Report Title:

Prescription Drugs

 

Description:

Establishes the Prescription Drug Access Program to lower prescription drug costs for persons without prescription drug coverage under existing health insurance plans or government programs by pooling the purchasing power of program participants and thereby providing the leverage needed to negotiate discounts from drug manufacturers and labelers that voluntarily participate in the program. (HB47 HD1)

 

HOUSE OF REPRESENTATIVES

H.B. NO.

47

TWENTY-FIRST LEGISLATURE, 2001

H.D. 1

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. Chapter 323D, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . PRESCRIPTION DRUG ACCESS PROGRAM

§323D- Prescription drug access program. There is established within the state agency, the prescription drug access program. The program will combine the purchasing power of persons without drug coverage under health insurance plans or public programs such as Medicare, to reduce prescription drug costs for this group. The state agency may contract with a third party or third parties in accordance with chapter 103F to administer any single component, or combination of components of the program including outreach, eligibility, claims, administration, rebate recovery, and redistribution.

§323D- Prescription drug advisory commission. (a) There is created within the department of health for administrative purposes only, the prescription drug advisory commission that shall serve in an advisory capacity to the state agency. The commission shall consist of nine members. The attorney general, director of commerce and consumer affairs, director of health, and director of human services, or their respective representatives shall serve as ex officio nonvoting members of the commission. The remaining five members shall, by and with the advice and consent of the senate, be appointed by the governor as follows:

(1) Two members of the public, one of whom shall represent the interests of senior citizens, shall be appointed from a list of nominees submitted by the senate president; provided that of the initial appointees, one shall be appointed for a two-year term and one shall be appointed for a three-year term;

(2) Two members of the public, one of whom shall represent the interests of senior citizens, shall be appointed from a list of nominees submitted by the speaker of the house of representatives; provided that of the initial appointees, one shall be appointed for a two-year term and one shall be appointed for a three-year term; and

(3) One member shall be a pharmacist who:

(A) Is licensed to practice pharmacy and is engaged in the practice of retail pharmacy in this State;

(B) Possesses at least five years of experience in this State as a licensed pharmacist; and

(C) Is a resident of this State.

At least one appointed member shall be from each of the counties of Hawaii, Honolulu, Kauai, and Maui.

(b) All appointed members shall be selected on the basis of their interest in and knowledge of policy relating to prescription drugs, and their ability to contribute to the development of prescription drug policy in this state.

(c) With the exception of certain initial appointees, all members of the commission shall serve for terms of three years and may be reappointed. With the exception of the pharmacist member, appointed members may serve out their complete term regardless of whether during the term of their membership their profession or qualifications vary from requirements under subsection (a).

(d) The commission shall meet at least four times per year at times and places agreed upon by the members of the commission. The chair shall be elected annually by all members of the commission and shall be selected from members who are not representatives of a government agency. Members shall serve without compensation but shall be reimbursed for necessary expenses incurred in the discharge of their duties.

§323D- Duties of prescription drug advisory commission. The commission shall:

(1) Review access to prescription drugs for state residents, including pricing and affordability information;

(2) Advise the administrator on access to prescription drugs and prescription drug prices, including insurance and third-party payments for prescription drugs; and

(3) Advise the administrator on the adoption of rules necessary to implement this part.

§323D- Program eligibility. (a) Any state resident without prescription drug coverage under a health insurance plan or public program shall be eligible to participate in the prescription drug access program.

(b) The state agency:

(1) Shall establish simplified procedures for determining eligibility and shall issue program enrollment cards to eligible residents;

(2) Shall undertake outreach efforts to build public awareness of the program and maximize the enrollment of eligible residents; and

(3) May adjust the requirements and terms of the program by rule to accommodate any new federally funded prescription drug programs.

§323D- Rebate agreement. (a) All prescription drug manufacturers or labelers that sell prescription drugs in the state in accordance with chapter 328 through any state funded or state-operated program may enter into a rebate program with the state agency for the prescription drug access program. The rebate agreement may require the manufacturer or labeler to make rebate payments to the State each calendar quarter according to a schedule established by the agency.

(b) The administrator shall negotiate the amount of the rebate required from a manufacturer or labeler.

§323D- Nonparticipating manufacturers and labelers. The state agency may release the names of manufacturers and labelers that do not enter into rebate agreements. This information shall be deemed public information.

§323D- Discounted retail prices for program participants. (a) Each retail pharmacy voluntarily participating in the prescription drug access program shall discount the price of drugs covered by the program and sold to program participants.

(b) The state agency shall establish discounted prices for drugs covered by a rebate agreement and shall promote the use of efficacious and reduced-cost drugs, taking into consideration:

(1) Reduced prices for state and federally capped drug programs;

(2) Differential dispensing fees;

(3) Administrative overhead;

(4) Incentive payments; and

(5) The average of all rebates provided pursuant to section 323D- , weighted by sales of drugs subject to those rebates over the most recent twelve-month period for which the information is available.

(c) In making a determination under this section, the administrator may rely on pricing information for a selected number of prescription drugs where the list of drugs selected is:

(1) Representative of the prescription drug needs of the residents of the State; and

(2) Made public.

