Report Title:

Prescription Drugs; Pharmaceutical Cost Management Council

Description:

Establishes a pharmaceutical cost management council to consider strategies to manage increasing costs of prescription drugs and increase access to prescription drugs for all Hawaii residents.

HOUSE OF REPRESENTATIVES

H.B. NO.

1052

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to prescription drugs.

 

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

SECTION 1. The legislature finds that the rising cost of prescription drugs has imposed a significant hardship on individuals who have limited budgets, are uninsured, or who have prescription coverage that is unable to control costs successfully due to cost shifting and disparate pricing policies. The average cost per prescription for seniors rose significantly between 1992 and 2000 and is expected to continue increasing significantly through 2010. As a result, there is an increasing need for citizens of Hawaii to have affordable access to prescription drugs. In an effort to promote healthy communities and to protect the public health and welfare of Hawaii residents, the legislature finds that it is the legislature's responsibility to make every effort to provide affordable prescription drugs for all residents of the State.

The purpose of this Act is to establish a pharmaceutical cost management council to consider strategies to manage increasing costs of prescription drugs and increase access to prescription drugs for all Hawaii residents.

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

"§346-A Pharmaceutical cost management council. (a) There is created within the department of human services, for administrative purposes, the pharmaceutical cost management council, which shall consist of:

(1) The director of human services;

(2) The director of health;

(3) The director of human resources development;

(4) The chair of the employer-union health benefits trust fund;

(5) The administrator of the disability compensation division of the department of labor and industrial relations;

(6) Five members from the public who shall be appointed by the governor as provided in section 26-34 and shall include:

(A) A licensed pharmacist employed by a community retail pharmacy;

(B) A representative of a pharmaceutical manufacturer with substantial operations located in the State that has at least seven hundred fifty employees;

(C) A primary care physician;

(D) An individual who represents those who will receive benefit from the establishment of this council; and

(E) An individual with experience in the financing, development, or management of a health insurance company that provides pharmaceutical coverage.

Any member of the council may be removed by the governor for cause.

(b) The director of human services shall serve as chairperson of the council, which shall meet at times and places specified by the chairperson or upon the request of two members of the council.

(c) Members shall not be compensated but shall be reimbursed for necessary expenses, including travel expenses, incurred in the performance of their duties.

(d) The department of human services shall provide necessary support services to the council.

§346-B Powers of pharmaceutical cost management council. (a) The pharmaceutical cost management council shall have the power to:

(1) Contract for the purpose of implementing the cost containment provisions of this part;

(2) File suit;

(3) Execute, as permitted by applicable federal law, prescription drug purchasing agreements with:

(A) All departments, agencies, authorities, institutions, programs, any agencies or programs of the federal government, quasi-public corporations, and political subdivisions of this State; provided that any contract or agreement executed with or on behalf of the department shall contain all necessary provisions to comply with the provisions of Title XIX of the Social Security Act, 42 U.S.C. §1396 et seq., dealing with pharmacy services offered to recipients under any prescription drug assistance program in the State;

(B) Governments of other states and jurisdictions and their individual departments, agencies, authorities, institutions, programs, quasi-public corporations, and political subdivisions; and

(C) Regional or multi-state purchasing alliances or consortia, formed for the purpose of pooling the combined purchasing power of the individual members in order to increase bargaining power; and

(4) Consider strategies by which Hawaii may manage the increasing costs of prescription drugs and increase access to prescription drugs for all of the State's citizens, including the authority to:

(A) Explore the enactment of fair prescription drug pricing policies;

(B) Explore discount prices or rebate programs for seniors and persons without prescription drug coverage;

(C) Explore programs offered by pharmaceutical manufacturers that provide prescription drugs for free or at reduced prices;

(D) Explore requirements and criteria, including the level of detail, for prescription drug manufacturers to disclose to the council expenditures for advertising, marketing, and promotion, based on aggregate national data;

(E) Explore the establishment of counter-detailing programs aimed at educating health care practitioners authorized to prescribe prescription drugs about the relative costs and benefits of various prescription drugs, with an emphasis on generic substitution for brand name drugs when available and appropriate; prescribing older, less costly drugs instead of newer, more expensive drugs, when appropriate; and prescribing lower dosages of prescription drugs, when available and appropriate;

(F) Explore disease state management programs aimed at enhancing the effectiveness of treating certain diseases identified as prevalent among state residents with prescription drugs;

(G) Explore prescription drug purchasing agreements with large private sector purchasers of prescription drugs and including those private entities in pharmacy benefit management contracts; provided that no private entity may be compelled to participate in a purchasing agreement;

(H) Explore the feasibility of using or referencing the federal supply schedule or referencing to the price, as adjusted for currency valuations, set by the Canada Patented Medicine Prices Review Board, or any other appropriate referenced price, to establish prescription drug pricing for brand name drugs in the State; and to review and determine the dispensing fees for pharmacies;

(I) Explore, if possible, joint negotiations for drug purchasing and a shared prescription drug pricing schedule and shared preferred drug list for use by the public employees insurance agency, the medicaid program, other state payors, and private insurers;

(J) Explore coordination between the medicaid program, the public employees insurance agency and, to the extent possible, in-state hospitals and private insurers toward the development of a uniform preferred prescription drug list that is clinically appropriate and that leverages retail prices;

(K) Explore policies that promote the use of generic drugs, where appropriate;

(L) Explore a policy that precludes a drug manufacturer from reducing the amounts of drug rebates or otherwise penalize an insurer, health plan, or other entity that pays for prescription drugs based upon the fact that the entity uses step therapy or other clinical programs before a drug is covered or otherwise authorized for payment; and

(M) Explore arrangements with entities in the private sector, including self-funded benefit plans and nonprofit corporations, toward combined purchasing of health care services, health care management services, pharmacy benefits management services, or pharmaceutical products on the condition that no private entity be compelled to participate in the prescription drug purchasing pool;

(5) Contract with appropriate legal, actuarial, and other service providers required to accomplish any function within the powers of the council;

(6) Explore and develop other strategies, as permitted under state and federal law, aimed at managing escalating prescription drug prices and increasing affordable access to prescription drugs for all Hawaii citizens; and

(7) Explore the licensing and regulation of pharmaceutical detailers, including the requirement of continuing professional education, the imposition of fees for licensing and continuing education, the establishment of a special revenue account for deposit of the fees and the imposition of penalties for noncompliance with licensing and continuing education requirements, and rules to establish procedures to implement this paragraph.

(b) The council shall report to the legislature no later than twenty days before the convening of the regular session of 2006, and annually thereafter, to provide recommendations to the legislature on needed legislative action and other functions established by this section or requested by the legislature.

(c) The council shall study the fiscal impact to the State of the federal "Medicare Prescription Drug Improvement and Modernization Act of 2003" and shall include the council's findings in its initial report to the legislature.

(d) The council shall:

(1) Review and determine that the implementation of any prescription drug assistance programs under this section will not jeopardize, reduce, or penalize the benefits of veterans or other recipients of federal supply schedule drug prices, considering their respective co-pay structures and the pricing mechanisms of their respective programs; and

(2) Commence negotiations to obtain independent agreements or multi-state agreements from as many as ten states to use or reference a pricing schedule."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

 

INTRODUCED BY:

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