Report Title:
Prescription Drugs; Cost Containment
Description:
Establishes the Prescription Drug Cost Containment Program to reduce the costs of prescription drugs for Hawaii residents, while maintaining high quality in prescription drug therapies.
HOUSE OF REPRESENTATIVES |
H.B. NO. |
2707 |
TWENTY-SECOND LEGISLATURE, 2004 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to prescription drugs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:
"Chapter
prescription drug cost containment
§ -1 Definitions. As used in this chapter:
"Board" means the drug product selection board established in section 328-95, unless otherwise stated.
"Department" means the department of human services, unless otherwise stated.
"Director" means director of human services, unless otherwise stated.
"Health benefit plan" means a health benefit plan with prescription drug coverage offered or administered by a health insurer. The term includes:
(1) Any state public assistance program with a health benefit plan that provides coverage of prescription drugs;
(2) Any health benefit plan offered by or on behalf of the State or any instrumentality of the State, that provides coverage for government employees and their dependents and agrees to participate in the program; and
(3) Any insured or self-insured health benefit plan that agrees to participate in the program.
"Health insurer" means a mutual benefit society, health maintenance organization, mutual benefit societies of employee organizations, voluntary employee beneficiary associations, and to the extent permitted under federal law, any administrator of an insured, self-insured, or publicly funded health care benefit plan offered by public and private entities.
"Participating health benefit plan" means a health benefit plan that has agreed to participate in one or more components of the pharmacy best practices and cost control program.
"Program" means the pharmacy best practices and cost control program established by this chapter.
"State employees health benefit plan" means a health benefits plan as defined in chapter 87A.
"State public assistance program" includes the State medicaid program, QUEST, medicaid prescription drug expansion program, state children’s health insurance program, general assistance program, and the out-of-state counterparts to such programs.
§ -2 Pharmacy best practices and control program; establishment. (a) The director shall establish a pharmacy best practices and cost control program designed to reduce the cost of providing prescription drugs, while maintaining high quality in prescription drug therapies.
(b) The program shall include:
(1) A preferred list of covered prescription drugs that identifies preferred choices within therapeutic classes for particular diseases and conditions, including generic alternatives;
(2) Utilization review procedures, including a prior authorization review process;
(3) Any strategy designed to negotiate with pharmaceutical manufacturers to lower the cost of prescription drugs for program participants, including a supplemental rebate program;
(4) Education programs, including a counter-detailing program, designed to provide information and education on the therapeutic and cost-effective utilization of prescription drugs to physicians, pharmacists, and other health care professionals authorized to prescribe and dispense prescription drugs;
(5) Alternative pricing mechanisms, including consideration of using maximum allowable cost-pricing for generic and other prescription drugs;
(6) Alternative coverage terms, including consideration of providing coverage of over-the-counter drugs where cost-effective in comparison to prescription drugs, and authorizing coverage of dosages capable of permitting the consumer to split each pill if cost-effective and medically appropriate for the consumer;
(7) A simple, uniform prescription form, designed to implement the preferred drug list, and to enable prescribers and consumers to request an exception to the preferred drug list choice with a minimum of cost and time to prescribers, pharmacists, and consumers; and
(8) Any other cost containment activity adopted, by rule, by the director that is designed to reduce the cost of providing prescription drugs while maintaining high quality in prescription drug therapies.
§ -3 Program implementation. (a) The director, in collaboration with the director of commerce and consumer affairs and the director of health, shall implement the preferred drug list as a uniform, statewide preferred drug list by encouraging all health benefit plans in the State to participate in the program. The director may implement the pharmacy best practices and cost control program for any other health benefit plan outside this state that agrees to participate in the program.
(b) The director shall encourage all health benefit plans to implement the preferred drug list as a uniform, statewide preferred drug list by inviting the representatives of each health benefit plan providing prescription drug coverage to residents of the State to participate as observers or nonvoting members in the drug product selection board meetings, and by inviting such plans to use the preferred drug list in connection with the plans’ prescription drug coverage;
(c) A participating health benefit plan other than a state public assistance program may agree with the director to limit the plan’s participation to one or more program components. The director shall supervise the implementation and operation of the pharmacy best practices and cost control program, including developing and maintaining the preferred drug list, to carry out the provisions of this chapter. The director may include insured or self-insured health benefit plans that agree to use the preferred drug list or otherwise participate in the provisions of this chapter.
