STAND. COM. REP. NO.  953-14

Honolulu, Hawaii

                , 2014

RE:   S.B. No. 2365

      S.D. 2

      H.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Sir:

     Your Committee on Labor & Public Employment, to which was referred S.B. No. 2365, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE CLAIMS,"

begs leave to report as follows:

The purpose of this measure is to limit the reimbursement of prescription medications to prevent drug prices from becoming an unreasonable cost driver of health care in workers' compensation and motor vehicle insurance claims, while ensuring the same standard of service and care intended for both injured employees under the workers' compensation law and injured individuals under the motor vehicle insurance law.

The Department of Human Resources Development, Property Casualty Insurers Association of America, and National Association of Mutual Insurance Companies provided testimony in support of this measure.  The Department of Labor and Industrial Relations; City and County of Honolulu, Department of Human Resources; The Chamber of Commerce of Hawaii; Hawaii Insurers Council; Hawaii Medical Association; Automated Health Care Solutions; Work Injury Medical Association of Hawaii; and International Longshore & Warehouse Union, Local 142 provided comments on this measure.

     Your Committee has amended this measure by:

     (1)  Specifying that payment for:

          (A)  Prescription drugs, including repackaged and relabeled drugs;

          (B)  Compounded prescription drugs; and

          (C)  Repackaged, relabeled, or compounded prescription drugs, if the original manufacturer of the underlying drug product used is unknown,

          not exceed 140 percent of the average wholesale price set by the original manufacturer;

     (2)  Specifying that the payment for prescription drugs shall be based on the average wholesale price set by the original manufacturer of the dispensed prescription drug as identified by its National Drug Code and as published in the Red Book: Pharmacy's Fundamental Reference;

     (3)  Providing that payment for a prescription drug that is not available at a major retail pharmacy within the State will not be reimbursed;

     (4)  Requiring that all pharmaceutical claims, including claims submitted for compounded prescription drugs, include the National Drug Code of the original manufacturer; and

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     Your Committee recognizes the concerns of the insurance industry that tying the motor vehicle insurance medical fee schedule to the workers' compensation medical fee schedule will mean that any changes to the latter will affect the former.  Because these concerns may involve issues beyond the purview of this measure's title, your Committee notes that these concerns may be better addressed in other measures moving through the legislative process.

     As affirmed by the record of votes of the members of your Committee on Labor & Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2365, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2365, 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 Labor & Public Employment,

____________________________

MARK M. NAKASHIMA, Chair