Establishes the Hawaii Rx Program to make prescription drugs more affordable to all residents of the State. (SD1)

A BILL FOR AN ACT

SECTION 1. The purpose of this Act is to establish the Hawaii RX program in an effort to reduce the costs of prescription drugs for all participants in the program.

SECTION 2. Hawaii Rx program. There is established within the office of the governor, the Hawaii Rx program. The program will combine the purchasing power of all persons to reduce prescription drug costs for this group. The governor 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.

SECTION 3. Hawaii RX advisory commission. (a) There is created within the office of the governor for administrative purposes only, the Hawaii RX advisory commission that shall serve in an advisory capacity to the governor. The commission shall consist of nine members. The attorney general, director of commerce and consumer affairs, director of health, and director of human services, or their respective representatives shall serve as ex officio nonvoting members of the commission. The remaining five members shall be appointed by the governor pursuant to section 26-34 as follows:

At least one appointed member shall be from each of the counties of Hawaii, Honolulu, Kauai, and Maui.

(b) All appointed members shall be selected on the basis of their interest in and knowledge of policy relating to prescription drugs, and their ability to contribute to the development of prescription drug policy in this State.

(c) With the exception of certain initial appointees, all members of the commission shall serve for terms of three years and may be reappointed. With the exception of the pharmacist member, appointed members may serve out their complete term regardless of whether during the term of their membership their profession or qualifications vary from requirements under subsection (a).

(d) The commission shall meet at least four times per year at times and places agreed upon by the members of the commission. The chair shall be elected annually by all members of the commission and shall be selected from members who are not representatives of a government agency. Members shall serve without compensation but shall be reimbursed for necessary expenses incurred in the discharge of their duties.

SECTION 4. Duties of Hawaii RX advisory commission. The commission shall:

SECTION 5. Program eligibility. (a) All residents of the State shall be eligible to participate in the Hawaii RX program.

(b) The governor:

SECTION 6. Rebate agreement. (a) Any prescription drug manufacturers or labelers that sell prescription drugs in the State may enter into a rebate program with the governor for the Hawaii RX program. The rebate agreement shall require the manufacturer or labeler to make rebate payments to the State each calendar quarter or according to a schedule established by the agency.

(b) The governor shall negotiate the amount of the rebate required from a manufacturer or labeler.

SECTION 7. Nonparticipating manufacturers and labelers. If the governor and a drug manufacturer or labeler fail to reach agreement on the terms of a rebate, the governor shall prompt a review of whether to place that manufacturer's or labeler's products on the prior authorization or formularies for any other state-funded prescription drug program in accordance with chapter 328, and take similar actions involving prior authorization or formularies for any other state-funded drug program. The governor shall adopt rules creating clear procedures for the implementation of this section. The governor may release the names of manufacturers and labelers that do not enter into rebate agreements. This information shall be deemed public information. The governor may also publicize to doctors, pharmacists, and other health professionals information about the relative cost of drugs produced by manufacturers and labelers that enter in rebate agreements compared to those who do not enter into rebate agreements.

SECTION 8. Discounted retail prices for program participants. (a) Each retail pharmacy voluntarily participating in the Hawaii RX program shall discount the price of drugs covered by the program and sold to program participants.

(b) The governor shall establish discounted prices for drugs covered by a rebate agreement and shall promote the use of efficacious and reduced-cost drugs, taking into consideration:

(c) In making a determination under this section, the governor may rely on pricing information for a selected number of prescription drugs where the list of drugs selected is:

(d) Beginning July 1, 2001, a participating retail pharmacy shall offer prescription drugs at or below the average wholesale price, minus six per cent, plus a dispensing fee designated by the governor. These initial price levels shall be calculated by the governor and the dispensing fee shall not be less than that provided under the state Medicaid program. The average wholesale price is the wholesale price charged 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, 2002, a participating retail pharmacy shall offer prescription drugs at or below the initial price levels specified in subsection (d), minus the amount of any rebate paid by the State to the retail pharmacy.

SECTION 9. Pharmacy reimbursement. (a) A retail pharmacy shall submit claims to the governor to verify the amount charged to program participants. On a weekly or biweekly basis, the governor shall reimburse each retail pharmacy for discounted prices of prescription drugs provided to program participants plus a professional fee of $3 or other amount as the board of pharmacy may provide by rule under section 12.

(b) The governor shall collect retail pharmacy use data necessary to calculate the amount of the manufacturer or labeler rebate under section 6. The governor shall protect the confidentiality of information received as required under state or federal law, rule, or regulation.

SECTION 10. Discrepancies in rebate amounts. (a) If there is a discrepancy in the manufacturer’s or labeler’s favor between the amount claimed by a pharmacy and the amount rebated by the manufacturer or labeler, the governor, at the State’s expense, may hire a mutually agreed-upon independent auditor to verify the accuracy of the data supplied to the governor. If a discrepancy still exists following the audit, the manufacturer or labeler shall justify the reason for the discrepancy or make payment to the governor for any additional amount due.

(b) If there is a discrepancy against the interest of the manufacturer or labeler in the information provided by the governor to the manufacturer or labeler regarding the manufacturer’s or labeler’s rebate, the manufacturer or labeler, at the manufacturer’s or labeler’s expense, may hire a mutually agreed-upon independent auditor to verify the accuracy of the data supplied to the governor. If a discrepancy still exists following the audit, the governor shall justify the reason for the discrepancy and refund to the manufacturer or labeler any excess payment made by the manufacturer or labeler.

SECTION 11. Annual report. The governor shall report the enrollment and financial status of the Hawaii RX program to the legislature no later than twenty days prior to the convening of each regular session, beginning with the 2002 regular session.

SECTION 12. Hawaii RX program special fund. There is established the Hawaii RX program special fund:

All interest on special account balances shall accrue to the special account. Moneys in the special account shall be used solely for purposes of the Hawaii RX program.

SECTION 12. Operation of the Hawaii RX program. (a) The governor shall adopt rules requiring retail pharmacies to disclose to participants of the Hawaii RX program the amount saved as a result of the program. In adopting rules, the governor shall consider and protect proprietary information.

(b) The governor may adjust the professional fee under section 10 by rule under chapter 91, Hawaii Revised Statutes.

SECTION 13. The governor shall use the governor'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 1396r-8.

SECTION 14. In implementing this Act, the governor shall coordinate with other governmental programs and may take actions to enhance efficiency, reduce the cost of prescription drugs, and maximize the benefits of this and other governmental programs, including proposals to amend eligibility for the Hawaii RX program to provide program benefits to the beneficiaries of other programs.

The governor may seek waivers of federal law, rule, or regulation necessary to implement this Act.

SECTION 15. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for fiscal year 2001-2002 to establish positions in the office of the governor for outreach activities, and to contract for claims management services.

SECTION 16. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for fiscal year 2001-2002 for the costs associated with the issuance of prescription cards.

The sums appropriated in this section and section 15 shall be expended by the governor for the purposes of this Act.

SECTION 17. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 18. This Act shall take effect on July 1, 2050.