(d) The director shall implement the pharmacy best practices and cost control program for medicaid and all other state public assistance program health benefit plans to the extent permitted by federal law.
(e) The director shall take all steps necessary to enable program participation in joint purchasing agreements. The director shall execute any joint purchasing agreements or other contracts with any participating health benefit plan or organization within or outside the State that the director determines will lower the cost of prescription drugs for state residents while maintaining high quality in prescription drug therapies.
(f) The director and director of human resources may renegotiate and amend existing contracts to which their departments are parties if such renegotiation and amendment will be of economic benefit to the health benefit plans subject to such contracts, and to the beneficiaries of such plans. Any renegotiated or substituted contract shall be designed to improve the overall quality of integrated health care services provided to beneficiaries of such plans.
(g) The director, with the assistance of the director of human resources, the insurance commissioner, and director of health shall establish a collaborative process with the Hawaii Medical Association, pharmacists, health insurers, consumers, employer organizations and other health benefit plan sponsors, pharmaceutical manufacturer organizations, and other interested parties designed to consider and make recommendations to reduce the cost of prescription drugs for all Hawaii residents.
§ -4 State employees health benefit plan. (a) The director of human resources shall use the preferred drug list in the state employees health benefit plan only if participation in the program will provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan, and only if agreed to through the bargaining process between the State and the board of trustees of the Hawaii employer-union health benefits trust fund. The provisions of this subsection do not authorize the actuarial pooling of the state employees health benefit plan with any other health benefit plan, unless otherwise agreed to through the bargaining process between the State and the board of trustees of the Hawaii employer-union health benefits trust fund.
(b) With regard to participation by the state employees health benefit plan, the director shall execute any joint purchasing agreements or other contracts with any health benefit plan or organization within or outside the State that the director determines will lower the cost of prescription drugs and provide overall quality of integrated health care services to the state employees health benefit plan and the beneficiaries of the plan, and which is negotiated through the bargaining process between the State and the board of trustees of the Hawaii employer-union health benefits trust fund.
§ -5 State public assistance program. The director shall develop procedures for the coordination of state public assistance program health benefit plan benefits with pharmaceutical manufacturer patient assistance programs offering free or low cost prescription drugs, including the development of a proposed single application form for such programs. The director may contract with a nongovernmental organization to develop the single application form.
§ -6 Drug product selection board. (a) The drug product selection board shall make recommendations to the director for the adoption of the preferred drug list. The board’s recommendations shall be based upon considerations of clinical efficacy, safety, and cost-effectiveness.
(b) The board shall meet at least quarterly. Board meetings shall be subject to chapter 92.
(c) To the extent feasible, the board shall review all drug classes included in the preferred drug list at least every twelve months, and may recommend that the director make additions to or deletions from the preferred drug list.
(d) The program shall establish board procedures for the timely review of prescription drugs newly approved by the federal Food and Drug Administration, including procedures for the review of newly-approved prescription drugs in emergency circumstances.
§ -7 Supplemental rebates. (a) The director, separately or in collaboration with the authorized representatives of any participating health benefit plan, shall use the preferred drug list authorized by the pharmacy best practices and cost control program to negotiate with pharmaceutical companies for the payment to the director of supplemental rebates or price discounts for medicaid and for any other state public assistance health benefit plans designated by the director, in addition to those required by Title XIX of the Social Security Act. The director may also use the preferred drug list to negotiate for the payment of rebates or price discounts in connection with drugs covered under any other participating health benefit plan within or outside the State; provided that such negotiations and any subsequent agreement shall comply with the provisions of 42 U.S.C. § 1396r-8. The program, or such portions of the program as the director shall designate, shall constitute a state pharmaceutical assistance program under 42 U.S.C. § 1396r-8(c)(1)(C).
