SB 2047: Insurance Commissioner; Pharmacy Benefit Managers; Prescription Drugs; Maximum Allowable Cost; Contracting Pharmacies; Appropriation
- Session Year: 2025-2026
- House: Senate
- Latest Version Date: 2026-03-27
Current Status:
Failed
(2026-03-30: Report adopted; referred to the committee(s) on FIN as amended in HD 2 with none voting aye with reservations; none voting no (0) and Representative(s) Cochran, Lowen, Perruso, Quinlan excused (4).)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Final Decking
Enacted
Establishes certain requirements for pharmacy benefit managers, other than health maintenance organizations that own and operate their own pharmacies, that reimburse contracting pharmacies for drugs on a maximum allowable cost basis. Allows contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal. Authorizes the Insurance Commissioner to assess fines for violations. Appropriates funds. Effective 7/1/3000. (HD2)
Establishes certain requirements for pharmacy benefit managers, other than health maintenance organizations that own and operate their own pharmacies, that reimburse contracting pharmacies for drugs on a maximum allowable cost basis. Allows contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal. Authorizes the Insurance Commissioner to assess fines for violations. Appropriates funds. Effective 1/30/2050. (HD1)
Establishes requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including maximum allowable cost lists, maximum allowable cost reports, and a complaint process. Requires pharmacy benefit managers to disclose lower-priced equivalent drugs when a maximum allowable cost is upheld on appeal. Allows contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal. Authorizes the Insurance Commissioner to adopt rules and assess fines for violations. Appropriates funds. Effective 1/30/2050. (SD2)
Establishes requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including maximum allowable cost lists, maximum allowable cost reports, and a complaint process. Requires pharmacy benefit managers to disclose lower-priced equivalent drugs when a maximum allowable cost is upheld on appeal. Allows contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal. Authorizes the Insurance Commissioner to adopt rules and assess fines for violations. Appropriates funds. Effective 1/30/2050. (SD1)
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THE SENATE |
S.B. NO. |
2047 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 2 |
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STATE OF HAWAII |
H.D. 2 |
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A BILL FOR AN ACT
RELATING TO PHARMACY BENEFIT MANAGERS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that pharmacy benefit managers are third party administrators that contract with health plans, employers, unions, and government entities to manage prescription drug programs on behalf of health plan beneficiaries. Over the past decade, the role of pharmacy benefit managers in the delivery of health care has significantly increased. However, a recent report has found that pharmacy benefit managers have had an adverse impact on the overall costs and prices of prescription drugs.
The legislature further finds that a maximum allowable cost list is a list of the maximum amounts that a pharmacy benefit manager will reimburse a pharmacy for various drugs. In general, no two maximum allowable cost lists are alike and will vary according to the drug, pharmacy benefit manager, and plan sponsor. However, the lack of transparency surrounding maximum allowable cost pricing has enabled pharmacy benefit managers to pay aggressively low reimbursements to pharmacies, while charging significantly higher amounts for the same drug to plan sponsors. This large discrepancy between the list price of prescription drugs and the transaction price often results in much higher patient copayments.
The legislature also finds that nearly all health plans require some level of cost sharing, either via a fixed copayment or some percentage of the cost of care. However, in certain situations, a pharmacy benefit manager may set an insurance copayment at a higher amount than the actual cost of the medication and later take back the excess amount from a pharmacy, in a practice known as copay clawbacks.
The legislature additionally finds that the State had previously regulated pharmacy benefit manager maximum allowable cost lists under section 328-106, Hawaii Revised Statutes. This section was later repealed because it placed the regulatory responsibility on the department of health, which lacked the expertise to oversee what was intended as a price control function. The section also lacked an adequate remedy for violations, an appropriate enforcement mechanism, and incentives for pharmacy benefit managers to comply with disclosure of maximum allowable cost lists. Since section 328-106, Hawaii Revised Statutes, was repealed, no new laws have been enacted to regulate maximum allowable cost lists for pharmacy benefit managers.
The legislature finds that it is appropriate to restore statutory protections relating to pharmacy benefit managers maximum allowable cost lists and place these protections within chapter 431R, Hawaii Revised Statutes, which governs prescription drug benefits under the purview of the department of commerce and consumer affairs. These protections will encourage transparency amongst pharmacy benefit managers while protecting the State's independent pharmacies and consumers by strengthening the ability of pharmacies to receive timely maximum allowable cost lists, establishing a complaints process for violations, and clarifying penalties for violations.
Accordingly, the purpose of this Act is to:
(1) Establish certain requirements for pharmacy benefit managers, other than health maintenance organizations that own and operate their own pharmacies, that reimburse contracting pharmacies for drugs on a maximum allowable cost basis; and
(2) Require pharmacy benefit managers to disclose lower‑priced equivalent drugs when a maximum allowable cost is upheld on appeal and allow contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal and recoup any overpayment.
SECTION 2. Chapter 431R, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§431R- Pharmacy benefit managers; maximum allowable cost. (a) This section shall apply to all pharmacy benefit managers that reimburse a contracting pharmacy for a drug on a maximum allowable cost basis.
(b) Each pharmacy benefit manager shall include the following information in the contract with a contracting pharmacy:
(1) Information identifying any national drug pricing compendia; or
(2) Other data sources for the maximum allowable cost list.
(c) Upon request, a pharmacy benefit manager shall make available to a contracting pharmacy a comprehensive report for all drugs on the maximum allowable cost list for a plan, which shall contain the latest maximum allowable cost prices used by the pharmacy benefit manager for patients served by the contracting pharmacy, in a readily accessible and secure electronic or usable web-based format.
(d) No drug shall be included on a maximum allowable cost list or reimbursed on a maximum allowable cost basis unless:
(1) The drug is listed as "A"- or "B"-rated in the most recent version of the Orange Book or has a rating of "NR", "NA", or similar rating by a nationally recognized reference;
(2) The drug is generally available for purchase in this State from a national or regional wholesaler; and
(3) The drug is not obsolete.
(e) A pharmacy benefit manager shall review and make any necessary adjustments to the maximum allowable cost of each drug on a maximum allowable cost list at least once every seven days using the most recent data sources available. The pharmacy benefit manager shall reimburse a contracting pharmacy based on the most recently updated maximum allowable cost list.
(f) Each pharmacy benefit manager shall establish a clearly defined process for a contracting pharmacy to appeal the maximum allowable cost for a drug on a maximum allowable cost list that includes the following provisions:
(1) A contracting pharmacy may base its appeal on one or more of the following:
(A) The maximum allowable cost for a drug is below the cost at which the drug is available for purchase by similarly situated pharmacies in the State from a national or regional wholesaler; or
(B) The drug does not meet the requirements of subsection (d) for reimbursement on a maximum allowable cost basis;
(2) Upon receipt of payment for a claim, a contracting pharmacy shall have no less than fourteen business days to file an appeal with the pharmacy benefit manager; and
(3) The pharmacy benefit manager shall make a final determination on the contracting pharmacy's appeal no later than fourteen business days after the pharmacy benefit manager's receipt of the appeal; provided that:
(A) If the maximum allowable cost is upheld on appeal, the pharmacy benefit manager shall provide the contracting pharmacy with the reason for the determination and the national drug code of an equivalent drug that may be purchased by a similarly situated pharmacy at a price that is equal to or less than the maximum allowable cost of the drug that is the subject of the appeal; and
(B) If the maximum allowable cost is not upheld on appeal, the pharmacy benefit manager shall adjust the maximum allowable cost of the drug within one calendar day of the date of the final determination and allow the contracting pharmacy to reverse and rebill the claim that is the subject of the appeal, and all claims for the same drug at the prescription drug benefit plan level, which shall be reimbursed at the maximum allowable cost established by the appeal, until the maximum allowable cost list is updated pursuant to subsection (e).
