Report Title:

Hawaii Rx Plus Program

Description:

Amends the Hawaii Rx program based on the U.S. Supreme Court's ruling on the Maine Rx program on which Hawaii Rx is modeled, to: (1) address the concerns of the Centers for Medicare and Medicaid Services to protect access of medicaid clients to the prescription drugs they need; (2) prevent loss of prescription of drug benefits to employees covered by employer-sponsored drug benefit plans; (3) address the concerns of pharmacies and drug manufacturers; (4) conform the rebate process to chapters 91 and 92; and (5) rename the program as Hawaii Rx Plus.

THE SENATE

S.B. NO.

2935

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE HAWAII RX PLUS PROGRAM.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Recognizing the need for affordable prescription drugs for Hawaii residents who have no prescription drug coverage, the legislature in 2002 established the Hawaii Rx program. This program was modeled after the Maine Rx program and is intended to reduce prescription drug costs by having drugs available to program participants at discounted prices.

Before the effective date for implementation of the Hawaii Rx program, Maine was sued to prevent the implementation of the Maine Rx program. After a United States Supreme Court decision in May 2003 regarding the Maine Rx program, Maine modified its Rx program to include eligibility criteria. This bill proposes to similarly amend the Hawaii Rx program by establishing an income eligibility limit at 350 per cent of the federal poverty level and clarifying that persons already eligible under medicaid or chapter 393 (Pre-Paid Health Care Act), Hawaii Revised Statutes, are not eligible.

The Hawaii Rx program is not intended for persons covered under medicaid because their prescription drugs are already covered under the medicaid program. It was also not the intent of the legislature that the Hawaii Rx program replace or discourage employer-sponsored prescription drug benefits that provide greater prescription drug benefits than the Rx program.

Most importantly, this Act addresses the concerns of the Centers for Medicare and Medicaid Services in protecting prescription drug access for medicaid recipients. The required Centers for Medicare and Medicaid Services approval of the Hawaii Rx program prior to implementing any rebate agreements, ensures that prescription drug discounts for persons not on medicaid are not obtained at the expense or detriment of medicaid recipients.

This Act also amends the Hawaii Rx program to conform the rebate process to chapters 91 and 92, Hawaii Revised Statutes, to prevent conflicts of interest, to provide opportunities for public testimony, and to streamline the rebate process to expedite implementation and reduce administrative costs.

To address pharmacies' concerns, this Act prohibits the department of human services from charging transaction fees to pharmacies in order to encourage pharmacies to participate in the program. The Act also requires manufacturers, pharmacies, health plans, and other payors to provide to the department, prescription drug utilization data which is necessary to solicit rebate bids from manufacturers.

Finally, to ensure the integrity of the rebate process, the Act prohibits any third party contracted to administer any part of the program from receiving any compensation or other benefits from any manufacturer participating in the program.

SECTION 2. Chapter 346, Hawaii Revised Statutes, is amended by amending the title of part XIII, to read as follows:

"[[]PART XIII.[]] Rx PLUS PROGRAM"

SECTION 3. Section 346-311, Hawaii Revised Statutes, is amended as follows:

(1) By adding a new definition to be appropriately inserted and to read as follows:

""Rebate agreement" means any agreement between the department or its authorized agent and any manufacturer participating in the program regarding rebates for its prescription drugs sold in the State."

(2) By amending the definition of "discount" to read as follows:

""Discount" means the amount by which the price of a drug sold by a pharmacy is reduced as [determined by the department of human services.] provided for in any rebate agreement."

(3) By amending the definition of "program" to read as follows:

""Program" means the Rx plus program except as otherwise provided."

SECTION 4. Section 346-312, Hawaii Revised Statutes, is amended to read as follows:

"[[]§346-312[]] Rx plus program. There is established within the department, the Rx plus program. The program will combine the purchasing power of all eligible persons to reduce prescription drug costs for those in the group. The department 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. Any contract to administer any program component shall prohibit the contractor from receiving any compensation or other benefits from any manufacturer participating in the program."

SECTION 5. Section 346-313, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) [All residents] A resident of the State shall be eligible to participate in the [Rx] program[.] if the resident's family income is equal to or less than three hundred fifty per cent of the federal poverty level and the resident is not eligible for medicaid and not eligible for any medical coverage under chapter 393, provided that approval is obtained from the Centers for Medicare and Medicaid Services prior to implementing any rebate agreements."

SECTION 6. Section 346-314, Hawaii Revised Statutes, is amended to read as follows:

"[[346-314[]] Rebate agreement. (a) Any [prescription drug] manufacturer that sells prescription drugs in the State may enter into a rebate agreement with the department for the Hawaii Rx [access] plus program. The rebate agreement shall require the manufacturer to make rebate payments to the State each calendar year or according to a schedule established by the department.

