified Hawaii residents and thereby increase the overall health of Hawaii residents, promote healthy communities, and protect the public health and welfare.  The legislature also intends that the program be integrated as much as possible with other state health programs.  It is not the intention of the legislature for this law to discourage employers from offering to pay, or from paying for prescription drug benefits for their employees, or to supplant employer-sponsored prescription drug benefit plans."

     SECTION 3.  Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§346-  Hawaii Rx plus preferred drug list.  (a)  All drugs shall be available at the medicaid discount price, or less.  The Hawaii Rx plus preferred drug list shall offer an additional "secondary discount price," or less, on preferred drugs, to be reimbursed through the Hawaii state pharmacy assistance program special fund.

     (b)  The department shall establish secondary discounts for drugs covered by a rebate agreement and shall promote the use of safe, efficacious, and cost-effective drugs, taking into consideration:

     (1)  Reduced prices for state and federally capped drug programs;

     (2)  Differential dispensing fees;

     (3)  Administrative costs of the department; and

     (4)  The recommendation of the pharmacy and therapeutic committee.

     (c)  The department shall establish a Hawaii Rx plus preferred drug list that includes, but is not limited to:

     (1)  Drugs listed on the State's medicaid preferred drug list;

     (2)  Any other drugs listed on the Hawaii Rx plus preferred drug list pursuant to this section; and

     (3)  Generic drugs that are priced using a maximum allowable cost list, as determined by the department.

     (d)  The pharmacy and therapeutic committee shall review and recommend drugs for placement on the Hawaii Rx plus preferred drug list, striving to identify the safest and most efficacious drugs that are available at the lowest cost.  The committee's recommendations may take into consideration any of the following factors:

     (1)  Therapeutic value for the disease or condition under treatment;

     (2)  Clinical efficacy;

     (3)  Safety;

     (4)  Cost; and

     (5)  Other relevant factors as determined by the committee.

     (e)  When considering categories of drugs designed to treat specialized chronic medical conditions and diseases, the committee shall consult with physicians and other health care professionals with specialized clinical knowledge and expertise in this area, either in their capacity as consultants serving on a subcommittee of the committee, or as physicians or pharmacists with a practice or specialty in chronic diseases.

     (f)  The determination of a drug's safety and efficacy shall be consistent with the standards set forth in the peer-reviewed literature and other available sources, including but not limited to:

     (1)  The American Hospital Formulary Service Drug Information;

     (2)  The United States Pharmacopoeia Drug Information;

     (3)  The DRUGDEX System; and

     (4)  The American Medical Association Drug Evaluations.

     (g)  The determination of a drug's net cost shall consider the pharmacy reimbursement amount authorized under section   346- , as adjusted by manufacturer's rebates to be paid to the department.  The committee shall determine that a drug has no significant clinical or safety advantages over one or more alternative drugs when used for a given purpose before it may consider the drug's net cost."

     SECTION 4.  Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§346-  Participating and nonparticipating manufacturers and labelers.  (a)  The names of manufacturers that enter and do not enter into rebate agreements pursuant to this part shall be deemed public information.  The department shall release this information to health care providers and the public.

     (b)  The department or administrator may also provide to health care providers information about the relative cost of drugs produced by manufacturers that enter into rebate agreements compared to the cost of drugs produced by those that do not enter into rebate agreements, as allowed by law."

     SECTION 5.  Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§346-  Pharmacy reimbursement.  (a)  A pharmacy shall submit claims to the department to verify the amount charged to tier two and tier three program participants.  On a schedule to be determined by the department, the department shall reimburse each pharmacy for the discounts of prescription drugs provided to program participants.

     (b)  The department shall collect pharmacy use data necessary to calculate the amount of the manufacturer rebate under section 346- .  The department shall protect the confidentiality of information received as required under state or federal law, rule, or regulation.

     (c)  The department shall not impose transaction charges on participating pharmacies that submit claims or receive payments under the program."

     SECTION 6.  Chapter 346-341, Hawaii Revised Statutes, is amended by:

     (1)  Adding fourteen new definitions to be appropriately inserted and to read as follows:

     ""Administrator" means the director of human services.

