Hawaii 2022 Regular Session

Hawaii House Bill HB1783 Compare Versions

Only one version of the bill is available at this time.

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1	1	HOUSE OF REPRESENTATIVES H.B. NO. 1783 THIRTY-FIRST LEGISLATURE, 2022 STATE OF HAWAII A BILL FOR AN ACT relating to pharmacy benefit managers. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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3	3	HOUSE OF REPRESENTATIVES H.B. NO. 1783
4	4	THIRTY-FIRST LEGISLATURE, 2022
5	5	STATE OF HAWAII
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7	7	HOUSE OF REPRESENTATIVES
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9	9	H.B. NO.
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11	11	1783
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13	13	THIRTY-FIRST LEGISLATURE, 2022
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17	17	STATE OF HAWAII
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31	31	A BILL FOR AN ACT
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37	37	relating to pharmacy benefit managers.
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43	43	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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47	47	SECTION 1. The legislature finds that it is in the interest of consumers to prohibit pharmacy benefit managers from engaging in certain practices, including contractually limiting the ability of pharmacies and pharmacists from disclosing certain information and requiring consumers to pay more than the cash price for prescriptions. The legislature further finds that it is desirable to increase fees and penalties assessed under chapter 431S, Hawaii Revised Statutes. The purpose of this Act is to: (1) Create a new section in chapter 431S addressing pharmacy benefit manager practices; (2) Create a new section in chapter 431S to provide additional enforcement authority to the insurance commissioner; (3) Amend the definition of "pharmacy benefit manager" in chapter 431R, Hawaii Revised Statutes, to reference registration under chapter 431S to more closely align both chapters; (4) Add new definitions to chapter 431S to facilitate this Act; (5) Amend the definition of "covered entity" in chapter 431S to align with entities over which the insurance commissioner exercises significant jurisdiction; and (6) Provide the insurance commissioner with authority to suspend or revoke a pharmacy benefit manager's registration under certain conditions. SECTION 2. Chapter 431S, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows: "§431S- Business practices. (a) In any participation contracts between a pharmacy benefit manager and pharmacists or pharmacies providing prescription drug coverage for a prescription drug benefit plan, no pharmacy or pharmacist shall be prohibited, restricted, or penalized in any way from disclosing to any covered person any health care information that the pharmacy or pharmacist deems appropriate regarding: (1) The nature of treatment, risks, or alternatives; (2) The availability of alternate therapies, consultations, or tests; (3) The decision of utilization reviewers or similar persons to authorize or deny services; (4) The process that is used to authorize or deny health care services or benefits; or (5) Information on financial incentives and structures used by the insurer. (b) A pharmacy benefit manager shall not prohibit a pharmacy or pharmacist from discussing information regarding the total cost for pharmacist services for a prescription drug or from selling a more affordable alternative to the covered person if a more affordable alternative is available. (c) A pharmacy benefit manager contract with a participating pharmacist or pharmacy shall not prohibit, restrict, or limit disclosure of information to the commissioner, law enforcement, or state and federal government officials; provided that: (1) The recipient of the information has the obligation, to the extent provided by state or federal law, to maintain proprietary information as confidential; and (2) Prior to disclosure of information designated as confidential the pharmacist or pharmacy marks as confidential any document in which the information appears or requests confidential treatment for any oral communication of that information. (d) A pharmacy benefit manager shall not require a covered person purchasing a covered prescription drug to pay an amount greater than the lesser of the covered person's cost-sharing amount under the terms of the prescription drug benefit plan or the amount the covered person would pay for the drug if the covered person were paying the cash price. Any amount paid by a covered person under this section shall be attributable toward any deductible or, to the extent consistent with section 2707, Public Health Service Act, the annual out-of-pocket maximums under the covered person's health benefit plan. §431S- Enforcement. (a) The commissioner is authorized to enforce compliance with the requirements of this chapter. (b) The commissioner may examine or audit the books and records of a pharmacy benefit manager providing claims processing services or other prescription drug or device services for a prescription drug benefit plan to determine compliance with this chapter. (c) The information or data acquired during an examination under paragraph (b) shall: (1) Be considered proprietary and confidential; (2) Not be disclosable under chapter 92F; (3) Not be subject to subpoena; and (4) Not be subject to discovery or admissible as evidence in any private civil action. (d) The commissioner may use any document or information provided pursuant to this section