STAND. COM. REP. NO. 795

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 591

       S.D. 2

 

 

 

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

 

Sir:

 

     Your Committee on Judiciary and Labor, to which was referred S.B. No. 591, S.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO PHARMACY BENEFIT MANAGEMENT COMPANIES,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to require registration and regulation of pharmacy benefit management companies including periodic audits of pharmacies that submit claims to pharmacy benefit management companies.

 

     Your Committee received testimony in support of this measure from six private individuals.  Your Committee received testimony in opposition to this measure from the Insurance Commissioner of the Department of Commerce and Consumer Affairs; Express Scripts; Medco Health Solutions, Inc.; Hawaii Medical Service Association; Pharmaceutical Care Management Association; CVS Caremark Corporation; and Ohana Health Plan.

 

     Your Committee finds that pharmacy benefit management companies play a growing role in the provision of health insurance coverage for prescription drugs but are currently unregulated by any state entity.  Your Committee further finds that requiring registration of pharmacy benefit management companies will allow the State to exercise some degree of oversight over these companies to ensure the health and safety of Hawaii's residents. 

 

     Your Committee notes the concerns regarding certain provisions of this measure that were raised in the testimony of pharmacy benefit managers, health insurers, and the Insurance Commissioner.  Your Committee further notes that these stakeholders engaged in sincere efforts to communicate with the proponents of this measure and your Committee to address concerns and to reach consensus on amendments to this measure. 

 

Accordingly, your Committee has amended this measure by deleting its contents and replacing them with language that:

 

     (1)  Requires registration of a pharmacy benefit management company with and subsequent annual statements filed with the Insurance Commissioner;

 

     (2)  Establishes certain standards and criteria for the conducting of audits of pharmacies by managed care companies, insurance companies, third-party payers, or the representatives of these entities, which will help to enforce existing regulatory standards for providers of prescription drugs as well as supplement the new regulations created by this measure;

 

     (3)  Prohibits certain actions by a pharmacy benefit management company, including actions that limit consumer protection or a patient's method of obtaining prescription medications;

 

     (4)  Authorizes the Insurance Commissioner to assess fines for violations of the new chapter established pursuant to this measure and authorizes appeals of certain decisions made by the Insurance Commissioner;

 

     (5)  Requires a pharmacy benefit management company contracting with an entity to provide prescription drug coverage to provide an annual report, which shall include information regarding the number and total amount paid to pharmacies for prescriptions filled under the contract, as well as other information regarding fulfillment of the contract;

 

     (6)  Mandates that pharmacy benefit management companies shall provide to pharmacies that contract with the pharmacy benefit management company the methodology that the pharmacy benefit management company uses to determine reimbursement, as well as other disclosures related to payment of the pharmacy by the pharmacy benefit management company; and

 

     (7)  Mandates disclosures to enrollees that include a list of the names and locations of all affiliated providers, the method of resolving complaints of covered persons, and notice that the pharmacy benefit management company is required to be registered in the State by the insurance commissioner.

 

     As affirmed by the record of votes of the members of your Committee on Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 591, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 591, S.D. 2.

 

Respectfully submitted on behalf of the members of the Committee on Judiciary and Labor,

 

 

 

____________________________

CLAYTON HEE, Chair