STAND. COM. REP. NO.  140

 

Honolulu, Hawaii

                , 2011

 

RE:   H.B. No. 1243

      H.D. 1

 

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

 

Sir:

 

     Your Committees on Labor & Public Employment and Economic Revitalization & Business, to which was referred H.B. No. 1243 entitled:

 

"A BILL FOR AN ACT RELATING TO REPACKAGED DRUGS AND COMPOUND MEDICATIONS,"

 

beg leave to report as follows:

 

     The purpose of this bill is to help mitigate unreasonable increases in the cost of prescription drugs, including repackaged prescription drugs and compound medications in Hawaii's workers' compensation insurance system by providing reasonable restrictions on markups.

 

     The Property Casualty Insurers Association of America; Hawaii Employers' Mutual Insurance Company, Inc.; Hawaii Insurers Council; GEICO; and Marriott International, Inc. supported this bill.  The Department of Labor and Industrial Relations supported the intent of this measure.  The Hawaii Injured Worker's Alliance and Aloha Pain Clinic opposed this bill.

 

     The repackaging of drugs is the practice of breaking a large bottle of drugs down into several bottles of smaller quantities, while compound drugs are created by combining two or more "raw" ingredients into a unique product to provide therapeutic relief of an injury or illness.

 

     Recent workers' compensation cost data has shown an increase in costs.  Pharmacy costs, in particular the additional use of repackaged and compound drugs, appear to be the primary driver behind such an increase.

 

     Your Committees note, however, the concerns of some of the stakeholders and therefore respectfully request the Committee on Health, should it choose to hear this measure, to examine how the regulations proposed in this bill may affect both physicians' ability to dispense medications to patients and access to medications in rural areas and on the neighbor islands.

 

     Your Committees have amended this bill by:

 

     (1)  Specifying that the cap on the payment for prescription drugs cannot exceed 140 percent of the average wholesale price as listed in the American Druggist Red Book;

 

     (2)  Removing an insurer, self-insured, or captive insurer's pharmacy benefit network price as a factor in determining the maximum payment for prescription drugs;

 

     (2)  Providing that the unit price of repackaged or relabeled drugs cannot exceed the original manufacturers' average wholesale price plus 40 percent; and

 

     (3)  Making technical, nonsubstantive amendments for clarity, consistency, and style.

 

     As affirmed by the records of votes of the members of your Committees on Labor & Public Employment and Economic Revitalization & Business that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1243, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1243, H.D. 1, and be referred to the Committee on Health.

 

Respectfully submitted on behalf of the members of the Committees on Labor & Public Employment and Economic Revitalization & Business,

 

 

____________________________

ANGUS L.K. MCKELVEY, Chair

 

____________________________

KARL RHOADS, Chair