in the performance of the commissioner's duties to determine compliance. (e) The commissioner may impose a penalty on a pharmacy benefit manager or the covered entity with which it is contracted, or both, for a violation of this chapter. The penalty may not exceed $ per entity for each violation of this chapter, except as provided under chapter 431S-5." SECTION 3. Section 431R-1, Hawaii Revised Statutes, is amended by amending the definition of "pharmacy benefit manager" to read as follows: ""Pharmacy benefit manager" means any person, business, or entity that performs pharmacy benefit management[, including but not limited to a person or entity under contract with a pharmacy benefit manager to perform pharmacy benefit management on behalf of a managed care company, nonprofit hospital or medical service organization, insurance company, third-party payor, or health program administered by the State.] and is registered pursuant to chapter 431S." SECTION 4. Section 431S-1, Hawaii Revised Statutes, is amended as follows: 1. By adding six new definitions to be appropriately inserted and to read: ""Claims processing services" means the administrative services performed in connection with the processing and adjudicating of claims relating to pharmacist services that include: (1) Receiving payments for pharmacist services; (2) Making payments to pharmacists or pharmacies for pharmacist services; or (3) Both. "Covered person" means a member, policy holder, subscriber, enrollee, beneficiary, dependent, or other individual participating in a prescription drug benefits plan. "Other prescription drug or device services" means services other than claims processing services, provided directly or indirectly, whether in connection with or separate from claims processing services, including but not limited to: (1) Negotiating rebates, discounts, or other financial incentives and arrangements with drug companies; (2) Disbursing or distributing rebates; (3) Managing or participating in incentive programs or arrangements for pharmacist services; (4) Negotiating or entering into contractual arrangements with pharmacists or pharmacies, or both; (5) Developing and maintaining formularies; (6) Designing prescription benefit programs; or (7) Advertising or promoting services. "Pharmacist" means a registered pharmacist licensed by the board of pharmacy of the State pursuant to chapter 461. "Pharmacist services" means products, goods, and services or any combination of products, goods, and services, provided as a part of the practice of pharmacy. "Pharmacy" means a store, shop, or place permitted as a pharmacy by the board of pharmacy of the State pursuant to chapter 461. 2. By amending the definition of "covered entity" to read: ""Covered entity" means: (1) A [health benefits plan regulated under chapter 87A;] health insurer regulated under article 10A of chapter 431; mutual benefit society regulated under article 1 of chapter 432; or health maintenance organization regulated under chapter 432D; [provided that a "covered entity" under this paragraph shall not include a health maintenance organization regulated under chapter 432D that owns or manages its own pharmacies;] or (2) A health program administered by the State in the capacity of a provider of health coverage[; or]. [(3) An employer, labor union, or other group of persons organized in the State that provides health coverage to covered persons employed or residing in the State.] "Covered entity" shall not include any plans issued for coverage for federal employees or specified disease or limited benefit health insurance as provided by section 431:10A-607." 3. By amending the definition of "pharmacy benefit manager" to read: ""Pharmacy benefit manager" means any person that performs pharmacy benefit management, including but not limited to a person or entity in a contractual or employment relationship with a pharmacy benefit manager to perform pharmacy benefit management for a covered entity[.]; provided that the term shall not include a consultant who only provides advice as to the selection or performance of a pharmacy benefit manager, or a covered entity to the extent that it performs any claims processing and other prescription drug or device services exclusively for its enrollees." SECTION 5. Section 431S-3, Hawaii Revised Statutes, is amended to read as follows: "§431S-3 Registration required. (a) Notwithstanding any law to the contrary, no person shall act or operate as a pharmacy benefit manager without first obtaining a valid registration issued by the commissioner pursuant to this chapter. (b) Each person seeking to register as a pharmacy benefit manager shall file with the commissioner an application on a form prescribed by the commissioner. The application shall include: (1) The name, address, official position, and professional qualifications of each individual who is responsible for the conduct of the affairs of the pharmacy benefit manager, including all members of the board of directors; board of trustees; executive commission; other governing board or committee; principal officers, as applicable; partners or members, as applicable; and any other person who exercises control or influence over the affairs of the pharmacy benefit manager; (2) The name and address of the applicant's agent for service of process in the State; and (3) A nonrefundable issuance fee of [$140.] $ . The commissioner may, upon showing of good cause, waive or modify, in whole or part, the fee in this subsection by order. (c) The commissioner may suspend or revoke the registration of a pharmacy benefit manager if the commissioner determines that the applicant or