Report Title:

Hawaii Rx Plus

Description:

Adopts income limits and other eligibility requirements for state drug prescription program. Clarifies consequences of manufacturer nonparticipation. Requires rebates from participating manufacturers. Establishes committee to recommend drugs for preferred and nonpreferred drug lists.

THE SENATE

S.B. NO.

3237

TWENTY-SECOND LEGISLATURE, 2004

 

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 346, Hawaii Revised Statutes, is amended by adding a new section to part XIII to be appropriately designated and to read as follows:

"346-A Nonparticipating manufacturers. (a) The names of manufacturers who enter and who do not enter into rebate agreements pursuant to this part shall be public information. The department shall release this information to health care providers and the public on a regular basis and shall publicize participation by manufacturers that is of particular benefit to the public. The department shall establish prior authorization requirements in the QUEST program, as permitted by law, to the extent that the department determines that:

(1) It is appropriate to do so to encourage manufacturer participation in the program; and

(2) The additional prior authorization requirements are consistent with the goals of the QUEST program and the requirements of the title XIX of the Social Security Act, title 42 United States Code sections 1396-1396v, as amended.

(b) This section shall take effect on the date that the department begins offering prescription drug benefits under this part."

SECTION 2. Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to part XIII to be appropriately designated and to read as follows:

"346-B Dispensing of drug by participating pharmacist. (a) Any pharmacist filling a prescription under the Rx plus program shall substitute, where identified, a preferred drug for any nonpreferred drug in a given therapeutic class; provided that the pharmacist shall dispense the prescribed nonpreferred drug:

(1) If the endorsing practitioner has indicated on the prescription that the nonpreferred drug must be dispensed as written; or

(2) The prescription is for a refill of an antipsychotic, antidepressant, chemotherapy, antiretroviral, or immunosuppressive drug.

(b) When a substitution is made under subsection (a), the dispensing pharmacist shall notify the prescribing practitioner of the specific drug and dose dispensed."

SECTION 3. Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to part XIII to be appropriately designated and to read as follows:

"346-C Program goals. The legislature finds that affordability is critical in providing access to prescription drugs for Hawaii residents. This part is enacted by the legislature to enable the State to take steps to make prescription drugs more affordable for qualified Hawaii residents, thereby increasing the overall health of Hawaii residents, promoting health communities, and protecting the public health and welfare, and to integrate the program as much as possible with other state health programs. It is not the intention of the State to discourage employers from offering or paying for prescription drug benefits for their employees or to replace employer-sponsored prescription drug benefit plans that provide benefits comparable to those made available to qualified Hawaii residents under this part."

SECTION 4. Section 346-311, Hawaii Revised Statutes, is amended by adding six new definitions to be appropriately inserted and to read as follows:

""Covered drugs" means drugs included on the State's medicaid preferred drug list, as amended.

"Initial discounted price" as it pertains to a drug means the price that the department pays medicaid and QUEST participating retail pharmacies to purchase the drug for its medicaid and QUEST members.

"Medicaid advisory committee" means the committee that advises the state medicaid director in accordance with federal law to promote access to quality affordable pharmaceuticals according to standards.

"Participating retail pharmacy" or "retail pharmacy" means a retail pharmacy located in this State, or another business licensed to dispense prescription drugs in this State, that voluntarily elects to participate in the program.

"Qualified resident" means a resident of the State who has a family income equal to or less than three hundred fifty per cent of the federal poverty level and who is enrolled in the program. "Qualified resident" includes a resident of the State whose family incurs unreimbursed expenses for prescription drugs that equal five per cent or more of family income or whose total unreimbursed medical expenses equal fifteen per cent or more of family income. For the purposes of this definition, the cost of drugs provided under this part is considered an expense incurred by the family for eligibility determination purposes.

"Secondary discounted price" as it pertains to a drug means the initial discounted price less any further discounts paid out of the Rx plus special fund."

SECTION 5. Section 346-311, Hawaii Revised Statutes, is amended by amending the definition of "program" to read as follows:

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

SECTION 6. Section 346-312, Hawaii Revised Statutes, is amended to read as follows:

"[[]346-312[]] Rx plus program. (a) There is established within the department, the Rx plus program. The program will combine the purchasing power of all [persons] qualified residents to enable the State to take steps to reduce prescription drug costs and to improve the quality of health care for [those in the group.] qualified Hawaii residents in the program, thereby increasing the overall health of Hawaii residents, promoting healthy communities, and protecting the public health and welfare, and to integrate the program as part of any statewide program for the uninsured.

(b) The program shall utilize manufacturer rebates and pharmacy discounts to reduce prescription drug prices.

(c) The department may administer the program or 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 negotiations and recovery, and redistribution[.] in order to achieve the maximum possible discount for Hawaii residents.

(d) The department shall conduct ongoing quality assurance activities similar to those used in the medicaid program."

SECTION 7. Section 346-313, Hawaii Revised Statutes, is amended to read as follows:

"[[]346-313[]] Program eligibility. (a) All qualified residents of the State shall be eligible to participate in the Rx plus program[.]; provided that a person shall not be eligible if within the three-month period prior to application the person was insured or otherwise covered under an employer-based health plan and the person's employer paid fifty per cent or more of the cost of the employee's coverage; and provided further that this disqualification shall not apply if:

(1) The employee's cost for coverage exceeded ten per cent of the family's income;

(2) The employee lost coverage due to:

(A) A change in employment;

(B) Termination of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, of the Employee Retirement Income Security Act of 1974, as amended, title 19 United States Code sections 1160-1168; or

(C) Termination of coverage for a reason beyond the control of the employee; or

(3) The department determines that grounds exist for a good cause exception.

