H.B. NO.














relating to pharmacy benefit managers.





SECTION 1. The legislature finds that pharmacy benefit managers are companies that are heavily involved in the pharmacy industry and the process by which prescription drug benefits are offered by insurance companies, including deciding what prescription drugs should be included in an insurer's formulary, setting reimbursement rates, specifying the prior authorization process, setting copayment amounts, and establishing pharmacy networks, among other things.

The legislature further finds that the actions of pharmacy benefit managers can have wide-ranging impacts on pharmacies and consumers in Hawaii, particularly those consumers in rural areas who may have limited access to pharmacies within a pharmacy benefit manager's network. Despite these potential impacts, pharmacy benefit managers are not currently required to be registered.

Accordingly, the purpose of this Act is to require pharmacy benefit managers in Hawaii to register with the insurance commissioner.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to title 24 to be appropriately designated and to read as follows:


Pharmacy benefit managers

   -A Definitions. As used in this chapter:

"Commissioner" means the insurance commissioner.

"Covered entity" means:

(1) A health benefits plan regulated under chapter 87A, health insurer regulated under article 10A of chapter 431, mutual benefit society regulated under article 1 of chapter 432, or health maintenance organization regulated under chapter 432D;

(2) A health program administered by the State in the capacity of a provider of health coverage; or

(3) An employer, labor union, or other group of persons organized in the State that provides health coverage to covered persons employed or residing in the State.

"Covered entity" shall not include any plans issued for coverage for federal employees or specified disease or limited benefit health insurance as provided by section 431:10A-102.5.

"Covered person" means a member, policyholder, subscriber, enrollee, beneficiary, dependent, or other individual participating in a prescription drug benefit plan.

"Person" means an individual, partnership, corporation, organization, or other business entity.

"Pharmacy benefit management" means:

(1) Any of the following services provided with regard to the administration of pharmacy benefits:

(A) Mail service pharmacy;

(B) Claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to covered persons;

(C) Clinical formulary development and management services;

(D) Rebate contracting and administration;

(E) Certain patient compliance, therapeutic intervention, and generic substitution programs; or

(F) Disease management programs involving prescription drug utilization;

(2) The procurement of prescription drugs by a pharmacy benefit manager at a negotiated rate for dispensation to covered persons in the State; or

(3) The administration or management of prescription drug benefits provided by a covered entity for the benefit of covered persons.

"Pharmacy benefit manager" means any person that performs pharmacy benefit management, including but not limited to a person or entity in a contractual or employment relationship with a pharmacy benefit manager to perform pharmacy benefit management for a covered entity.

"Prescription drug benefit plan" means a health insurance plan offered by a covered entity that includes coverage for prescription drugs.

   -B Applicability. This chapter shall apply to any pharmacy benefit manager that provides claims processing services, other prescription drug or device services, or both, to covered persons who are residents of the State.

   -C Registration required. (a) No person shall act or operate as a pharmacy benefit manager without first obtaining a valid registration issued by the commissioner pursuant to this chapter.

(b) Each person seeking to register as a pharmacy benefit manager shall file with the commissioner an application on a form prescribed by the commissioner. The application shall include:

(1) The name, address, official position, and professional qualifications of each individual who is responsible for the conduct of the affairs of the pharmacy benefit manager, including all members of the board of directors; board of trustees; executive commission; other governing board or committee; principal officers, as applicable; partners or members, as applicable; and any other person who exercises control or influence over the affairs of the pharmacy benefit manager;

(2) The name and address of the applicant's agent for service of process in the State; and

(3) A nonrefundable application fee of $140.

   -D Annual renewal requirement. (a) Each pharmacy benefit manager shall renew its registration by March 31 each year.

(b) When renewing its registration, a pharmacy benefit manager shall submit to the commissioner the following:

(1) An application for renewal on a form prescribed by the director; and

(2) A renewal fee of $140.

(c) Failure on the part of a pharmacy benefit manager to renew its registration as provided in this section shall result in a penalty of $140 and may cause the registration to be revoked or suspended by the commissioner until the requirements for renewal have been met.

   -E Penalty. Any person who acts as a pharmacy benefit manager in this State without first being registered pursuant to this chapter shall be subject to a fine of $500 for each violation.

   -F Rules. The commissioner shall adopt, amend, or repeal rules pursuant to chapter 91 to carry out the purposes of this chapter."

SECTION 3. In codifying the new sections added by section 2 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 4. This Act shall take effect on July 1, 2017.
























Report Title:

Pharmacy Benefit Managers; Pharmacy Benefit Management; Registration; Insurance Commissioner



Requires pharmacy benefit managers to register with the insurance commissioner.




The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.