any individual responsible for the conduct of affairs of the applicant is not competent, trustworthy, financially responsible, of good personal and business reputation, or has been found to have violated the insurance laws of the State or any other jurisdiction, or has had an insurance or other certificate of authority or license denied or revoked for cause by any jurisdiction." SECTION 6. Section 431S-4, Hawaii Revised Statutes, is amended to read as follows: "§431S-4 Annual renewal requirement. (a) Each pharmacy benefit manager shall renew its registration by March 31 each year. (b) When renewing its registration, a pharmacy benefit manager shall submit to the commissioner the following: (1) An application for renewal on a form prescribed by the commissioner; and (2) A service fee of [$140.] $ . The commissioner may, upon showing of good cause, waive or modify, in whole or part, the fee in this subsection by order." SECTION 7. Section 431S-5, Hawaii Revised Statutes, is amended to read as follows: "[[]§431S-5[]] Penalty. Any person who acts as a pharmacy benefit manager in this State without first being registered pursuant to this chapter shall be subject to a fine of [$500] $ for each violation." SECTION 8. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date. SECTION 9. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable. SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 11. This Act shall take effect upon its approval. INTRODUCED BY: _____________________________
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49	49	SECTION 1. The legislature finds that it is in the interest of consumers to prohibit pharmacy benefit managers from engaging in certain practices, including contractually limiting the ability of pharmacies and pharmacists from disclosing certain information and requiring consumers to pay more than the cash price for prescriptions. The legislature further finds that it is desirable to increase fees and penalties assessed under chapter 431S, Hawaii Revised Statutes.
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51	51	The purpose of this Act is to:
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53	53	(1) Create a new section in chapter 431S addressing pharmacy benefit manager practices;
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55	55	(2) Create a new section in chapter 431S to provide additional enforcement authority to the insurance commissioner;
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57	57	(3) Amend the definition of "pharmacy benefit manager" in chapter 431R, Hawaii Revised Statutes, to reference registration under chapter 431S to more closely align both chapters;
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59	59	(4) Add new definitions to chapter 431S to facilitate this Act;
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61	61	(5) Amend the definition of "covered entity" in chapter 431S to align with entities over which the insurance commissioner exercises significant jurisdiction; and
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63	63	(6) Provide the insurance commissioner with authority to suspend or revoke a pharmacy benefit manager's registration under certain conditions.
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65	65	SECTION 2. Chapter 431S, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
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67	67	"§431S- Business practices. (a) In any participation contracts between a pharmacy benefit manager and pharmacists or pharmacies providing prescription drug coverage for a prescription drug benefit plan, no pharmacy or pharmacist shall be prohibited, restricted, or penalized in any way from disclosing to any covered person any health care information that the pharmacy or pharmacist deems appropriate regarding:
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69	69	(1) The nature of treatment, risks, or alternatives;
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71	71	(2) The availability of alternate therapies, consultations, or tests;
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73	73	(3) The decision of utilization reviewers or similar persons to authorize or deny services;
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75	75	(4) The process that is used to authorize or deny health care services or benefits; or
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77	77	(5) Information on financial incentives and structures used by the insurer.
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79	79	(b) A pharmacy benefit manager shall not prohibit a pharmacy or pharmacist from discussing information regarding the total cost for pharmacist services for a prescription drug or from selling a more affordable alternative to the covered person if a more affordable alternative is available.
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81	81	(c) A pharmacy benefit manager contract with a participating pharmacist or pharmacy shall not prohibit, restrict, or limit disclosure of information to the commissioner, law enforcement, or state and federal government officials; provided that:
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83	83	(1) The recipient of the information has the obligation, to the extent provided by state or federal law, to maintain proprietary information as confidential; and
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85	85	(2) Prior to disclosure of information designated as confidential the pharmacist or pharmacy marks as confidential any document in which the information appears or requests confidential treatment for any oral communication of that information.