(b) The administrator shall [negotiate the amount of the rebate required from a manufacturer.] solicit rebates from manufacturers in accordance with chapters 91 and 92.

(c) Prescription drug manufacturers, pharmacies, health plans, and other payors shall provide prescription drug utilization data to the department upon request for the purposes of soliciting rebate bids from the manufacturers."

SECTION 7. Section 346-316, Hawaii Revised Statutes, is amended as follows:

"[[]§346-316[]] Discounted retail prices for program participants. (a) Each pharmacy participating in the [Rx] program shall discount the price of drugs covered by the program and sold to program participants.

(b) The department shall establish discounts for drugs covered by a rebate agreement, based on the rebates received from the participating manufacturers, and shall promote the use of reduced-cost drugs[, taking into consideration:

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

(2) Dispensing fees:

(3) Administrative costs of the department; and

(4) The average of all rebates provided pursuant to section 346-314, 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] soliciting rebates 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.

(d) Beginning July 1, 2004, [a participating pharmacy shall offer prescription drugs below the average wholesale price, plus a dispensing fee designated by the department. These initial price levels shall be calculated by the department and the dispensing fee shall not be less than that provided under the state medicaid program. The average wholesale price is the price on a specific commodity that is assigned by the drug manufacturer and is listed in a nationally-recognized drug pricing file.] the department shall begin program implementation, including, but not limited to, adopting rules and soliciting rebates from manufacturers pursuant to chapters 91 and 92, procuring any appropriate contracts pursuant to chapter 103F, establishing discounts for drugs covered by any rebate agreements and notifying all participating pharmacies of the discounts, provided that approval is obtained from the Centers for Medicare and Medicaid Services prior to implementation of any rebate agreements.

(e) No later than [January 1, 2005,] July 1, 2005, a participating pharmacy shall offer prescription drugs at or below the initial price levels specified in subsection [(d), minus the amount of any discounts as calculated pursuant to subsections (b) and (c) to be paid by the State to the pharmacy.] (b)."

SECTION 8. Section 346-317, Hawaii Revised Statutes, is amended to read as follows:

"[[]§346-317[]] Pharmacy reimbursement. (a) A pharmacy shall submit claims to the department to verify the amount charged to program participants. On a schedule to be determined by the department, the department shall reimburse each pharmacy for the discounts of prescription drugs provided to program participants.

(b) The department shall collect pharmacy use data necessary to calculate the amount of the manufacturer rebate under section 346-314. The department shall protect the confidentiality of information received as required under state or federal law, rule, or regulation.

(c) The department may not impose transaction charges on pharmacies participating in the program that submit claims or receive payments under the program."

SECTION 9. Section 346-318, Hawaii Revised Statutes, is amended to read as follows:

"[[]§346-318[]] Rx plus special fund. (a) There is established within the state treasury, to be administered by the department, the Rx plus special fund into which shall be deposited:

(1) All moneys received from manufacturers who pay rebates as provided in section 346-314;

(2) Appropriations made by the legislature to the fund; and

(3) Any other revenues designated for the fund.

(b) Moneys in the [Rx special] fund shall be used for the following purposes:

(1) Reimbursement payments to participating pharmacies for discounts provided to program participants;

(2) The cost of administering the [Rx] program, including salary and benefits of employees, computer costs[;], and contracted services as provided in section 346-312, including transaction costs for processing pharmacy claims; and

(3) Any other purpose deemed necessary by the department for the purpose of operating and administering the [Rx] program.

All interest on [special] fund balances shall accrue to the [special] fund. Upon dissolution of the [Rx special] fund, any unencumbered moneys in the fund shall lapse [to] into the general fund."

SECTION 10. The department shall assess:

(1) The effectiveness of the Rx plus program established under chapter 346, part XIII, in providing prescription drug discounts to those eligible for the program;

(2) The impact that the Rx plus program has on employers providing medical coverage pursuant to chapter 393, Hawaii Revised Statutes, including whether any employers discontinue providing prescription drug coverage to their employees due to the existence of the Rx plus program; and

(3) The impact that the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 has on the Rx plus program, including the impact that health savings security accounts and health savings accounts have in reducing the number of individuals who lack prescription drug coverage.

The department shall submit a report of its assessment to the legislature no later than twenty days prior to the convening of the regular session of 2006.

SECTION 11. There is appropriated out of the general revenues of the State of Hawaii the sum of $400,000, or so much thereof as may be necessary, for fiscal year 2004-2005, to be deposited into the Rx plus special fund created in section 346-318, Hawaii Revised Statutes.

SECTION 12. There is appropriated out of the Rx plus special fund the sum of $400,000, or so much thereof as may be necessary, for fiscal year 2004-2005, for the purposes of the fund.

SECTION 13. The sums appropriated shall be expended by the department of human services.

SECTION 14. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 15. This Act shall take effect on July 1, 2004.

INTRODUCED BY:

_____________________________

BY REQUEST