STAND. COM. REP. NO. 2805

Honolulu, Hawaii

RE: S.B. No. 2443

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 2443, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO PHARMACY BENEFIT MANAGERS,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Address and define pharmacy benefit manager practices;

(2) Create enforcement authority by the Insurance Commissioner to suspend and revoke a pharmacy benefit manager's registration and impose fines; and

(3) Repeal section 328-106, Hawaii Revised Statutes, which requires the Department of Health to enforce the terms of private contacts pertaining to pharmacy benefit managers.

Your Committee received testimony in support of this measure from the Department of Health, Hawai‘i Primacy Care Association, Hawai‘i Medical Association, and one individual. Your Committee received testimony in opposition to this measure from one individual. Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs, CVS Health, and American Cancer Society Cancer Action Network.

Your Committee finds that pharmacy benefit manager practices, including the practice of limiting a pharmacy or pharmacist from disclosing certain information and requiring consumers to pay more than the cash price for prescriptions, have considerable impacts on the pricing of prescription drugs. Many residents in the State struggle to afford the medications they need and, accordingly, should have access to any information that would increase price transparency. Additionally, and particularly for cancer patients, certain drugs do not yet have a modestly-priced generic equivalent or other alternative to drug treatment. This measure prohibits certain pharmacy benefit manager practices to increase price transparency and require that any amounts paid by a covered person be attributable toward any deductible or out-of-pocket maximums under the covered person's health benefit plan. This measure is therefore necessary to establish a framework to prevent over-reaching pharmacy benefit managers from creating barriers to life-saving treatments and access to new drugs, especially for cancer care.

Your Committee has amended this measure by:

(1) Clarifying the ability of the Insurance Commissioner, law enforcement, or state and federal government officials to access certain information;

(2) Prohibiting a pharmacy benefit manager from reimbursing a 340B pharmacy differently than any other network pharmacy based on its status as a 340B pharmacy;

(3) Extending certain penalties under chapter 480, Hawaii Revised Statutes;

(4) Clarifying the Insurance Commissioner's ability to suspend or revoke the registration of a pharmacy benefit manager, including requiring the Insurance Commissioner to conduct a hearing in accordance with Chapter 91, Hawaii Revised Statutes;

(5) Increasing the fine for failing to register as a pharmacy benefit manager from $500 to $1,000 for each violation;

(6) Inserting language prohibiting a contract for managed care to contain a provision that authorizes pharmacy benefit managers to reimburse a contracting pharmacy on a maximum allowable cost basis after December 31, 2022;

(7) Amending section 1 to reflect its amended purpose; and

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

As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2443, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2443, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

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ROSALYN H. BAKER, Chair