(b) The department:

(1) Shall establish procedures [for determining] to verify eligibility and shall issue program enrollment cards to eligible qualified residents;

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

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

SECTION 8. 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 Rx access program.] A drug manufacturer or labeler that sells prescription drugs in this State through any publicly supported pharmaceutical assistance program shall enter into a rebate agreement with the department for this purpose. The rebate agreement shall require the manufacturer to make rebate payments to the State each calendar quarter or according to a schedule established by the department.

(b) The administrator shall negotiate the amount of the rebate required from a manufacturer[.] in accordance with this part.

(c) The administrator shall take into consideration the rebate calculated under the medicaid rebate program pursuant title 42 United States Code section 1369r-8, the average wholesale price of prescription drugs, and any other information on prescription drug prices and price discounts.

(d) The administrator of the Rx plus program 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 title 42 United States Code section 1369r-8.

(e) With respect to rebates effective January 1, 2005, the administrator shall use the administrator's best efforts to obtain a rebate amount equal to or greater than the amount of any discount, rebate, or price reduction for prescription drugs provided to the federal government."

SECTION 9. Section 346-315, Hawaii Revised Statutes, is amended to read as follows:

"[[]346-315[]] Nonparticipating manufacturers. [If the department and a drug manufacturer fail to reach agreement on the terms of a rebate, the department shall conduct a review of whether to place that manufacturer's products on the prior authorization list or formularies for the state medicaid program in accordance with this chapter.] (a) The [department may release the] names of manufacturers that do not enter into rebate agreements[. This information] pursuant to this part shall be deemed public information. The department shall release this information to health care providers and the public. The department shall establish prior authorization requirements in the QUEST program, as permitted by law, to the extent the department determines that:

(1) It is appropriate to do so to encourage manufacturer participation in the program; and

(2) The additional prior authorization requirements are consistent with the goals of the QUEST program and the requirements of the title XIX of the Social Security Act, title 42 United States Code sections 1396-1396v.

(b) The department or administrator may also provide to [doctors, pharmacists, and other health professionals] health care providers information about the relative cost of drugs produced by manufacturers that enter into rebate agreements compared to the cost of drugs produced by those that do not enter into rebate agreements. The department shall adopt rules under chapter 91 creating procedures for the implementation of this section.

(c) This section shall be repealed when section 346-A takes effect."

SECTION 10. Section 346-316, Hawaii Revised Statutes, is amended to read as follows:

"[[]346-316[]] Discounted retail prices for program participants. (a) Each retail pharmacy participating in the Rx plus program shall [discount the price of] sell drugs covered [by the program and sold] to [program participants.] qualified residents at the lower initial discounted price and the secondary discounted price as such discounted prices are determined by the department pursuant to this part.

(b) The department shall establish discounts 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) [Dispensing] Differential 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.] The recommendation of the medicaid advisory committee.

(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.] Beginning July 1, 2004, a participating retail pharmacy shall offer the initial discounted price.

(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.

(e)] No later than January 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.] retail pharmacy shall offer the secondary discounted price if available."

SECTION 11. 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 plus special fund shall be used for the following purposes:

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

(2) The cost of administering the Rx plus program, including salary and benefits of employees, computer costs; and

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

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

SECTION 12. Section 346-319, Hawaii Revised Statutes, is amended to read as follows:

"[[]346-319[]] Annual report. The department shall report the enrollment and financial status of the Rx plus program to the legislature no later than twenty days prior to the convening of each regular session, beginning with the 2005 regular session."

SECTION 13. Chapter 346, Hawaii Revised Statutes, is amended by amending the title of part XIII to read as follows:

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

SECTION 14. (a) The governor, speaker of the state house of representatives, and president of the state senate shall jointly establish a medicaid advisory committees in accordance with federal law. The committee shall be comprised of the following nine members:

(1) Three members appointed by the governor or the state medicaid director, including a pharmacist, a physician with a specialty in chronic disease management, and a doctor with a specialty in aging;

(2) Three members appointed by the senate president, including a representative of a statewide organization that advocates on behalf of senior citizens, a representative of a consumer organization representing a statewide organization that represents medicaid recipients, and a physician; and

(3) Three members appointed by the speaker of the house of representatives, including a representative of a statewide consumer organization representing senior citizens, a pharmacist representing locally owned drug stores, and a physician.

(b) The medicaid advisory committee shall review all drugs subject to being placed on the prior authorization and preferred drug lists, and shall recommend drugs for each list. The committee shall strive to identify the safest and most efficacious drugs that are available at the lowest cost, and in making its determinations, the committee shall be guided by considerations of safety, efficacy, and cost, as follows:

(1) The determination of a drug's safety and efficacy shall be consistent with the standards set forth in the peer-reviewed literature and the American Hospital Formulary Service Drug Information, the United States Pharmacopoeia Drug Information, the DRUGDEX Information System, and the America Medical Association Drug Evaluations; and

(2) The determination of a drug's net cost shall consider the pharmacy reimbursement amount authorized under section 346-317, as adjusted by manufacturer's or supplemental rebates to be paid to the department. The committee may not consider a drug's net cost unless it determines that the drug has no significant clinical or safety advantages over one or more alternative drugs, when used for a given purpose.

(c) When considering categories of drugs designed to treat specialized chronic medical conditions and diseases, the medicaid advisory committee shall consult with physicians and other health care professionals with specialized clinical knowledge and expertise in this area, either in their capacity as consultants serving on a subcommittee of the committee, or as physicians or pharmacists with a practice or specialty in chronic diseases.

SECTION 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 16. In codifying the new sections added by sections 1 to 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 17. This Act shall take effect upon its approval.

INTRODUCED BY:

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