     "Discount" means the amount by which the price of a drug sold by a pharmacy is reduced as determined by the department of human services.

     "Hawaii Rx plus program" means the prescription drug discount program that provides discounts to qualified Hawaii residents who are uninsured or underinsured through manufacturer rebates and pharmacy discounts.

     "Hawaii state pharmacy assistance program" means the program that covers the co-payments for eligible seniors and disabled individuals under the medicare part D drug benefit and the prescription drug discounts for the Hawaii Rx plus program.

     "Initial discount price" as it pertains to a drug means the price that the department pays medicaid participating pharmacies to purchase the drug for its medicaid members.

     "Manufacturer" means anyone who is engaged in manufacturing, preparing, propagating, compounding, processing, packaging, repackaging, or labeling a prescription drug.

     "Participating pharmacy" or "retail pharmacy" means a retail pharmacy located in this State, or another business licensed to dispense prescription drugs in this State, that elects to participate in the program.

     "Pharmacy and therapeutic committee" means the committee established by the department that advises the state medicaid director on the Hawaii Rx plus preferred drug list.

     "Preferred drug" includes but is not limited to:

     (1)  A drug listed on the State's medicaid preferred drug list;

     (2)  An antipsychotic drug;

     (3)  An antidepressant drug;

     (4)  A chemotherapy drug;

     (5)  An antiretroviral drug;

     (6)  An immunosuppressive drug; and

     (7)  Any other drug listed on the Hawaii Rx plus preferred drug list pursuant to this part.

     "Secondary discount price" as it pertains to a drug means the initial discount price less any further discounts paid out of the Hawaii state pharmacy assistance program special fund.

     "State medicare part D program" means the medicare part D state pharmacy assistance program that provides co-payments for qualified Hawaii residents."

     "Tier one enrollee" means a beneficiary who qualifies for the medicare part D state pharmacy assistance program.

     "Tier two enrollee" means a beneficiary who qualifies for the Hawaii Rx plus program and whose household income is equal to or less than three hundred and fifty per cent of the federal poverty level.

     "Tier three enrollee" means a beneficiary who qualifies for the Hawaii Rx plus program and whose household income is equal to or less than three hundred per cent of the federal poverty level as approved by the federal Centers for Medicare and Medicaid Services."

     (2)  Amending the following definitions to read as follows:

     ""Asset test" means the asset limits for eligibility in the [state pharmacy assistance program] state medicare part D program as defined by the Medicare Modernization Act and any amendments thereto.

     "Contractor means the person, partnership, or corporate entity that has an approved contract with the department to administer the Hawaii state pharmacy assistance program as established under this part.

     "Enrollee" means a resident of this State who meets the conditions specified in this part and in departmental rules relating to eligibility for participating in the Hawaii state pharmacy assistance program and whose application for enrollment in the Hawaii state pharmacy assistance program has been approved by the department."

     SECTION 7.  Section 346-342, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:

     "(a)  There is established within the department the Hawaii state pharmacy assistance program[.], which shall provide benefits for enrollees in the state medicare part D program and the Hawaii Rx plus program.  Provided that there are no federally approved prescription drug plans available in the state that provide a full coverage prescription drug benefit, the [state pharmacy assistance program] state medicare part D program may coordinate the prescription drug coverage with [the] any benchmark federal medicare part D prescription drug plan benefit, including related supplies, as determined by the department, to each resident who meets the eligibility requirements as outlined in section 346-343.  The Hawaii Rx plus program shall combine the purchasing power of all qualified residents to enable the State to reduce prescription drug costs, as approved by the federal Centers for Medicare and Medicaid Services, and further improve the quality of healthcare for qualified Hawaii residents in the program, thereby increasing the overall health of Hawaii residents, promoting healthy communities, and protecting the public health and welfare.

     (b)  The department may provide enrollment assistance to eligible individuals into the [state pharmacy assistance program.] state medicare part D program.  Enrollment for medicaid dual eligible persons shall begin no later than October 1, 2005.