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87	87	(d) A pharmacy benefit manager shall not require a covered person purchasing a covered prescription drug to pay an amount greater than the lesser of the covered person's cost-sharing amount under the terms of the prescription drug benefit plan or the amount the covered person would pay for the drug if the covered person were paying the cash price.
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89	89	Any amount paid by a covered person under this section shall be attributable toward any deductible or, to the extent consistent with section 2707, Public Health Service Act, the annual out-of-pocket maximums under the covered person's health benefit plan.
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91	91	§431S- Enforcement. (a) The commissioner is authorized to enforce compliance with the requirements of this chapter.
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93	93	(b) The commissioner may examine or audit the books and records of a pharmacy benefit manager providing claims processing services or other prescription drug or device services for a prescription drug benefit plan to determine compliance with this chapter.
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95	95	(c) The information or data acquired during an examination under paragraph (b) shall:
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97	97	(1) Be considered proprietary and confidential;
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99	99	(2) Not be disclosable under chapter 92F;
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101	101	(3) Not be subject to subpoena; and
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103	103	(4) Not be subject to discovery or admissible as evidence in any private civil action.
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105	105	(d) The commissioner may use any document or information provided pursuant to this section in the performance of the commissioner's duties to determine compliance.
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107	107	(e) The commissioner may impose a penalty on a pharmacy benefit manager or the covered entity with which it is contracted, or both, for a violation of this chapter. The penalty may not exceed $ per entity for each violation of this chapter, except as provided under chapter 431S-5."
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109	109	SECTION 3. Section 431R-1, Hawaii Revised Statutes, is amended by amending the definition of "pharmacy benefit manager" to read as follows:
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111	111	""Pharmacy benefit manager" means any person, business, or entity that performs pharmacy benefit management[, including but not limited to a person or entity under contract with a pharmacy benefit manager to perform pharmacy benefit management on behalf of a managed care company, nonprofit hospital or medical service organization, insurance company, third-party payor, or health program administered by the State.] and is registered pursuant to chapter 431S."
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113	113	SECTION 4. Section 431S-1, Hawaii Revised Statutes, is amended as follows:
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115	115	1. By adding six new definitions to be appropriately inserted and to read:
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117	117	""Claims processing services" means the administrative services performed in connection with the processing and adjudicating of claims relating to pharmacist services that include:
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119	119	(1) Receiving payments for pharmacist services;
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121	121	(2) Making payments to pharmacists or pharmacies for pharmacist services; or
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123	123	(3) Both.
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125	125	"Covered person" means a member, policy holder, subscriber, enrollee, beneficiary, dependent, or other individual participating in a prescription drug benefits plan.
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127	127	"Other prescription drug or device services" means services other than claims processing services, provided directly or indirectly, whether in connection with or separate from claims processing services, including but not limited to:
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129	129	(1) Negotiating rebates, discounts, or other financial incentives and arrangements with drug companies;
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131	131	(2) Disbursing or distributing rebates;
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133	133	(3) Managing or participating in incentive programs or arrangements for pharmacist services;
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135	135	(4) Negotiating or entering into contractual arrangements with pharmacists or pharmacies, or both;
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137	137	(5) Developing and maintaining formularies;
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139	139	(6) Designing prescription benefit programs; or
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141	141	(7) Advertising or promoting services.
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143	143	"Pharmacist" means a registered pharmacist licensed by the board of pharmacy of the State pursuant to chapter 461.
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145	145	"Pharmacist services" means products, goods, and services or any combination of products, goods, and services, provided as a part of the practice of pharmacy.
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147	147	"Pharmacy" means a store, shop, or place permitted as a pharmacy by the board of pharmacy of the State pursuant to chapter 461.
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149	149	2. By amending the definition of "covered entity" to read:
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151	151	""Covered entity" means:
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153	153	(1) A [health benefits plan regulated under chapter 87A;] health insurer regulated under article 10A of chapter 431; mutual benefit society regulated under article 1 of chapter 432; or health maintenance organization regulated under chapter 432D; [provided that a "covered entity" under this paragraph shall not include a health maintenance organization regulated under chapter 432D that owns or manages its own pharmacies;] or
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155	155	(2) A health program administered by the State in the capacity of a provider of health coverage[; or].