(b) The director shall negotiate supplemental rebates, price discounts, and other mechanisms to reduce net prescription drug costs by means of any negotiation strategy that the director determines will result in the maximum economic benefit to the program and to consumers in the State, while maintaining access to high quality prescription drug therapies. The provisions of this subsection do not authorize agreements with pharmaceutical manufacturers whereby financial support for medical services covered by the medicaid program is accepted as consideration for placement of one or more prescription drugs on the preferred drug list.
(c) The director and the department shall prohibit the public disclosure of information revealing company-identifiable trade secrets, including rebate and supplemental rebate amounts, and manufacturer’s pricing, obtained by the department, and by any officer, employee, or contractor of the department in the course of negotiations conducted pursuant to this section. Such confidential information shall be exempt from public disclosure. § -8 Prior authorization. (a) The pharmacy best practices and cost control program shall authorize pharmacy benefit coverage when a patient’s health care provider prescribes a prescription drug not on the preferred drug list, or a prescription drug which is not the list’s preferred choice, if either of the circumstances set forth in subsection (b) or (c) of this section applies.
(b) The program shall authorize coverage under the same terms as coverage for preferred choice drugs if the prescriber determines, after consultation with the pharmacist, or with the participating health benefit plan if required by the terms of the plan, that:
(1) The preferred choice has not been effective, or with reasonable certainty is not expected to be effective, in treating the patient’s condition; or
(2) The preferred choice causes or is reasonably expected to cause adverse or harmful reactions in the patient.
The prescriber’s determination concerning whether the standards established in this subsection have been demonstrated shall be final.
(c) The program shall authorize coverage if the patient agrees to pay any additional cost in excess of the benefits provided by the patient’s health benefit plan which is participating in the program. The provisions of this subsection shall not apply to the extent that they may be inconsistent with any federal medicaid laws and regulations. The provisions of this subsection shall not affect implementation by a participating health benefit plan of tiered copayments or other similar cost sharing systems.
(d) The program or any participating health benefit plan shall provide information on how prescribers, pharmacists, beneficiaries, and other interested parties may obtain a copy of the preferred drug list, whether any change has been made to the preferred drug list since it was last issued, and the process by which exceptions to the preferred list may be made.
(e) The program’s prior authorization process shall not apply to prescription drugs prescribed for the treatment of severe and persistent mental illness including schizophrenia, severe depression, or bipolar disorder.
(f) The prior authorization process shall be designed to minimize administrative burdens on prescribers, pharmacists, and consumers. The provisions of this section shall apply to the program’s prior authorization process, except to the extent that different prior authorization rules are established in this chapter.
(g) The prior authorization process shall ensure real-time receipt of requests by telephone, voice mail, facsimile, electronic transmission, or mail on a twenty-four-hour basis, seven days a week.
(h) The prior authorization process shall provide an in-person response to emergency requests by a prescriber with telephone answering queues that do not exceed ten minutes.
(i) Any request for authorization or approval of a drug that the prescriber indicates, including the clinical reasons for the request, is for an emergency or urgent condition shall be responded to in no more than four hours from the time the program or participating health benefit plan receives the request.
(j) In emergency circumstances, or if the response to a request for prior authorization is not provided within the time period established in subsection (i), a seventy-two-hour supply of the drug prescribed shall be deemed to be authorized by the program or the participating health benefit plan; provided it is a prescription drug approved by the Food and Drug Administration; and provided further, for drugs dispensed to a medicaid beneficiary, it is subject to a rebate agreement with the Centers for Medicare and Medicaid Services.
(k) The program or participating plan shall provide to participating providers a prior authorization request form for each enrolled beneficiary, known to be a patient of the provider, designed to permit the prescriber to make prior authorization requests in advance of the need to fill the prescription, and designed to be completed without unnecessary delay. The form shall be capable of being stamped with information relating to the participating provider, and if feasible, at least one form capable of being copied shall contain known patient information.