     (c)  [The]For the state medicare part D program, the department shall allow any willing benchmark prescription drug plan approved by the federal Centers for Medicare and Medicaid Services to provide the coordination of benefits between the [State's medicare prescription drug program] state medicare part D program and the federal medicare part D drug benefit."

     Section 8.  Section 346-342, Hawaii Revised Statutes, is amended by amending subsection (i) to read as follows:

     "(i)  The department or contractor [may] shall take into consideration the rebate calculated under the medicaid rebate program pursuant to title 42 United States Code Section 1396r-8, the average [wholesale] manufacturer price of prescription drugs, and any other cost data related to prescription drug prices and price discounts."

     SECTION 9.  Section 346-343, Hawaii Revised Statutes, is amended to read as follows:

     "§346-343  Eligibility.  (a)  All residents of the State shall be eligible to participate in the Hawaii state pharmacy assistance program; provided that the applicant[:] meets the following eligibility requirements:

     (1)  Tier one enrollee:

          [(1)] (A) Is a resident of Hawaii;

          [(2)] (B) Is sixty-five years or older, or is disabled and receiving a social security benefit;

          [(3)] (C) Has a household income [at or below] equal to or less than one hundred fifty per cent of the federal poverty level;

          [(4)] (D) Meets the asset test; [and]

          [(5)] (E) Is not a member of a retirement plan who is receiving a benefit from the Medicare Modernization Act[.];

         (F)  Is medicaid dual eligible for and/or receiving medicare part D prescription drug benefit; and

         (G)  Is enrolled in the program.

     (2)  Tier two enrollee:

         (A)  Is a resident of Hawaii;

         (B)  Has a family income equal to or less than three hundred fifty per cent of the federal poverty level;

         (C)  Lacks prescription drug coverage or has exceeded the extent of the resident's prescription drug benefits; and

         (D)  Is enrolled in the program.

     (3)  Tier three enrollee:

         (A)  Is a resident of the State of Hawaii;

         (B)  Has a family income equal to or less than three hundred per cent of the federal poverty level, as approved by the federal Centers for Medicare and Medicaid Services;

         (C)  Lacks prescription drug coverage or has exceeded the extent of the resident's prescription drug benefits; and

         (D)  Is enrolled in the program.

     (b)  [State pharmacy assistance] Tier one program applicants who are enrolled in any other public assistance program providing pharmaceutical benefits, other than the Medicare Modernization Act and medicaid, shall be ineligible for the [state pharmacy assistance] state medicare part D program as long as they receive pharmaceutical benefits from that other public assistance program, unless the applicant is eligible for medicare.  Residents who qualify for, or are enrolled in, the Hawaii Rx plus program shall be eligible for the [state pharmacy assistance] state medicare part D program; provided that they meet all other [state pharmacy assistance] state medicare part D program requirements.

     (c)  [State pharmacy assistance program applicants] Applicants who are enrolled in a private sector plan or insurance providing payments for prescription drugs shall be ineligible to receive benefits from the [state pharmacy assistance] state medicare part D program.

     (d)  The department:

     (1)  Shall establish procedures to determine eligibility and shall issue program enrollment cards to eligible qualified residents;

     (2)  Shall provide for outreach efforts to build public awareness of the program and maximize the enrollment of eligible qualified residents; and

     (3)  May adjust the requirements and terms of the program by rule to accommodate any federally funded or authorized prescription drug program."

     SECTION 10.  Section 346-344, Hawaii Revised Statutes, is amended to read as follows:

     "§346-344  Benefits.  (a)  For persons meeting the tier one eligibility requirements in section 346-343, the Hawaii state pharmacy assistance program may pay all or some of the co-payments required under the federal medicare part D pharmacy benefit program, subject to the sufficiency of funds in the Hawaii state pharmacy assistance program special fund, as determined by the department.

     (b)  [The state pharmacy assistance program]For tier one enrollees, the state medicare part D program is the payor of last resort subject to the sufficiency of funds in the Hawaii state pharmacy assistance program special fund, as determined by the department.

