STAND. COM. REP. NO. 1961

Honolulu, Hawaii

RE:    H.C.R. No. 54

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committees on Human Services and Public Housing and Health, to which was referred H.C.R. No. 54 entitled:

"HOUSE CONCURRENT RESOLUTION REQUESTING THE DEPARTMENT OF HUMAN SERVICES TO ESTABLISH AN INTERIM TASK FORCE TO REVIEW THE STATE MAXIMUM ALLOWABLE COST PROGRAM'S REIMBURSEMENT POLICY AND ITS IMPACT ON SMALL, INDEPENDENT, COMMUNITY PHARMACIES,"

beg leave to report as follows:

     The purpose of this measure is to request the Department of Human Services to establish an interim State Maximum Allowable Cost Program Evaluation Task Force (Task Force) to review the state Maximum Allowable Cost (MAC) Program's reimbursement policy and its impact on small, independent, community pharmacies.

     Your Committees received testimony in support of this measure from the Department of Human Services and Longs Drugs.

     Pharmacists are highly-trained and skilled healthcare professionals who perform various roles to ensure optimal health outcomes for their patients.  Many pharmacists are also small‑business owners, owning the pharmacy in which they practice.  For each prescription that a pharmacy fills under the Medicaid Program, Medicaid pays the pharmacy an amount meant to cover both the cost of acquiring the drug from the manufacturer and the cost of distributing and dispensing.

     With the rising cost of healthcare taking a significant toll on federal and state budgets, federal regulations were implemented in 1987 to limit the amount which Medicaid could reimburse for certain generic drugs under the Federal Upper Limit Program.  States also limit Medicaid drug reimbursement under the MAC Programs, which generally lists more drugs than the federal program and features lower pricing.  Presently, MAC Program prices in Hawaii are set to remain below federal prices to adhere to federal regulations and ensure maximum federal reimbursement for Medicaid expenditures.

     According to a recent study by the Government Accountability Office, proposed Medicaid pharmacy reimbursement cuts will force pharmacists to accept Medicaid drug reimbursement that is, on average, thirty six per cent below their acquisition cost.  It will be Hawaii's poor, in particular women and children who make up the majority of Medicaid recipients, who will suffer when they can no longer access community pharmacies for the medications they need.

     Your Committees believe that more information needs to be collected to better understand how MAC Program prices are set and how to ensure a reasonable reimbursement to small pharmacies within state spending limits and of federal Medicaid restrictions.

     As affirmed by the records of votes of the members of your Committees on Human Services and Public Housing and Health that are attached to this report, your Committees concur with the intent and purpose of H.C.R. No. 54, and recommend its adoption.

Respectfully submitted on behalf of the members of the Committees on Human Services and Public Housing and Health,

____________________________ DAVID Y. IGE, Chair

____________________________ SUZANNE CHUN OAKLAND, Chair