STAND. COM. REP. NO. 841

Honolulu, Hawaii

RE: S.B. No. 1381

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred S.B. No. 1381, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE REPEAL OF SECTION 328-106, HAWAII REVISED STATUTES,"

begs leave to report as follows:

The purpose and intent of this measure is to repeal section 328-106, Hawaii Revised Statutes, which provides the Department of Health with the authority to regulate pharmacy benefit managers that reimburse a contracting pharmacy for a drug on a maximum allowable cost basis.

Your Committee received testimony in support of this measure from the Department of Health.

Your Committee finds that it is not the Legislature's intent for the Department of Health to enforce and regulate an appeals process between private entities nor is it in the scope of the Department of Health's purview and expertise to do so. Your Committee further finds that disputes between pharmacy benefit managers and pharmacies over contractually obligated reimbursements should be enforced by the courts. According to testimony received by your Committee, the regulatory mechanism established in section 328-106, Hawaii Revised Statutes, is ineffective and does not offer pharmacies realistic or substantive relief from the volatile price fluctuations of the prescription drug market.

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1381, S.D. 1, and recommends that it pass Third Reading.

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

________________________________

KARL RHOADS, Chair