(g) A contracting pharmacy shall not disclose to any third party the maximum allowable cost list or any related information it receives from a pharmacy benefit manager, whether directly or through a pharmacy services administrative organization or similar entity contracted to provide administrative services to that contracting pharmacy.
(h) The insurance commissioner may establish an external review process by rule for complaints of violations of this section, which, except to the extent that the parties have other remedies available under applicable federal or state law, may be binding on the complaining contracting pharmacy and the pharmacy benefit manager that is the subject of the complaint. The insurance commissioner may assign any costs associated with the external review process to the complaining contracting pharmacy and the pharmacy benefit manager that is the subject of the complaint.
(i) For purposes of this subsection, "pharmacy benefit manager" has the same meaning as in section 431S-1; provided that this section shall not apply to a health maintenance organization that is part of a fully integrated delivery system in which enrollees primarily use pharmacies that are owned and operated by the health maintenance organization."
SECTION 3. Section 328-91, Hawaii Revised Statutes, is amended by deleting the definitions of "maximum allowable cost", "maximum allowable cost list", and "obsolete".
[""Maximum
allowable cost" means the maximum amount that a pharmacy benefit manager
shall reimburse a pharmacy for the cost of a drug.
"Maximum
allowable cost list" means a list of drugs for which a maximum allowable
cost has been established by a pharmacy benefit manager.
"Obsolete"
means a drug that may be listed in a national drug pricing compendia but cannot
be dispensed based on the expiration date of the last lot manufactured."]
SECTION 4. Section 431R-1, Hawaii Revised Statutes, is amended by adding five new definitions to be appropriately inserted and to read as follows:
""Contracting pharmacy" means a non-affiliated pharmacy that is not part of a national or regional chain.
"Maximum allowable cost" means the maximum amount that a pharmacy benefit manager reimburses a contracting pharmacy for the cost of a drug.
"Maximum allowable cost list" means a list of drugs or other methodology used by a pharmacy benefit manager to directly or indirectly set the maximum allowable cost to a contracting pharmacy or pharmacist for a generic drug, brand-name drug, biologic product, or other prescription drug. "Maximum allowable cost list" includes but is not limited to:
(1) The average acquisition cost, including national average drug acquisition cost;
(2) The average manufacturer price;
(3) The average wholesale price;
(4) The brand effective rate or generic effective rate;
(5) Discount indexing;
(6) Federal upper limits;
(7) The wholesale acquisition cost; and
(8) Any other term that a pharmacy benefit manager or a prescription drug benefit plan provider may use to establish reimbursement rates to a pharmacist or pharmacy for pharmacist services.
"Obsolete" means a drug that may be listed in a national drug pricing compendia but cannot be dispensed based on the expiration date of the last lot manufactured.
"Orange Book" has the same meaning as defined in section 328-91."
SECTION 5. Section 431R-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The insurance commissioner may assess a fine of
up to $10,000 for each violation by a pharmacy benefit manager or prescription drug
benefit plan provider who is in violation of section 431R-2 [or],
431R-3[.], or 431R- .
In addition, the insurance commissioner may order the pharmacy benefit manager
to take specific affirmative corrective action or make restitution."
SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 for the insurance division of the department of commerce and consumer affairs to effectuate the purposes of this Act.
The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.
SECTION 7. This Act shall not be applied so as to impair any contract existing as of the effective date of this Act in a manner violative of either the Hawaii State Constitution or article 1, section 10, of the United States Constitution.
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect on July 1, 3000.
Report Title:
Insurance Commissioner; Pharmacy Benefit Managers; Prescription Drugs; Maximum Allowable Cost; Contracting Pharmacies; Appropriation
Description:
Establishes certain requirements for pharmacy benefit managers, other than health maintenance organizations that own and operate their own pharmacies, that reimburse contracting pharmacies for drugs on a maximum allowable cost basis. Allows contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal. Authorizes the Insurance Commissioner to assess fines for violations. Appropriates funds. Effective 7/1/3000. (HD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
|
THE SENATE |
S.B. NO. |
2047 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 2 |
|
|
STATE OF HAWAII |
H.D. 1 |
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
RELATING TO PHARMACY BENEFIT MANAGERS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that pharmacy benefit managers are third party administrators that contract with health plans, employers, unions, and government entities to manage prescription drug programs on behalf of health plan beneficiaries. Over the past decade, the role of pharmacy benefit managers in the delivery of health care has significantly increased. However, a recent report has found that pharmacy benefit managers have had an adverse impact on the overall costs and prices of prescription drugs.
The legislature further finds that a maximum allowable cost list is a list of the maximum amounts that a pharmacy benefit manager will reimburse a pharmacy for various drugs. In general, no two maximum allowable cost lists are alike and will vary according to the drug, pharmacy benefit manager, and plan sponsor. However, the lack of transparency surrounding maximum allowable cost pricing has enabled pharmacy benefit managers to pay aggressively low reimbursements to pharmacies, while charging significantly higher amounts for the same drug to plan sponsors. This large discrepancy between the list price of prescription drugs and the transaction price often results in much higher patient copayments.
The legislature also finds that nearly all health plans require some level of cost sharing, either via a fixed copayment or some percentage of the cost of care. However, in certain situations, a pharmacy benefit manager may set an insurance copayment at a higher amount than the actual cost of the medication and later take back the excess amount from a pharmacy, in a practice known as copay clawbacks.
The legislature additionally finds that the State had previously regulated pharmacy benefit manager maximum allowable cost lists under section 328-106, Hawaii Revised Statutes. This section was later repealed because it placed the regulatory responsibility on the department of health, which lacked the expertise to oversee what was intended as a price control function. The section also lacked an adequate remedy for violations, an appropriate enforcement mechanism, and incentives for pharmacy benefit managers to comply with disclosure of maximum allowable cost lists. Since section 328-106, Hawaii Revised Statutes, was repealed, no new laws have been enacted to regulate maximum allowable cost lists for pharmacy benefit managers.
The legislature finds that it is appropriate to restore statutory protections relating to pharmacy benefit managers maximum allowable cost lists and place these protections within chapter 431R, Hawaii Revised Statutes, which governs prescription drug benefits under the purview of the department of commerce and consumer affairs. These protections will encourage transparency amongst pharmacy benefit managers while protecting the State's independent pharmacies and consumers by strengthening the ability of pharmacies to receive timely maximum allowable cost lists, establishing a complaints process for violations, and clarifying penalties for violations.
Accordingly, the purpose of this Act is to:
(1) Establish certain requirements for pharmacy benefit managers, other than health maintenance organizations that own and operate their own pharmacies, that reimburse contracting pharmacies for drugs on a maximum allowable cost basis; and
(2) Require pharmacy benefit managers to disclose lower‑priced equivalent drugs when a maximum allowable cost is upheld on appeal and allow contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal and recoup any overpayment.
SECTION 2. Chapter 431R, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§431R- Pharmacy benefit managers; maximum allowable cost. (a) This section shall apply to all pharmacy benefit managers that reimburse a contracting pharmacy for a drug on a maximum allowable cost basis.