     (c)  The [state pharmacy assistance program] benefits for tier one enrollees shall be funded with state appropriations, including funds derived from revenues to the State from rebates paid by pharmaceutical manufacturers pursuant to section 346-342(g), and with savings resulting from medicare prescription drug coverage for the medicaid dual eligible population.

     (d)  For tier two and tier three enrollees, each retail pharmacy participating in the Hawaii Rx plus program shall sell drugs to qualified residents at the initial discount price, as determined by the department pursuant to this part.

     (e)  Beginning July 1, 2004, a participating pharmacy shall offer the initial discount price.

     (f)  No later than July 1, 2008, a participating pharmacy shall offer the secondary discount price to tier three enrollees, if available.

     (g)  The benefits for tier two and tier three enrollees shall be funded with state appropriations, including funds, as approved by the federal Centers for Medicare and Medicaid Services, derived from revenues to the State from rebates paid by pharmaceutical manufacturers pursuant to title 42 United States Code section 1396r-8 and to section 346-342(g)."

     SECTION 11.  Section 346-345, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§346-345[]Special fund.  (a)  There is established within the state treasury to be administered by the department, the Hawaii state pharmacy assistance program special fund, into which shall be deposited:

     (1)  All moneys received from manufacturers that pay rebates as provided in section 346-342(g);

     (2)  Appropriations made by the legislature to fund; and

     (3)  any other revenues designated for the fund.

     (b)  Moneys in the Hawaii state pharmacy assistance program special fund may be used for:

     (1)  Reimbursement payments to participating pharmacies for co-payments required under the federal medicare part D pharmacy benefit program as provided to [state pharmacy assistance program participants] tier one enrollees;

     (2)  Reimbursement payments to participating pharmacies for discounts provided to tier two and tier three enrollees;

     [(2)] (3) The costs of administering the Hawaii state pharmacy assistance program, including salary and benefits of employees, computer costs, and contracted services as provided in section 346-342(d); and

     [(3)] (4) Any other purpose deemed necessary by the department for the purpose of operating and administering the Hawaii state pharmacy assistance program.

     All interest on special fund balances shall accrue to the special fund.  Upon dissolution of the Hawaii state pharmacy assistance program special fund, any unencumbered moneys in the fund shall lapse to the general fund.

     (c)  The department shall expend all [revenues] moneys in the Hawaii state pharmacy assistance program special fund to pay for the benefits to enrollees in the Hawaii state pharmacy assistance program, the costs of administering the program, and reimbursement of medicaid pharmaceutical costs[.], provided that any mandatory rebate revenues cannot be used for administrative program costs and general funds must be used to pay for a percentage of the secondary discount price unless otherwise approved by the federal Centers for Medicare and Medicaid Services."

     SECTION 12.  Chapter 346, Hawaii Revised Statutes, is amended by amending the title of part XV to read as follows:

     "[[]PART XV.[]]  HAWAII STATE PHARMACY ASSISTANCE PROGRAM"

     SECTION 13.  Part XIII of Chapter 346, Hawaii Revised Statutes, is repealed.

     SECTION 14.  The department shall conduct a study in order to gather information on the size of the target population, utilization data and other information as needed in order for the department to identify the amount of the appropriation needed to implement the secondary discount price and other costs of the program.

     SECTION 15.  There is appropriated out of the general revenues of the State of Hawaii the sum of $50,000, or so much thereof as may be necessary for fiscal year 2007-2008, to be paid into the Hawaii state pharmacy assistance program special fund.

     There is appropriated out of the Hawaii state pharmacy assistance program special fund the sum of $50,000, or so much thereof as may be necessary for fiscal year 2007-2008, to the department of human services for the purposes of conducting the study mandated in Section 14 of this Act.

     The sum appropriated by this Act shall be expended by the department of human services for the purposes of conducting the study mandated in Section 14 of this Act.

     SECTION 16.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 17.  This Act shall take effect on July 1, 2008, except for section 14 and section 15 which shall take effect on July 1, 2007.

 

INTRODUCED BY:

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BY REQUEST