STAND. COM. REP. NO. 265

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 1414

       S.D. 1

 

 

 

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

 

Sir:

 

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1414 entitled:

 

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

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to restrict reimbursements under workers' compensation insurance for repackaged prescription drugs and compounded medications to the amount that is currently authorized for retail pharmacies under state law.

 

     Your Committee received testimony in support of this measure from the Department of Human Resources Development, the City and County of Honolulu, Marriott International, Inc., Hawaii Employers' Mutual Insurance Company, Inc., Hawaii Insurers Council, GEICO, the Property Casualty Insurers Association of America, IMS, and ALTRES, Inc.  Your Committee received testimony in opposition to this measure from Aloha Pain Clinic, Industrial Pharmacy Management, LLC, Workstar Injury Recovery Center, Hawaii Injured Worker's Alliance, and two individuals.

 

     Your Committee finds that the cost of prescription drugs is one of the main drivers of health care cost inflation nationwide.  Your Committee further finds that the repackaging and compounding of prescription drugs is a means of artificially increasing the retail price of drugs by merely modifying packaging materials or delivery systems.  Your Committee also finds that this measure will serve as an effective cost-containment strategy for the workers' compensation system without impacting an injured employee's access to needed medications.  Furthermore, your Committee finds that this measure is not intended to apply to the practice of pharmacy that creates a specialized drug, consisting of more than one active ingredient, according to a doctor's prescription for certain individual patients nor to the practice of medicine whereby a doctor mixes or combines drugs for dispensing directly to a patient according to the patient's individualized needs.

 

     Your Committee is not unsympathetic to concerns voiced by health care providers, especially those on the neighbor islands, that low rates of reimbursements and delays in receiving payment for medical care provided to workers' compensation patients affects providers' ability to effectively deliver care.  Your Committee notes that the allowable reimbursement rate of one hundred percent of the drug's cost plus forty percent for repackaged or compounded drugs contained in this measure is one of the most generous in the nation.  However, your Committee further finds that it is inappropriate for providers to recover costs by using repackaging or compounding schemes to recoup costs at the expense of workers' compensation insurers.  Your Committee recommends that providers who find themselves at odds with workers' compensation insurance policies pursue remedies that reform that system instead of engaging in unfair business practices.

 

     Your Committee has amended this measure by:

 

     (1)  Clarifying that the restrictions on reimbursements for compounded medications apply only to physician-dispensed premixed or prepackaged compounded medications; and

 

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1414, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1414, S.D. 1, and be referred to the Committee on Judiciary and Labor.

 

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

 

 

 

____________________________

ROSALYN H. BAKER, Chair