(b) Each pharmacy benefit manager shall include the following information in the contract with a contracting pharmacy:
(1) Information identifying any national drug pricing compendia; or
(2) Other data sources for the maximum allowable cost list.
(c) Upon request, a pharmacy benefit manager shall make available to a contracting pharmacy a comprehensive report for all drugs on the maximum allowable cost list for a plan, which shall contain the most up-to-date maximum allowable cost price or prices used by the pharmacy benefit manager for patients served by the contracting pharmacy, in a readily accessible and secure electronic or usable web-based format.
(d) No drug shall be included on a maximum allowable cost list or reimbursed on a maximum allowable cost basis unless:
(1) The drug is listed as "A"- or "B"-rated in the most recent version of the Orange Book or has a rating of "NR", "NA", or similar rating by a nationally recognized reference;
(2) The drug is generally available for purchase in this State from a national or regional wholesaler; and
(3) The drug is not obsolete.
(e) A pharmacy benefit manager shall review and make any necessary adjustments to the maximum allowable cost of each drug on a maximum allowable cost list at least once every seven days using the most recent data sources available. The pharmacy benefit manager shall reimburse a contracting pharmacy based on the most recently updated maximum allowable cost list.
(f) Each pharmacy benefit manager shall establish a clearly defined process for a contracting pharmacy to appeal the maximum allowable cost for a drug on a maximum allowable cost list that includes the following provisions:
(1) A contracting pharmacy may base its appeal on one or more of the following:
(A) The maximum allowable cost for a drug is below the cost at which the drug is available for purchase by similarly situated pharmacies in the State from a national or regional wholesaler; or
(B) The drug does not meet the requirements of subsection (d) for reimbursement on a maximum allowable cost basis;
(2) Upon receipt of payment for a claim, a contracting pharmacy shall have no less than fourteen business days to file an appeal with the pharmacy benefit manager; and
(3) The pharmacy benefit manager shall make a final determination on the contracting pharmacy's appeal no later than fourteen business days after the pharmacy benefit manager's receipt of the appeal; provided that:
(A) If the maximum allowable cost is upheld on appeal, the pharmacy benefit manager shall provide the contracting pharmacy with the reason for the determination and the national drug code of an equivalent drug that may be purchased by a similarly situated pharmacy at a price that is equal to or less than the maximum allowable cost of the drug that is the subject of the appeal; and
(B) If the maximum allowable cost is not upheld on appeal, the pharmacy benefit manager shall adjust the maximum allowable cost of the drug within one calendar day of the date of the final determination and allow the contracting pharmacy to reverse and rebill the claim that is the subject of the appeal, and all claims for the same drug at the plan level, which shall be reimbursed at the maximum allowable cost established by the appeal, until the maximum allowable cost list is updated pursuant to subsection (e).
(g) A contracting pharmacy shall not disclose to any third party the maximum allowable cost list and any related information it receives, either directly from a pharmacy benefit manager or through a pharmacy services administrative organization or similar entity with which the contracting pharmacy has a contract to provide administrative services for that contracting pharmacy.
(h) The insurance commissioner may establish an external review process by rule for complaints of violations of this section, which, except to the extent that the parties have other remedies available under applicable federal or state law, may be binding on the complaining contracting pharmacy and the pharmacy benefit manager against whom the complaint is made. The insurance commissioner may assign any costs associated with the external review process to the complaining contracting pharmacy and the pharmacy benefit manager against whom a complaint is made.
(i) This section shall not apply to a health maintenance organization that is part of a fully integrated delivery system in which enrollees primarily use pharmacies that are owned and operated by the health maintenance organization."
SECTION 3. Section 431R-1, Hawaii Revised Statutes, is amended by adding five new definitions to be appropriately inserted and to read as follows:
""Contracting pharmacy" means a non-affiliated pharmacy that is not part of a regional or national chain.
"Maximum allowable cost" means the maximum amount that a pharmacy benefit manager reimburses a contracting pharmacy for the cost of a drug.
"Maximum allowable cost list" means a list of drugs or other methodology used by a pharmacy benefits manager to directly or indirectly set the maximum allowable payment to a contracting pharmacy or pharmacist for a generic drug, brand-name drug, biologic product, or other prescription drug. "Maximum allowable cost list" includes but is not limited to:
(1) Average acquisition cost, including national average drug acquisition cost;
(2) Average manufacturer price;
(3) Average wholesale price;
(4) Brand effective rate or generic effective rate;
(5) Discount indexing;
(6) Federal upper limits;
(7) Wholesale acquisition cost; and
(8) Any other term that a pharmacy benefits manager or a health insurer may use to establish reimbursement rates to a pharmacist or pharmacy for pharmacist services.
"Obsolete" means a drug that may be listed in a national drug pricing compendia but cannot be dispensed based on the expiration date of the last lot manufactured.
"Orange Book" has the same meaning as defined in section 328-91."
SECTION 4. Section 431R-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The insurance commissioner may assess a fine of
up to $10,000 for each violation by a pharmacy benefit manager or prescription drug
benefit plan provider who is in violation of section 431R-2 [or],
431R-3[.], or 431R- .
In addition, the insurance commissioner may order the pharmacy benefit manager
to take specific affirmative corrective action or make restitution."
SECTION 5. Section 328-91, Hawaii Revised Statutes, is amended by deleting the definitions of "maximum allowable cost", "maximum allowable cost list", and "obsolete".
[""Maximum
allowable cost" means the maximum amount that a pharmacy benefit manager
shall reimburse a pharmacy for the cost of a drug.
"Maximum
allowable cost list" means a list of drugs for which a maximum allowable
cost has been established by a pharmacy benefit manager.
"Obsolete"
means a drug that may be listed in a national drug pricing compendia but cannot
be dispensed based on the expiration date of the last lot manufactured."]
SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 for the insurance division of the department of commerce and consumer affairs to effectuate the purposes of this Act.
The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.
SECTION 7. This Act shall not be applied so as to impair any contract existing as of the effective date of this Act in a manner violative of either the Hawaii State Constitution or article 1, section 10, of the United States Constitution.
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect on January 30, 2050.
Report Title:
Insurance Commissioner; Pharmacy Benefit Managers; Prescription Drugs; Maximum Allowable Cost; Contracting Pharmacies; Appropriation
Description:
Establishes certain requirements for pharmacy benefit managers, other than health maintenance organizations that own and operate their own pharmacies, that reimburse contracting pharmacies for drugs on a maximum allowable cost basis. Allows contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal. Authorizes the Insurance Commissioner to assess fines for violations. Appropriates funds. Effective 1/30/2050. (HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
|
THE SENATE |
S.B. NO. |
2047 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 2 |
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
RELATING TO PHARMACY BENEFIT MANAGERS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that pharmacy benefit managers are third party administrators that contract with health plans, employers, unions, and government entities to manage prescription drug programs on behalf of health plan beneficiaries. Over the past decade, the role of pharmacy benefit managers in the delivery of health care has significantly increased. However, a recent report has found that pharmacy benefit managers have had an adverse impact on the overall costs and prices of prescription drugs.
The legislature further finds that a maximum allowable cost list is a list of the maximum amounts that a pharmacy benefit manager will reimburse a pharmacy for various drugs. In general, no two maximum allowable cost lists are alike and will vary according to the drug, pharmacy benefit manager, and plan sponsor. However, the lack of transparency surrounding maximum allowable cost pricing has enabled pharmacy benefit managers to pay aggressively low reimbursements to pharmacies, while charging significantly higher amounts for the same drug to plan sponsors. This large discrepancy between the list price of prescription drugs and the transaction price often results in much higher patient copayments.