§323D- Pharmacy reimbursement. (a) A retail pharmacy shall submit claims to the state agency to verify the amount charged to program participants. On a weekly or biweekly basis, the state agency shall reimburse each retail pharmacy for discounted prices of prescription drugs provided to program participants plus a professional fee of $3 or other amount as the board of pharmacy may provide by rule under section 461- .

(b) The state agency shall collect retail pharmacy use data necessary to calculate the amount of the manufacturer or labeler rebate under section 323D- . The state agency shall protect the confidentiality of information received as required under state or federal law, rule, or regulation.

§323D- Discrepancies in rebate amounts. (a) If there is a discrepancy in the manufacturer’s or labeler’s favor between the amount claimed by a pharmacy and the amount rebated by the manufacturer or labeler, the state agency, at the state agency’s expense, may hire a mutually agreed-upon independent auditor to verify the accuracy of the data supplied to the state agency. If a discrepancy still exists following the audit, the manufacturer or labeler shall justify the reason for the discrepancy or make payment to the state agency for any additional amount due.

(b) If there is a discrepancy against the interest of the manufacturer or labeler in the information provided by the state agency to the manufacturer or labeler regarding the manufacturer’s or labeler’s rebate, the manufacturer or labeler, at the manufacturer’s or labeler’s expense, may hire a mutually agreed-upon independent auditor to verify the accuracy of the data supplied to the state agency. If a discrepancy still exists following the audit, the state agency shall justify the reason for the discrepancy and refund to the manufacturer or labeler any excess payment made by the manufacturer or labeler.

§323D- Annual report. The state agency shall report the enrollment and financial status of the prescription drug access program to the legislature no later than twenty days prior to the convening of each regular session, beginning with the 2002 regular session."

SECTION 2. Chapter 461, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§461- Operation of the prescription drug access program. (a) The board shall adopt rules requiring retail pharmacies to disclose to participants of the prescription drug access program the amount saved as a result of the program. In adopting rules, the board shall consider and protect proprietary information.

(b) The board may adjust the professional fee under section 323D- by rule."

SECTION 3. Section 323D-12.6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§323D-12.6[]] State health planning and development special fund; created; deposits; expenditures; fees. (a) There is established within the state treasury, to be administered by the state health planning and development agency, the state health planning and development special fund into which shall be deposited all moneys collected under chapter 323D.

(b) [Moneys] There is established within the special fund the prescription drug access program special account:

(1) Into which all moneys received from manufacturers and labelers who pay rebates and any appropriations or allocations designated for the account shall be deposited;

(2) From which all moneys for reimbursement to retail pharmacies for discounted prices provided to program participants shall be expended; and

(3) From which all moneys for reimbursement to the state agency for the cost of administering the prescription drug access program, including contracted services, computer costs, professional fees paid to retail pharmacies, and other reasonable program costs shall be expended.

All interest on special account balances shall accrue to the special account. Moneys in the special account shall be used solely for purposes of the prescription drug access program.

(c) Except as otherwise provided in subsection (b), moneys in the special fund shall be expended by the state health planning and development agency to assist in offsetting program expenses of the agency.

[(c)](d) The agency shall adopt rules in accordance with chapter 91 to establish reasonable fees for the purposes of this chapter."

SECTION 4. Initial rebate. (a) The administrator of the state health planning and development agency shall use the administrator’s best efforts to obtain an initial rebate amount equal to or greater than the rebate calculated under the Medicaid program pursuant to 42 United States Code, Section 1396r-8.

SECTION 5. Initial determination of fair prices. By July 1, 2003, the administrator of the state health planning and development agency shall determine whether the prices for prescription drugs provided to program participants is reasonably comparable to the lowest cost paid for the same drugs delivered or dispensed. In making this determination, the following provisions shall apply:

(1) The administrator shall review prescription drug use in the Medicaid program using data from the most recent six-month period for which data is available;

(2) Using the data reviewed in paragraph (1), the administrator shall determine the one hundred drugs for which the most units were provided and the one hundred drugs for which the total cost was the highest;

(3) For each prescription drug listed in paragraph (2), the administrator shall determine the cost for each drug for program participants on a certain date; provided that the average cost for each such drug shall be calculated; and

(4) For each prescription drug listed in paragraph (2), the administrator shall determine the lowest cost for each drug paid by any purchaser on the date that is used for paragraph (3) delivered or dispensed in the state, taking into consideration the federal supply schedule and prices paid by pharmaceutical benefits managers and by large purchasers and excluding drugs purchased through the program; provided that the average cost for each such drug shall be calculated.

SECTION 6. Coordination with other government agencies. (a) In implementing this Act, the state health planning and development agency shall coordinate with other governmental programs and may take actions to enhance efficiency, reduce the cost of prescription drugs, and maximize the benefits of this and other governmental programs, including proposals to amend eligibility for the prescription drug access program to provide program benefits to the beneficiaries of other programs.

(b) The agency may seek waivers of federal law, rule, or regulation necessary to implement the provisions of this Act.

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of or so much thereof as may be necessary for fiscal year 2001-2002 to establish positions in the state health planning and development agency for outreach activities, and to contract for claims management services.

SECTION 8. There is appropriated out of the general revenues of the State of Hawaii the sum of or so much thereof as may be necessary for fiscal year 2001-2002 for the costs associated with the issuance of prescription cards.

SECTION 9. The sums appropriated shall be expended by the department of health for the purposes of this Act.

SECTION 10. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2001.