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 appropriates funds to assist Federally Qualified Health Centers to procure prescription drugs in the most cost-efficient manner to increase access to prescription drugs for all Hawaii residents. Effective date July 1, 2099. (SB1209 HD2)

THE SENATE

S.B. NO.

1209

TWENTY-THIRD LEGISLATURE, 2005

S.D. 2

STATE OF HAWAII

H.D. 2


 

A BILL FOR AN ACT

 

relating to prescription drugs.

 

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

PART I

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 drug coverage that does not successfully control costs 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 to increase significantly through 2010. As a result, there is an urgent need for Hawaii's citizens 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 part 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. Pharmaceutical cost management council. There is established within the department of human services for administrative purposes, the pharmaceutical cost management council, which shall consist of:

(1) The director of human services or the director's designee;

(2) The director of health or the director's designee;

(3) The director of human resources development or the director's designee;

(4) The chair of the employer-union health benefits trust fund or the chair's designee;

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

(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;

(C) A primary care physician;

(D) An individual who represents those who will receive benefits from the establishment of the pharmaceutical cost management 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 or the director's designee shall serve as chairperson of the council, which shall meet at times and places specified by the chairperson or upon the request of two or more members of the council.

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

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

SECTION 3. The pharmaceutical cost management council shall advise on:

(1) Contracts for the purpose of containing prescription drug costs;

(2) Recommended civil action;

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

(A) All departments, agencies, authorities, institutions, programs, quasi-public corporations, and political subdivisions of this state; and

(B) Any agencies or programs of the federal government;

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., relating to pharmacy services offered to recipients under any prescription drug assistance program in the state;

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

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

(4) 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 exploring:

(A) The enactment of fair prescription drug pricing policies;

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

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

(D) Requirements and criteria, including level of detail, for prescription drug manufacturer disclosure to the council of expenditures for advertising, marketing, and promotion, based on aggregate national data;

(E) 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 medically appropriate; prescribing older, less costly drugs instead of newer, more expensive drugs, when appropriate; and prescribing lower dosages of prescription drugs, when available and medically appropriate;

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

(G) Prescription drug purchasing agreements with large private sector purchasers of prescription drugs, including pharmacy benefit management contracts; provided that no private entity shall be compelled to participate in a purchasing agreement;

(H) The feasibility of using or referencing the federal supply schedule or referencing 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, concluding with a review and determination of the dispensing fees for pharmacies;

(I) Joint negotiations for drug purchasing and a shared prescription drug pricing schedule and shared preferred drug list for use by the employer-union health benefits trust fund, the medicaid program, other state payors, and private insurers;

(J) Coordination between the medicaid program, the employers-union health benefits trust fund, and 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) Policies that promote the use of generic drugs, where medically appropriate;

(L) A policy that precludes a drug manufacturer from reducing the amounts of drug rebates or otherwise penalizing 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) 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 shall be compelled to participate in the prescription drug purchasing pool;

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

(6) Development of 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 residents; and

(7) 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 prior to the convening of each regular session, beginning with the regular session of 2006, to provide recommendations, suggested legislation, and other information in fulfillment of the council's duties under this section or as 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 whether the implementation of any prescription drug assistance programs under this section will 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.

PART II

SECTION 4. Access to prescription drugs is essential to the restoration and maintenance of health, and is as significant as access to regular medical care. For some individuals, access to medical care is of little value unless they also have access to the drugs prescribed to them.

Federally qualified health centers across Hawaii annually serve nearly fifty thousand residents who are below two hundred per cent of the poverty level and have no prescription drug coverage. This segment of Hawaii's population disproportionately suffers from chronic diseases such as hypertension, asthma, and diabetes, which routinely require continuing medication. The Hawaii Rx plus program, the medicare drug benefit program, and other notable public efforts do not meet the needs of these residents because they cannot afford the patient co-payment that accompanies such programs.

Federally qualified health centers have very cost-effective means of procuring prescription drugs for these low-income patients through programs such as the federal drug pricing program, 340B program, and pharmaceutical manufacturer's patient assistance programs. A small public investment in these programs will result in an exponential increase in access for low-income patients to necessary prescription drugs.

The purpose of this part is to appropriate funds to:

(1) Subsidize the cost of purchasing pharmaceutical products through the federal drug pricing or 340B program by federally qualified health centers on behalf of their low-income patients;

(2) Subsidize services provided by federally qualified health centers to procure free prescription drugs for their low-income patients through pharmaceutical manufacturer's patient assistance programs; and

(3) Support the Medicine Bank in its collection and distribution of free pharmaceutical samples.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the amount of $3 or so much thereof as may be necessary for fiscal year 2005-2006 and the same sum or so much thereof as may be necessary for fiscal year 2006-2007 as follows:

(1) $1 to subsidize the cost of purchasing pharmaceutical products through the federal drug pricing or 340B program by federally qualified health centers on behalf of their low-income patients;

(2) $1 to subsidize services provided by federally qualified health centers to procure free prescription drugs for their low-income patients through pharmaceutical manufacturer's patient assistance programs; and

(3) $1 to support the Medicine Bank in its collection and distribution of free pharmaceutical samples.

The sums appropriated shall be expended by the department of health for the purposes of this Act.

PART III

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2099; provided that sections 2 and 3 shall be repealed on June 30, 2008.