The legislature also finds that nearly all health plans require some level of cost sharing, either via a fixed copayment or some percentage of the cost of care. However, in certain situations, a pharmacy benefit manager may set an insurance copayment at a higher amount than the actual cost of the medication and later take back the excess amount from a pharmacy, in a practice known as copay clawbacks.
The legislature additionally finds that the State had previously regulated pharmacy benefit manager maximum allowable cost lists under section 328-106, Hawaii Revised Statutes, but later repealed these requirements under Act 207, Session Laws of Hawaii 2023, because the law placed the regulatory responsibility on the department of health, which lacked the expertise to oversee what was intended as a price control function. The law also did not provide an adequate remedy for violations or an appropriate enforcement mechanism or incentives for pharmacy benefit managers to comply with disclosure of maximum allowable cost lists. However, after repealing section 328-106, Hawaii Revised Statutes, no laws were enacted to regulate maximum allowable cost lists for pharmacy benefit managers.
Finally, the legislature further finds that it is appropriate to restore statutory protections relating to pharmacy benefit managers maximum allowable cost lists within chapter 431R, Hawaii Revised Statutes, that governs prescription drug benefits, under the purview of the department of commerce and consumer affairs, to strengthen the ability of pharmacies to receive timely maximum allowable cost lists, establish a complaints process for violations, and clarify penalties to encourage transparency amongst pharmacy benefit managers while protecting the State's independent pharmacies and consumers.
Accordingly, the purpose of this Act is to:
(1) Establish requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including contents of contracts, maximum allowable cost lists, and maximum allowable cost reports, and a complaint process; and
(2) Require pharmacy benefit managers to disclose lower‑priced equivalent drugs when a maximum allowable cost is upheld on appeal and allow contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal and recoup any overpayment.
SECTION 2. Chapter 431R, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§431R- Pharmacy benefit managers; maximum allowable cost. (a) A pharmacy benefit manager that reimburses a contracting pharmacy for a drug on a maximum allowable cost basis shall comply with the requirements of this section.
(b) The pharmacy benefit manager shall include the following in the contract information with a contracting pharmacy:
(1) Information identifying any national drug pricing compendia; or
(2) Other data sources for the maximum allowable cost list.
(c) Upon request, the pharmacy benefit manager shall make available to a contracting pharmacy a comprehensive report for all drugs on the maximum allowable cost list for a plan, which shall contain the most up-to-date maximum allowable cost price or prices used by the pharmacy benefit manager for patients served by the pharmacy, in a readily accessible and secure electronic or usable web-based format.
(d) A drug shall not be included on a maximum allowable cost list or reimbursed on a maximum allowable cost basis unless all of the following apply:
(1) The drug is listed as "A"- or "B"-rated in the most recent version of the Orange Book or has a rating of "NR", "NA", or similar rating by a nationally recognized reference;
(2) The drug is generally available for purchase in this State from a national or regional wholesaler; and
(3) The drug is not obsolete.
(e) The pharmacy benefit manager shall review and make necessary adjustments to the maximum allowable cost of each drug on a maximum allowable cost list at least once every seven days using the most recent data sources available, and shall apply the updated maximum allowable cost list beginning that same day to reimburse the contracting pharmacy until the pharmacy benefit manager next updates the maximum allowable cost list in accordance with this section.
(f) The pharmacy benefit manager shall have a clearly defined process for a contracting pharmacy to appeal the maximum allowable cost for a drug on a maximum allowable cost list that complies with all of the following:
(1) A contracting pharmacy may base its appeal on one or more of the following:
(A) The maximum allowable cost for a drug is below the cost at which the drug is available for purchase by similarly situated pharmacies in this State from a national or regional wholesaler; or
(B) The drug does not meet the requirements of subsection (d) for reimbursement on a maximum allowable cost basis;
(2) A contracting pharmacy shall be provided not less than fourteen business days following receipt of payment for a claim to file the appeal with the pharmacy benefit manager;
(3) The pharmacy benefit manager shall make a final determination on the contracting pharmacy's appeal no later than fourteen business days after the pharmacy benefit manager's receipt of the appeal;
(4) If the maximum allowable cost is upheld on appeal, the pharmacy benefit manager shall provide to the contracting pharmacy the reason therefor and the national drug code of an equivalent drug that may be purchased by a similarly situated pharmacy at a price that is equal to or less than the maximum allowable cost of the drug that is the subject of the appeal; and
(5) If the maximum allowable cost is not upheld on appeal, the pharmacy benefit manager shall adjust, for the appealing contracting pharmacy, the maximum allowable cost of the drug that is the subject of the appeal, within one calendar day of the date of the decision on the appeal and allow the contracting pharmacy to reverse and rebill the claim that is the subject of the appeal, and all claims for the same drug at the plan level, until the maximum allowable cost list is updated pursuant to subsection (e), to be reimbursed at the maximum allowable cost established by the appeal.
(g) A contracting pharmacy shall not disclose to any third party the maximum allowable cost list and any related information it receives, either directly from a pharmacy benefit manager or through a pharmacy services administrative organization or similar entity with which the pharmacy has a contract to provide administrative services for that pharmacy.
(h) The insurance commissioner may adopt rules pursuant to chapter 91 to establish a process to subject complaints of violations of this section to an external review process, which may be binding on a complaining contracting pharmacy and a pharmacy benefit manager against whom a complaint is made, except to the extent that the parties have other remedies available under applicable federal or state law, and which may assign the costs associated with the external review process to a complaining contracting pharmacy and a pharmacy benefit manager against whom a complaint is made."
SECTION 3. Section 431R-1, Hawaii Revised Statutes, is amended by adding five new definitions to be appropriately inserted and to read as follows:
""Contracting pharmacy" means a non-affiliated pharmacy that is not part of a regional or national chain.
"Maximum allowable cost" means the maximum amount that a pharmacy benefit manager shall reimburse a pharmacy for the cost of a drug.
"Maximum allowable cost list" means a listing of drugs or other methodology used by a pharmacy benefits manager, directly or indirectly, setting the maximum allowable payment to a pharmacy or pharmacist for a generic drug, brand-name drug, biologic product, or other prescription drug. "Maximum allowable cost list" includes, without limitation:
(1) Average acquisition cost, including national average drug acquisition cost;
(2) Average manufacturer price;
(3) Average wholesale price;
(4) Brand effective rate or generic effective rate;
(5) Discount indexing;
(6) Federal upper limits;
(7) Wholesale acquisition cost; and
(8) Any other term that a pharmacy benefits manager or a health care insurer may use to establish reimbursement rates to a pharmacist or pharmacy for pharmacist services.
"Obsolete" means a drug that may be listed in a national drug pricing compendia but cannot be dispensed based on the expiration date of the last lot manufactured.
"Orange Book" has the same meaning as defined in section 328-91."
SECTION 4. Section 431R-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The insurance commissioner may assess a fine of
up to $10,000 for each violation by a pharmacy benefit manager or prescription drug
benefit plan provider who is in violation of section 431R-2 [or],
431R-3[.], or 431R- .
In addition, the insurance commissioner may order the pharmacy benefit manager
to take specific affirmative corrective action or make restitution."
