Honolulu, Hawaii

, 2002

RE: S.B. No. 2027

S.D. 1



Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committee on Health and Human Services, to which was referred S.B. No. 2027 entitled:


begs leave to report as follows:

The purposes of this measure, as received, are to:

(1) Create a special fund to hold Medicaid prescription drug rebates to the State to be earmarked for a prescription drug program for uninsured and for the State's children's health insurance program; and

(2) Direct the Governor to convene a blue ribbon committee to determine how to utilize funds and to submit proposals to the legislature.

Testimony in support of this measure was submitted by Longs Drugs and Health Care Association of Hawaii. Testimony in opposition to this measure was submitted by the Department of Human Services.

Your Committee finds that rising prescription drug prices and lack of coverage keeps prescription drugs out of the reach of many people. From 1999 to 2000 alone, the national spending on retail outpatient prescription drugs has risen nearly nineteen per cent. Your Committee further finds that rising drug spending has a disproportionate impact on senior citizens, people with disabilities, and the chronically ill.

Upon further consideration, your Committee has amended this measure by:

(1) Deleting the blue ribbon committee;

(2) Adding a purpose section;

(3) Amending the special fund so that the Department of Human Services can use the funds for any purpose to expand the Medicaid prescription drug coverage;

(4) Adding a new section in chapter 328, Hawaii Revised Statutes, for the Medicaid prescription drug expansion program;

(5) Adding three blank appropriation sections, one for the administrative cost which will be matched by the federal government, one for the $1 contribution, and one for the front load of funds necessary to start the program which shall be reimbursed by the special fund; and

(6) Changing the effective date so that sections 5, 6, and 7 will be effective July 1, 2002.

Your Committee is passing this measure as a work in progress. Making prescription drugs more affordable has high priority in your Committee, however, this Medicaid prescription drug expansion program needs to be looked at further to see if it can be done in a cost-effective manner. Your Committee has been told that this program can become self-sufficient in approximately two years, but preliminary numbers indicate that the front load appropriation could be very costly. Although the front load appropriation is to be repaid back into the general fund, this Committee would like to work with the Committee on Ways and Means to further explore options that could bring the initial cost down. This may be done perhaps by capping the number of people or the number of prescriptions. Your Committee intends to meet with members from pharmaceutical companies to assist in drafting a measure that can be both affordable to the State and beneficial to our residents.

As affirmed by the record of votes of the members of your Committee on Health and Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2027, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2027, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Health and Human Services,