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157	157	[(3) An employer, labor union, or other group of persons organized in the State that provides health coverage to covered persons employed or residing in the State.]
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159	159	"Covered entity" shall not include any plans issued for coverage for federal employees or specified disease or limited benefit health insurance as provided by section 431:10A-607."
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161	161	3. By amending the definition of "pharmacy benefit manager" to read:
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163	163	""Pharmacy benefit manager" means any person that performs pharmacy benefit management, including but not limited to a person or entity in a contractual or employment relationship with a pharmacy benefit manager to perform pharmacy benefit management for a covered entity[.]; provided that the term shall not include a consultant who only provides advice as to the selection or performance of a pharmacy benefit manager, or a covered entity to the extent that it performs any claims processing and other prescription drug or device services exclusively for its enrollees."
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165	165	SECTION 5. Section 431S-3, Hawaii Revised Statutes, is amended to read as follows:
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167	167	"§431S-3 Registration required. (a) Notwithstanding any law to the contrary, no person shall act or operate as a pharmacy benefit manager without first obtaining a valid registration issued by the commissioner pursuant to this chapter.
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169	169	(b) Each person seeking to register as a pharmacy benefit manager shall file with the commissioner an application on a form prescribed by the commissioner. The application shall include:
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171	171	(1) The name, address, official position, and professional qualifications of each individual who is responsible for the conduct of the affairs of the pharmacy benefit manager, including all members of the board of directors; board of trustees; executive commission; other governing board or committee; principal officers, as applicable; partners or members, as applicable; and any other person who exercises control or influence over the affairs of the pharmacy benefit manager;
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173	173	(2) The name and address of the applicant's agent for service of process in the State; and
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175	175	(3) A nonrefundable issuance fee of [$140.] $ .
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177	177	The commissioner may, upon showing of good cause, waive or modify, in whole or part, the fee in this subsection by order.
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179	179	(c) The commissioner may suspend or revoke the registration of a pharmacy benefit manager if the commissioner determines that the applicant or any individual responsible for the conduct of affairs of the applicant is not competent, trustworthy, financially responsible, of good personal and business reputation, or has been found to have violated the insurance laws of the State or any other jurisdiction, or has had an insurance or other certificate of authority or license denied or revoked for cause by any jurisdiction."
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181	181	SECTION 6. Section 431S-4, Hawaii Revised Statutes, is amended to read as follows:
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183	183	"§431S-4 Annual renewal requirement. (a) Each pharmacy benefit manager shall renew its registration by March 31 each year.
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185	185	(b) When renewing its registration, a pharmacy benefit manager shall submit to the commissioner the following:
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187	187	(1) An application for renewal on a form prescribed by the commissioner; and
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189	189	(2) A service fee of [$140.] $ .
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191	191	The commissioner may, upon showing of good cause, waive or modify, in whole or part, the fee in this subsection by order."
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193	193	SECTION 7. Section 431S-5, Hawaii Revised Statutes, is amended to read as follows:
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195	195	"[[]§431S-5[]] Penalty. Any person who acts as a pharmacy benefit manager in this State without first being registered pursuant to this chapter shall be subject to a fine of [$500] $ for each violation."
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197	197	SECTION 8. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
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199	199	SECTION 9. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
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201	201	SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
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203	203	SECTION 11. This Act shall take effect upon its approval.
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207	207	INTRODUCED BY: _____________________________
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209	209	INTRODUCED BY:
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211	211	_____________________________
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217	217	Report Title: Pharmacy Benefit Managers; Enforcement; Registration Description: Addresses and defines pharmacy benefit manager practices. Creates enforcement authority by the insurance commissioner to suspend or revoke a pharmacy benefit manager's registration and impose fines. The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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223	223	Report Title:
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225	225	Pharmacy Benefit Managers; Enforcement; Registration
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229	229	Description:
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231	231	Addresses and defines pharmacy benefit manager practices. Creates enforcement authority by the insurance commissioner to suspend or revoke a pharmacy benefit manager's registration and impose fines.
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239	239	The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.