SECTION 5. Section 328-91, Hawaii Revised Statutes, is amended by deleting the definitions of "maximum allowable cost", "maximum allowable cost list", and "obsolete".
[""Maximum
allowable cost" means the maximum amount that a pharmacy benefit manager
shall reimburse a pharmacy for the cost of a drug.
"Maximum
allowable cost list" means a list of drugs for which a maximum allowable
cost has been established by a pharmacy benefit manager.
"Obsolete"
means a drug that may be listed in a national drug pricing compendia but cannot
be dispensed based on the expiration date of the last lot manufactured."]
SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 for the insurance division of the department of commerce and consumer affairs to effectuate the purposes of this Act.
The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.
SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect on January 30, 2050.
Report Title:
Insurance Commissioner; Pharmacy Benefit Managers; Prescription Drugs; Maximum Allowable Cost; Contracting Pharmacies; Appropriation
Description:
Establishes requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including maximum allowable cost lists, maximum allowable cost reports, and a complaint process. Requires pharmacy benefit managers to disclose lower-priced equivalent drugs when a maximum allowable cost is upheld on appeal. Allows contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal. Authorizes the Insurance Commissioner to adopt rules and assess fines for violations. Appropriates funds. Effective 1/30/2050. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
|
THE SENATE |
S.B. NO. |
2047 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
RELATING TO PHARMACY BENEFIT MANAGERS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that pharmacy benefit managers are third party administrators that contract with health plans, employers, unions, and government entities to manage prescription drug programs on behalf of health plan beneficiaries. Over the past decade, the role of pharmacy benefit managers in the delivery of health care has significantly increased. However, a recent report has found that pharmacy benefit managers have had an adverse impact on the overall costs and prices of prescription drugs.
The legislature further finds that a maximum allowable cost list is a list of the maximum amounts that a pharmacy benefit manager will reimburse a pharmacy for various drugs. In general, no two maximum allowable cost lists are alike and will vary according to the drug, pharmacy benefit manager, and plan sponsor. However, the lack of transparency surrounding maximum allowable cost pricing has enabled pharmacy benefit managers to pay aggressively low reimbursements to pharmacies, while charging significantly higher amounts for the same drug to plan sponsors. This large discrepancy between the list price of prescription drugs and the transaction price often results in much higher patient copayments.
The legislature also finds that nearly all health plans require some level of cost sharing, either via a fixed copayment or some percentage of the cost of care. However, in certain situations, a pharmacy benefit manager may set an insurance copayment at a higher amount than the actual cost of the medication and later take back the excess amount from a pharmacy, in a practice known as copay clawbacks.
The legislature additionally finds that the State had previously regulated pharmacy benefit manager maximum allowable cost lists under section 326-106, Hawaii Revised Statutes, but later repealed these requirements under Act 207, Session Laws of Hawaii 2023, because the law placed the regulatory responsibility on the department of health, which lacked the expertise to oversee what was intended as a price control function. The law also did not provide an adequate remedy for violations or an appropriate enforcement mechanism or incentives for pharmacy benefit managers to comply with disclosure of maximum allowable cost lists. However, after repealing section 326-106, Hawaii Revised Statutes, no laws were enacted to regulate maximum allowable cost lists for pharmacy benefit managers.
Finally, the legislature further finds that it is appropriate to restore statutory protections relating to pharmacy benefit managers maximum allowable cost lists within chapter 431R, Hawaii Revised Statutes, that governs prescription drug benefits, under the purview of the department of commerce and consumer affairs, to strengthen the ability of pharmacies to receive timely maximum allowable cost lists, establish a complaints process for violations, and clarify penalties to encourage transparency amongst pharmacy benefit managers while protecting the State's independent pharmacies and consumers.
Accordingly, the purpose of this Act is to:
(1) Establish requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including contents of contracts, maximum allowable cost lists, and maximum allowable cost reports, and complaint process; and
(2) Require pharmacy benefit managers to disclose lower‑priced equivalent drugs when a maximum allowable cost is upheld on appeal and allow contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal and recoup any overpayment.
SECTION 2. Chapter 431R, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§431R- Pharmacy benefit manager; maximum allowable cost. (a) A pharmacy benefit manager that reimburses a contracting pharmacy for a drug on a maximum allowable cost basis shall comply with the requirements of this section.
(b) The pharmacy benefit manager shall include the following in the contract information with a contracting pharmacy:
(1) Information identifying any national drug pricing compendia; or
(2) Other data sources for the maximum allowable cost list.
(c) The pharmacy benefit manager shall make available to a contracting pharmacy upon request, a comprehensive report for all drugs on the maximum allowable cost list for a plan, which contains the most up-to-date maximum allowable cost price or prices used by the pharmacy benefit manager for patients served by the pharmacy, in a readily accessible and secure electronic or usable web-based format.
(d) A drug shall not be included on a maximum allowable cost list or reimbursed on a maximum allowable cost basis unless all of the following apply:
(1) The drug is listed as "A"- or "B"- rated in the most recent version of the Orange Book or has a rating of "NR", "NA", or similar rating by a nationally recognized reference;
(2) The drug is generally available for purchase in this State from a national or regional wholesaler; and
(3) The drug is not obsolete.
(e) The pharmacy benefit manager shall review and make necessary adjustments to the maximum allowable cost of each drug on a maximum allowable cost list at least once every seven days using the most recent data sources available, and shall apply the updated maximum allowable cost list beginning that same day to reimburse the contracting pharmacy until the pharmacy benefit manager next updates the maximum allowable cost list in accordance with this section.
(f) The pharmacy benefit manager shall have a clearly defined process for a contracting pharmacy to appeal the maximum allowable cost for a drug on a maximum allowable cost list that complies with all of the following:
(1) A contracting pharmacy may base its appeal on one or more of the following:
(A) The maximum allowable cost for a drug is below the cost at which the drug is available for purchase by similarly situated pharmacies in this State from a national or regional wholesaler; or
(B) The drug does not meet the requirements of subsection (d) for reimbursement on a maximum allowable cost basis;
(2) A contracting pharmacy shall be provided not less than fourteen business days following receipt of payment for a claim to file the appeal with the pharmacy benefit manager;
(3) The pharmacy benefit manager shall make a final determination on the contracting pharmacy's appeal no later than fourteen business days after the pharmacy benefit manager's receipt of the appeal;
(4) If the maximum allowable cost is upheld on appeal, the pharmacy benefit manager shall provide to the contracting pharmacy the reason therefor and the national drug code of an equivalent drug that may be purchased by a similarly situated pharmacy at a price that is equal to or less than the maximum allowable cost of the drug that is the subject of the appeal; and
(5) If the maximum allowable cost is not upheld on appeal, the pharmacy benefit manager shall adjust, for the appealing contracting pharmacy, the maximum allowable cost of the drug that is the subject of the appeal, within one calendar day of the date of the decision on the appeal and allow the contracting pharmacy to reverse and rebill the claim that is the subject of the appeal, and all claims for the same drug at the plan level, until the maximum allowable cost list is updated pursuant to subsection (e), to be reimbursed at the maximum allowable cost established by the appeal.
(g) A contracting pharmacy shall not disclose to any third party the maximum allowable cost list and any related information it receives, either directly from a pharmacy benefit manager or through a pharmacy services administrative organization or similar entity with which the pharmacy has a contract to provide administrative services for that pharmacy.