(l) The program’s prior authorization process shall require that the prescriber, not the pharmacy, request a prior authorization exception to the requirements of this section. The program may exempt a prescriber from the need to secure prior authorization for a specific drug category if the program determines that the prescriber has written a minimum number of scripts in that category, and the prescriber prescribes prescription drugs on the preferred drug list at or above the minimum threshold for that category.
§ -9 Pharmacy benefit management. (a) The director may implement all or a portion of the pharmacy best practices and cost control program through a contract with a third party with expertise in the management of pharmacy benefits.
(b) The director shall not enter into a contract with a pharmacy benefit manager unless the pharmacy benefit manager has agreed to disclose to the director the terms and the financial impact on Hawaii and on Hawaii beneficiaries of:
(1) Any agreement with a pharmaceutical manufacturer to favor the manufacturer’s products over a competitor’s products, or to place the manufacturer’s drug on the pharmacy benefit manager’s preferred list or formulary, or to switch the drug prescribed by the patient’s health care provider with a drug agreed to by the pharmacy benefit manager and the manufacturer;
(2) Any agreement with a pharmaceutical manufacturer to share manufacturer rebates and discounts with the pharmacy benefit manager, or to pay "soft money" or other economic benefits to the pharmacy benefit manager;
(3) Any agreement or practice to bill Hawaii health benefit plans for prescription drugs at a cost higher than the pharmacy benefit manager pays the pharmacy;
(4) Any agreement to share revenue with a mail order or Internet pharmacy company;
(5) Any agreement to sell prescription drug data concerning Hawaii beneficiaries, or data concerning the prescribing practices of the health care providers of Hawaii beneficiaries; or
(6) Any other agreement of the pharmacy benefit manager with a pharmaceutical manufacturer, or with wholesale and retail pharmacies, affecting the cost of pharmacy benefits provided to Hawaii beneficiaries.
(c) The director shall not enter into a contract with a pharmacy benefit manager who has entered into an agreement or engaged in a practice described in subsection (b), unless the director determines, and certifies in the fiscal report required by section -12, that such agreement or practice furthers the financial interests of the State, and does not adversely affect the medical interests of Hawaii beneficiaries.
§ -10 Pharmaceutical marketers. (a) Annually on or before January 1 of each year, every pharmaceutical manufacturing company shall disclose to the Hawaii board of pharmacy the value, nature, and purpose of any gift, fee, payment, subsidy, or other economic benefit provided in connection with detailing, promotional, or other marketing activities by the company, directly or through its pharmaceutical marketers, to any physician, hospital, nursing home, pharmacist, health benefit plan administrator, or any other person in Hawaii authorized to prescribe, dispense, or purchase prescription drugs in this state. Disclosure shall be made on a form and in a manner prescribed by the board of pharmacy. Initial disclosure shall be made on or before January 1, 2006, for the twelve-month period ending June 30, 2005. The board of pharmacy shall provide to the attorney general complete access to the information required to be disclosed under this subsection. The attorney general shall report annually on the disclosures made under this section to the legislature and the governor on or before March 1.
(b) Each company subject to the provisions of this section shall also disclose to the board, on or before October 1 of each year, the name and address of the individual responsible for the company’s compliance with the provisions of this section.
(c) The board of pharmacy and the office of the attorney general shall keep confidential all trade secret information. The disclosure form prescribed by the board of pharmacy shall permit the company to identify any information that is a trade secret.
(d) The following shall be exempt from disclosure:
(1) Free samples of prescription drugs intended to be distributed to patients;
(2) The payment of reasonable compensation and reimbursement of expenses in connection with bona fide clinical trials. As used in this subsection, "clinical trial" means an approved clinical trial conducted in connection with a research study designed to answer specific questions about vaccines, new therapies, or new ways of using known treatments;
(3) Any gift, fee, payment, subsidy, or other economic benefit the value of which is less than $25; and
(4) Scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association.
(e) The attorney general may bring an action for injunctive relief, costs, and attorneys fees, and to impose on a pharmaceutical manufacturing company that fails to disclose as required by subsection (a), a civil penalty of no more than $10,000 per violation. Each unlawful failure to disclose shall constitute a separate violation.
