STAND. COM. REP. NO.  984

Honolulu, Hawaii

                , 2011

RE:   S.B. No. 591

      S.D. 2

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Health, to which was referred S.B. No. 591, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO PHARMACY BENEFIT MANAGEMENT COMPANIES,"

begs leave to report as follows:

     The purpose of this bill is to regulate pharmacy benefit management companies (PBMs) by requiring PBMs to register with the insurance commissioner and by restricting the manipulation of drug co-payment pricing.

     Hawaii Medical Association and several concerned individuals testified in support of this measure.  The Department of Commerce and Consumer Affairs, CVS Caremark, Ohana Health Plan, Hawaii Medical Service Association, and Medco Health Solutions, Inc., opposed this bill. 

     Your Committee has amended this bill by:

(1)  Removing provisions regarding pharmacy audits;

(2)  Removing provisions for license suspension or revocation as a penalty for failure to file annual statement with the insurance commissioner;

(3)  Allowing PBMs increased discretion regarding the providers they contract with by eliminating language restricting the ability to exclude "unwanted providers";

(4)  Eliminating the prohibition against differential reimbursement to pharmacies;

(5)  Facilitating access to drugs with limited availability by eliminating registration requirements for out-of-state or mail order pharmacies; and

(6)  Making technical, nonsubstantive amendments for clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 591, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 591, S.D. 2, H.D. 1, and be referred to the Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Health,

____________________________

RYAN I. YAMANE, Chair