(h) The insurance commissioner may adopt rules pursuant to chapter 91 to establish a process to subject complaints of violations of this section to an external review process, which may be binding on a complaining contracting pharmacy and a pharmacy benefit manager against whom a complaint is made, except to the extent that the parties have other remedies available under applicable federal or state law, and which may assign the costs associated with the external review process to a complaining contracting pharmacy and a pharmacy benefit manager against whom a complaint is made."
SECTION 3. Section 431R-1, Hawaii Revised Statutes, is amended by adding four new definitions to be appropriately inserted and to read as follows:
""Contracting pharmacy" means an independent pharmacy that is not part of a regional or national chain, or part of a pharmacy services administration organization, and there is no other pharmacy within a ten-mile radius.
"Maximum allowable cost" means the maximum amount that a pharmacy benefit manager shall reimburse a pharmacy for the cost of a drug.
"Maximum allowable cost list" means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.
"Obsolete" means a drug that may be listed in a national drug pricing compendia but cannot be dispensed based on the expiration date of the last lot manufactured.
"Orange Book" has the same meaning as defined in section 328-91."
SECTION 4. Section 431R-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The insurance commissioner may assess a fine of
up to $10,000 for each violation by a pharmacy benefit manager or prescription drug
benefit plan provider who is in violation of section 431R-2 [or],
431R-3[.], or 431R- .
In addition, the insurance commissioner may order the pharmacy benefit manager
to take specific affirmative corrective action or make restitution."
SECTION 5. Section 328-91, Hawaii Revised Statutes, is amended by deleting the definitions of "maximum allowable cost", "maximum allowable cost list", and "obsolete".
[""Maximum
allowable cost" means the maximum amount that a pharmacy benefit manager
shall reimburse a pharmacy for the cost of a drug.
"Maximum
allowable cost list" means a list of drugs for which a maximum allowable
cost has been established by a pharmacy benefit manager.
"Obsolete"
means a drug that may be listed in a national drug pricing compendia but cannot
be dispensed based on the expiration date of the last lot manufactured."]
SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 for the Insurance Division of the Department of Commerce and Consumer Affairs to effectuate the purposes of this Act.
The sum appropriated shall be expended by the Department of Commerce and Consumer Affairs for the purposes of this Act.
SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect on January 30, 2050.
Report Title:
Insurance Commissioner; Pharmacy Benefit Managers; Prescription Drugs; Maximum Allowable Cost; Contracting Pharmacies; Appropriation
Description:
Establishes requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including maximum allowable cost lists, maximum allowable cost reports, and a complaint process. Requires pharmacy benefit managers to disclose lower-priced equivalent drugs when a maximum allowable cost is upheld on appeal. Allows contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal. Authorizes the Insurance Commissioner to adopt rules and assess fines for violations. Appropriates funds. Effective 1/30/2050. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
|
THE SENATE |
S.B. NO. |
2047 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
|
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
relating to pharmacy benefit managers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that pharmacy benefit managers are third party administrators that contract with health plans, employers, unions, and government entities to manage prescription drug programs on behalf of health plan beneficiaries. Over the past decade, the role of pharmacy benefit managers in the delivery of health care has significantly increased. However, a recent report has found that pharmacy benefit managers have had an adverse impact on the overall costs and prices of prescription drugs.
The legislature further finds that a maximum allowable cost list is a list of the maximum amounts that a pharmacy benefit manager will reimburse a pharmacy for various drugs. In general, no two maximum allowable cost lists are alike and will vary according to the drug, pharmacy benefit manager, and plan sponsor. However, the lack of transparency surrounding maximum allowable cost pricing has enabled pharmacy benefit managers to pay aggressively low reimbursements to pharmacies, while charging significantly higher amounts for the same drug to plan sponsors. This large discrepancy between the list price of prescription drugs and the transaction price often results in much higher patient copayments.
The legislature also finds that nearly all health plans require some level of cost sharing, either via a fixed copayment or some percentage of the cost of care. However, in certain situations, a pharmacy benefit manager may set an insurance copayment at a higher amount than the actual cost of the medication and later take back the excess amount from a pharmacy, in a practice known as copay clawbacks.
The legislature additionally finds that the State had previously regulated pharmacy benefit manager maximum allowable cost lists under section 326-106, Hawaii Revised Statutes, but later repealed these requirements under Act 207, Session Laws of Hawaii 2023, because the law placed the regulatory responsibility on the department of health, which lacked the expertise to oversee what was intended as a price control function. The law also did not provide an adequate remedy for violations or an appropriate enforcement mechanism or incentives for pharmacy benefit managers to comply with disclosure of maximum allowable cost lists. However, after repealing section 326-106, Hawaii Revised Statutes, no laws were enacted to regulate maximum allowable cost lists for pharmacy benefit managers.
Finally, the legislature further finds that it is appropriate to restore statutory protections relating to pharmacy benefit managers maximum allowable cost lists within chapter 431R, Hawaii Revised Statutes, that governs prescription drug benefits, under the purview of the department of commerce and consumer affairs, to strengthen the ability of pharmacies to receive timely maximum allowable cost lists, establish a complaints process for violations, and clarify penalties to encourage transparency amongst pharmacy benefit managers while protecting the State's independent pharmacies and consumers.
Accordingly, the purpose of this Act is to:
(1) Establish requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including contents of contracts, maximum allowable cost lists, and maximum allowable cost reports, and complaint process; and
(2) Require pharmacy benefit managers to disclose lower‑priced equivalent drugs when a maximum allowable cost is upheld on appeal and allow contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal and recoup any overpayment.
SECTION 2. Chapter 431R, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§431R- Pharmacy benefit manager; maximum allowable cost. (a) A pharmacy benefit manager that reimburses a contracting pharmacy for a drug on a maximum allowable cost basis shall comply with the requirements of this section.
(b) The pharmacy benefit manager shall include the following in the contract information with a contracting pharmacy:
(1) Information identifying any national drug pricing compendia; or
(2) Other data sources for the maximum allowable cost list.
(c) The pharmacy benefit manager shall make available to a contracting pharmacy upon request, a comprehensive report for all drugs on the maximum allowable cost list for a plan, which contains the most up-to-date maximum allowable cost price or prices used by the pharmacy benefit manager for patients served by the pharmacy, in a readily accessible and secure electronic or usable web-based format.
(d) A drug shall not be included on a maximum allowable cost list or reimbursed on a maximum allowable cost basis unless all of the following apply:
(1) The drug is listed as "A" or "B" rated in the most recent version of the Orange Book or has a rating of "NR", "NA", or similar rating by a nationally recognized reference;
(2) The drug is generally available for purchase in this State from a national or regional wholesaler; and
(3) The drug is not obsolete.
(e) The pharmacy benefit manager shall review and make necessary adjustments to the maximum allowable cost of each drug on a maximum allowable cost list at least once every seven days using the most recent data sources available, and shall apply the updated maximum allowable cost list beginning that same day to reimburse the contracting pharmacy until the pharmacy benefit manager next updates the maximum allowable cost list in accordance with this section.