(f) As used in this section:
"Pharmaceutical manufacturing company" means any entity that is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, or any entity engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs. The term does not include a wholesale drug distributor or pharmacist licensed under chapter 461.
"Pharmaceutical marketer" means a person who, while employed by or under contract to represent a pharmaceutical manufacturing company, engages in pharmaceutical detailing, promotional activities, or other marketing of prescription drugs in the State to any physician, hospital, nursing home, pharmacist, health benefit plan administrator, or any other person authorized to prescribe, dispense, or purchase prescription drugs. The term does not include a wholesale drug distributor or the distributor’s representative who promotes or otherwise markets the services of the wholesale drug distributor in connection with a prescription drug.
§ -11 Pharmacy discount plan. (a) On or before July 1, 2006, the director shall implement a pharmacy discount plan for Hawaii residents without adequate coverage for prescription drugs. The director may establish an enrollment fee in such amount as is necessary to support the administrative costs of the plan.
(b) The pharmacy discount plan authorized by this section shall include a program implemented as a Section 1115 Medicaid waiver, wherein the State makes a payment toward the cost of the drugs dispensed to individuals enrolled in this program of at least two per cent of the cost of each prescription or refill, consistent with the appropriation for the program established by this section.
(c) The director shall implement the pharmacy discount program authorized by this section without any financial contribution by the State otherwise required by subsection (b) of this section, and without federal waiver approval during such time as federal waiver approval has not been secured.
(d) As used in this section:
"Eligible beneficiary" means any individual Hawaii resident who is at least sixty-five years of age, or is disabled and is eligible for medicare or social security disability benefits, with household income equal to or less than four hundred per cent of the federal poverty level, and any other individual Hawaii resident with household income equal to or less than three hundred per cent of the federal poverty level.
"Hawaii resident without adequate coverage" includes eligible beneficiaries with no coverage for prescription drugs, and eligible beneficiaries whose annual maximum coverage limit under their health benefit plan has been reached.
§ -12 Health access oversight committee; legislative oversight. (a) There shall be established a health access oversight committee consisting of ten members. Five of the members shall be members of the house of representatives appointed by the speaker of the house of representatives and five of the members shall be members of the senate appointed by the president of the senate.
(b) The members of the health access oversight committee shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.
(c) The director shall report quarterly to the health access oversight committee on the following:
(1) The progress in securing Hawaii’s participation in such joint purchasing agreements; and
(2) Concerning the following aspects of the pharmacy best practices and cost control program:
(A) The efforts undertaken to educate health care providers about the preferred drug list and the program’s utilization review procedures;
(B) The number of prior authorization requests made; and
(C) The number of utilization review events, other than prior authorization requests.
(d) In connection with the pharmacy best practices and cost control program, the director shall report for review by the health access oversight committee, prior to initial implementation, and prior to any subsequent modifications:
(1) The compilation that constitutes the preferred drug list or list of drugs subject to prior authorization or any other utilization review procedures;
(2) Any utilization review procedures, including any prior authorization procedures; and
(3) The procedures by which drugs will be identified as preferred on the preferred drug list, and the procedures by which drugs will be selected for prior authorization or any other utilization review procedure.
(e) On or before January 1 of each year for the duration of any pharmacy benefit manager contract entered into by the pharmacy best practices and cost control program pursuant to this Act, the director shall report to the health access oversight committee, concerning implementation of the contract. The report shall include:
(1) A description of the activities of the pharmacy benefit manager;
(2) An analysis of the success of the pharmacy benefit manager in achieving each of the department’s public policy goals, together with the pharmacy benefit manager’s report of its activities and achievements;
(3) An assessment of medicaid and Rx program administrative costs relating to prescription drug benefits, including any recommendations for increasing the administrative efficiency of such programs;
(4) A fiscal report on the fiscal costs and savings to the State of the pharmacy benefit manager contract, including an accounting of any payments, fees, offsets, savings, and other financial transactions or accountings;
(5) Any recommendations for enhancing the benefits of the pharmacy benefit manager contract, and an identification of, and any recommendations for minimizing any problems with the contract; and
(6) If the department has not entered into a contract with a pharmacy benefit manager, or if any such contract has been rescinded, any recommendations for pursuing Hawaii’s public policy goals relating to pharmaceutical costs, quality, and access through other means.