(f) The pharmacy benefit manager shall have a clearly defined process for a contracting pharmacy to appeal the maximum allowable cost for a drug on a maximum allowable cost list that complies with all of the following:
(1) A contracting pharmacy may base its appeal on one or more of the following:
(A) The maximum allowable cost for a drug is below the cost at which the drug is available for purchase by similarly situated pharmacies in this State from a national or regional wholesaler; or
(B) The drug does not meet the requirements of subsection (d) for reimbursement on a maximum allowable cost basis;
(2) A contracting pharmacy shall be provided no less than fourteen business days following receipt of payment for a claim to file the appeal with the pharmacy benefit manager;
(3) The pharmacy benefit manager shall make a final determination on the contracting pharmacy's appeal no later than fourteen business days after the pharmacy benefit manager's receipt of the appeal;
(4) If the maximum allowable cost is upheld on appeal, the pharmacy benefit manager shall provide to the contracting pharmacy the reason therefor and the national drug code of an equivalent drug that may be purchased by a similarly situated pharmacy at a price that is equal to or less than the maximum allowable cost of the drug that is the subject of the appeal; and
(5) If the maximum allowable cost is not upheld on appeal, the pharmacy benefit manager shall adjust, for the appealing contracting pharmacy, the maximum allowable cost of the drug that is the subject of the appeal, within one calendar day of the date of the decision on the appeal and allow the contracting pharmacy to reverse and rebill the claim that is the subject of the appeal, and all claims for the same drug at the plan level, until the maximum allowable cost list is updated pursuant to subsection (e), to be reimbursed at the maximum allowable cost established by the appeal.
(g) A contracting pharmacy shall not disclose to any third party the maximum allowable cost list and any related information it receives, either directly from a pharmacy benefit manager or through a pharmacy services administrative organization or similar entity with which the pharmacy has a contract to provide administrative services for that pharmacy.
(h) The insurance commissioner may adopt rules pursuant to chapter 91 to establish a process to subject complaints of violations of this section to an external review process, which may be binding on a complaining contracting pharmacy and a pharmacy benefit manager against whom a complaint is made, except to the extent that the parties have other remedies available under applicable federal or state law, and which may assign the costs associated with the external review process to a complaining contracting pharmacy and a pharmacy benefit manager against whom a complaint is made."
SECTION 3. Section 431R-1, Hawaii Revised Statutes, is amended by adding four new definitions to be appropriately inserted and to read as follows:
""Contracting pharmacy" means an independent pharmacy that is not part of a regional or national chain, or part of a pharmacy services administration organization, and there is no other pharmacy within a ten-mile radius.
"Maximum allowable cost" means the maximum amount that a pharmacy benefit manager shall reimburse a pharmacy for the cost of a drug.
"Maximum allowable cost list" means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.
"Obsolete" means a drug that may be listed in a national drug pricing compendia but cannot be dispensed based on the expiration date of the last lot manufactured.
"Orange Book" has the same meaning as defined in section 328-91."
SECTION 4. Section 431R-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The insurance commissioner may assess a fine of
up to $10,000 for each violation by a pharmacy benefit manager or prescription drug
benefit plan provider who is in violation of section 431R-2 [or],
431R-3[.], or 431R- .
In addition, the insurance commissioner may order the pharmacy benefit manager
to take specific affirmative corrective action or make restitution."
SECTION 5. Section 328-91, Hawaii Revised Statutes, is amended by deleting the definitions of "maximum allowable cost", "maximum allowable cost list", and "obsolete".
[""Maximum
allowable cost" means the maximum amount that a pharmacy benefit manager
shall reimburse a pharmacy for the cost of a drug.
"Maximum
allowable cost list" means a list of drugs for which a maximum allowable
cost has been established by a pharmacy benefit manager.
"Obsolete"
means a drug that may be listed in a national drug pricing compendia but cannot
be dispensed based on the expiration date of the last lot manufactured."]
SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take effect upon its approval.
|
INTRODUCED BY: |
_____________________________ |
|
|
|
Report Title:
Pharmacy Benefit Managers; Prescription Drugs; Maximum Allowable Cost; Contracting Pharmacies
Description:
Establishes requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including maximum allowable cost lists, and maximum allowable cost reports, and complaints process.
Requires pharmacy benefit managers to disclose lower-priced equivalent drugs when a maximum allowable cost is upheld on appeal and allow contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal and recoup any overpayment.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
|
Date
|
Status
|
|---|---|
| Mar 30, 2026 | Report adopted; referred to the committee(s) on FIN as amended in HD 2 with none voting aye with reservations; none voting no (0) and Representative(s) Cochran, Lowen, Perruso, Quinlan excused (4). |
| Mar 30, 2026 | Reported from CPC (Stand. Com. Rep. No. 1483-26) as amended in HD 2, recommending referral to FIN. |
| Mar 24, 2026 | The committee on CPC recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 11 Ayes: Representative(s) Matayoshi, Grandinetti, Chun, Ilagan, Ichiyama, Iwamoto, Kong, Lowen, Marten, Tam, Pierick; Ayes with reservations: none; Noes: none; and Excused: none. |
| Mar 20, 2026 | Bill scheduled to be heard by CPC on Tuesday, 03-24-26 2:00PM in House conference room 329 VIA VIDEOCONFERENCE. |
| Mar 20, 2026 | Passed Second Reading as amended in HD 1 and referred to the committee(s) on CPC with none voting aye with reservations; none voting no (0) and Representative(s) Quinlan excused (1). |
| Mar 20, 2026 | Reported from HLT (Stand. Com. Rep. No. 1278-26) as amended in HD 1, recommending passage on Second Reading and referral to CPC. |
| Mar 18, 2026 | The committee on HLT recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 8 Ayes: Representative(s) Takayama, Keohokapu-Lee Loy, Amato, Marten, Olds, Takenouchi, Alcos, Garcia; Ayes with reservations: none; Noes: none; and 1 Excused: Representative(s) Hartsfield. |
| Mar 12, 2026 | Bill scheduled to be heard by HLT on Wednesday, 03-18-26 9:00AM in House conference room 329 VIA VIDEOCONFERENCE. |
| Mar 12, 2026 | Referred to HLT, CPC, FIN, referral sheet 17 |
| Mar 12, 2026 | Pass First Reading |
| Mar 10, 2026 | Received from Senate (Sen. Com. No. 156) in amended form (SD 2). |
| Mar 10, 2026 | Report adopted; Passed Third Reading, as amended (SD 2). Ayes, 25; Aye(s) with reservations: none . Noes, 0 (none). Excused, 0 (none). Transmitted to House. |
| Mar 6, 2026 | 48 Hrs. Notice 03-10-26. |
| Mar 6, 2026 | Reported from CPN/WAM (Stand. Com. Rep. No. 2918) with recommendation of passage on Third Reading, as amended (SD 2). |
| Mar 3, 2026 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 12 Aye(s): Senator(s) Dela Cruz, Moriwaki, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Lee, C., Richards, Wakai; Aye(s) with reservations: none ; 0 No(es): none; and 1 Excused: Senator(s) Fevella. |
| Mar 3, 2026 | The committee(s) on CPN recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in CPN were as follows: 4 Aye(s): Senator(s) Keohokalole, Fukunaga, Lamosao, McKelvey; Aye(s) with reservations: none ; 0 No(es): none; and 1 Excused: Senator(s) Awa. |
| Feb 27, 2026 | The committee(s) on CPN/WAM will hold a public decision making on 03-03-26 10:16AM; Conference Room 211 & Videoconference. |
| Feb 11, 2026 | Report adopted; Passed Second Reading, as amended (SD 1) and referred to CPN/WAM. |
| Feb 11, 2026 | Reported from HHS (Stand. Com. Rep. No. 2200) with recommendation of passage on Second Reading, as amended (SD 1) and referral to CPN/WAM. |