(f) The health access oversight committee shall closely monitor implementation of the preferred drug list and utilization review procedures to ensure that consumer protection standards are not diminished as a result of implementing the preferred drug list and the utilization review procedures, including any unnecessary delay in access to appropriate medications. The committee shall ensure that all affected interests, including consumers, health care providers, pharmacists and others with pharmaceutical expertise have an opportunity to comment on the preferred drug list and procedures reviewed under this subsection.
(g) The fiscal report required in subsection (e) shall include the disclosure, in a manner that preserves the confidentiality of any proprietary information as determined by the commissioner, of:
(1) Any agreements entered into by the pharmacy benefit manager; and
(2) The financial impact of such agreements on Hawaii, and on Hawaii beneficiaries.
§ -13 Rules. The director shall adopt rules pursuant to chapter 91 necessary for the purposes of this chapter."
SECTION 2. Section 461-4.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) In addition to any other powers and duties authorized by law, the board:
(1) Shall adopt, amend, and repeal rules pursuant to chapter 91, as it deems proper for the purposes of this chapter, Public Law 100-293, and 21 Code of Federal Regulations part 205;
(2) Shall examine, license, reinstate, and renew the licenses of qualified applicants for registered pharmacists and wholesale prescription drug distributors, and issue and renew permits to operate pharmacies;
(3) May require the inspection of any wholesale prescription drug distributor premises in the State to ensure compliance with this chapter and rules adopted under this chapter, or may require an applicant for a pharmacy license to submit a statement that the premises, including but not limited to security and sanitation, are in conformance with the board's requirements and that the applicant possesses the reference materials and technical clinical equipment and supplies as may be specified in rules adopted under this chapter; [and]
(4) May fine, suspend, or revoke any license or permit for any cause prescribed by this chapter, or for any violation of the rules adopted under this chapter, and refuse to grant or renew any license or permit for any cause which would be ground for revocation or suspension of a license or permit[.]; and
(5) Shall develop criteria for a standardized tamper-resistant prescription pad that may be used by all health care providers who prescribe drugs. Such criteria shall be developed in consultation with pharmacists, hospitals, nursing homes, physicians and other prescribers, and other affected parties."
SECTION 3. (a) The director of human services shall request a Section 1115 waiver or waiver amendment to:
(1) Maximize federal financial participation in Hawaii’s state pharmaceutical assistance programs; and
(2) Preserve Hawaii residents' continued access to such programs, unless the director of human services determines that such waiver or waiver amendment will not provide a financial benefit to the State over the long term.
The director of human services shall report to the health access oversight committee if a waiver application is not submitted, or if it is determined that a waiver that is not consistent with the principles established in subsection (b).
(b) The waiver request shall conform to the following principles unless deviation is necessary to conduct successful negotiations with the Centers for Medicare and Medicaid Services:
(1) The waiver request shall propose a financially sustainable program designed to provide access to medically necessary prescription drugs for low-income, elderly, and disabled Hawaii residents;
(2) The waiver request shall consolidate and streamline program administration of and eligibility for Hawaii’s pharmaceutical assistance programs; and
(3) The benefit plan and cost sharing provisions shall be designed to provide financial assistance and benefits based on the beneficiary’s household income.
SECTION 4. The director of human services shall submit a report to the legislature and recommended legislation no later than twenty days before the convening of the regular session regarding integration of the Rx program under part XIII of chapter 346, Hawaii Revised Statutes, and the medicaid prescription drug expansion program under section 346-59.8, Hawaii Revised Statutes, into the pharmacy best practices and control program and prescription discount plan established by this Act.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect on July 1, 2005.
INTRODUCED BY: |
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