| Feb 3, 2026 | Re-Referred to HHS, CPN/WAM. |
| Feb 2, 2026 | The committee(s) on HHS recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in HHS were as follows: 5 Aye(s): Senator(s) San Buenaventura, McKelvey, Kanuha, Keohokalole, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none. |
| Jan 30, 2026 | The committee(s) on HHS has scheduled a public hearing on 02-02-26 1:05PM; Conference Room 225 & Videoconference. |
| Jan 22, 2026 | Referred to HHS, CPN. |
| Jan 21, 2026 | Introduced and passed First Reading. |
| Jan 14, 2026 | Pending Introduction. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Mar 24, 2026 | The committee on CPC recommend that the measure be PASSED, WITH AMENDMENTS | House Standing Committee on Consumer Protection & Commerce |
Passed |
|
| Mar 18, 2026 | The committee on HLT recommend that the measure be PASSED, WITH AMENDMENTS | House Standing Committee on Health |
Passed |
|
| Mar 10, 2026 | Third Reading | Senate Floor |
Passed |
|
| Mar 3, 2026 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Ways and Means |
Passed |
|
| Mar 3, 2026 | The committee(s) on CPN recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Commerce and Consumer Protection |
Passed |
|
| Feb 2, 2026 | The committee(s) on HHS recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Health and Human Services |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Department of Health | *** Support | Mar 18, 2026 |
| Department of Health | *** Support | Mar 3, 2026 |
| Hawai'i Pharmacists Association (HPhA) | *** Support | Mar 24, 2026 |
| Mauliola Pharmacy | *** Support | Mar 18, 2026 |
| Office of Hawaiian Affairs | ** Support | |
| State Health Planning and Development Agency (SHPDA) | *** Support | Mar 24, 2026 |
STAND. COM. REP. NO. 2918
Honolulu, Hawaii
RE: S.B. No. 2047
S.D. 2
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2026
State of Hawaii
Sir:
Your Committees on Commerce and Consumer Protection and Ways and Means, to which was referred S.B. No. 2047, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO PHARMACY BENEFIT MANAGERS,"
beg leave to report as follows:
The purpose and intent of this measure is to:
(1) Establish requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including maximum allowable cost lists, maximum allowable cost reports, and a complaint process;
(2) Require pharmacy benefit managers to disclose lower-priced equivalent drugs when a maximum allowable cost is upheld on appeal;
(3) Allow contracting pharmacies to reverse and rebill claims if a maximum allowable cost is denied on appeal;
(4) Authorize the Insurance Commissioner to adopt rules and assess fines for violations; and
(5) Appropriate funds.
Your Committees received testimony in support of this measure from the State Health Planning and Development Agency and Hawaii Pharmacists Association.
Your Committees received comments on this measure from the Insurance Division of the Department of Commerce and Consumer Affairs, Hawaiʻi Primary Care Association, and Pharmaceutical Care Management Association.
Your Committees find that maximum allowable cost lists for widely-available, multiple-source generic drug reimbursements to pharmacies, which are administered by pharmacy benefit managers, are intended to be a general pricing benchmark. However, since regulatory oversight was repealed in 2023 due to administrative issues, pharmacy benefit managers have been able to use opaque methodologies when setting maximum allowable cost pricing. This can result in reimbursements to pharmacies below cost price, higher drug costs for plan sponsors and patients, and copay clawbacks. This measure would reinstate enforceable regulatory oversight of maximum allowable cost pricing, overseen by the Insurance Commissioner rather than the Department of Health, to improve transparency and fairness in prescription drug reimbursements for pharmacies and consumers.
Your Committees have amended this measure by:
(1) Replacing language to clarify the definitions of:
(A) "Contracting pharmacy" to mean a non-affiliated pharmacy that is not part of a regional or national chain; and
(B) "Maximum allowable cost list" to mean a listing of drugs or other methodology used by a pharmacy benefits manager, directly or indirectly, setting the maximum allowable payment to a pharmacy or pharmacist for certain drugs and to include certain information; and
(2) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.
As affirmed by the records of votes of the members of your Committees on Commerce and Consumer Protection and Ways and Means that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2047, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as S.B. No. 2047, S.D. 2.
Respectfully submitted on behalf of the members of the Committees on Commerce and Consumer Protection and Ways and Means,
|
________________________________ DONOVAN M. DELA CRUZ, Chair |
|
________________________________ JARRETT KEOHOKALOLE, Chair |
|
|
|
|
STAND. COM. REP. NO. 2200
Honolulu, Hawaii
RE: S.B. No. 2047
S.D. 1
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2026
State of Hawaii
Sir:
Your Committee on Health and Human Services, to which was referred S.B. No. 2047 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) Establish requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis, including maximum allowable cost lists, maximum allowable cost reports, and a complaint process;
(2) Require pharmacy benefit managers to disclose lower-priced equivalent drugs when a maximum allowable cost is upheld on appeal;
(3) Allow contracting pharmacies to reverse and rebill claims and recoup any overpayment if a maximum allowable cost is denied on appeal; and
(4) Authorize the Insurance Commissioner to adopt rules and assess fines for violations.
Your Committee received testimony in support of this measure from the State Health Planning and Development Agency, Office of Hawaiian Affairs, Hawaii Pharmacists Association, and one individual.
Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs, Hawaiʻi Primary Care Association, and CVS.
Your Committee finds that pharmacy benefit manager (PBM) pricing practices that lack transparency, such as aggressively low maximum allowable cost (MAC) reimbursement rates or copayment structures that exceed the actual cost of a medication, can directly affect patients' out-of-pocket costs and disrupt access to needed medications. Your Committee further finds that when pharmacies are reimbursed below acquisition cost, they may be unable to sustainably dispense certain drugs, leading to delays, substitutions, or patients being forced to seek medications farther from home. This measure supports strong, enforceable oversight of maximum allowable cost pricing used by pharmacy benefit managers to improve transparency and fairness in prescription drug reimbursement.
Your Committee has amended this measure by:
(1) Inserting a blank appropriation amount for the Insurance Division of the Department of Commerce and Consumer Affairs to effectuate the purposes of this measure;
(2) Inserting an effective date of January 30, 2050, to encourage further discussion; and
(3) 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 Health and Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2047, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2047, S.D. 1, and be referred to your Committees on Commerce and Consumer Protection and Ways and Means.
Respectfully submitted on behalf of the members of the Committee on Health and Human Services,
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________________________________ JOY A. SAN BUENAVENTURA, Chair |
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Date
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Testimony PDF
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| Mar 24, 2026 | SB2047_HD1_TESTIMONY_CPC_03-24-26_.PDF |
| Mar 18, 2026 | SB2047_SD2_TESTIMONY_HLT-HSH_03-18-26_.PDF |
| Mar 3, 2026 | SB2047_SD1_TESTIMONY_WAM-CPN_03-03-26_.PDF |
| Feb 2, 2026 | SB2047_TESTIMONY_HHS_02-02-26_.PDF |
Discussed in Hearing
50SEC
Conference Committee
2MIN
House Standing Committee on Consumer Protection & Commerce
37SEC
House Standing Committee on Consumer Protection & Commerce
6MIN
House Standing Committee on Health
6MIN
House Standing Committee on Human Services & Homelessness
2MIN
House Standing Committee on Health
2MIN
House Standing Committee on Human Services & Homelessness
1MIN
Senate Standing Committee on Agriculture and Environment
Bill Author
