SR 53: REQUESTING the administrator of the state health planning and development agency to convene a Pharmacy Benefit Manager Working Group to determine the best policies to reform Pharmacy Benefit Manager practices in the State to ENSURE TRANSPARENCY AND FAIRNESS FOR CONSUMERS AND IN THE PHARMACEUTICAL SECTOR, lower drug costs for patient consumers, and increase access to health care.

SENATE RESOLUTION

REQUESTING the administrator of the state health planning and development agency to convene a Pharmacy Benefit Manager Working Group to determine the best policies to reform Pharmacy Benefit Manager practices in the State to ENSURE TRANSPARENCY AND FAIRNESS FOR CONSUMERS AND IN THE PHARMACEUTICAL SECTOR, lower drug costs for patient consumers, and increase access to health care.

     WHEREAS, community pharmacies remain the most accessible health care locations, servicing remote and underserved communities with hours that often extend beyond those of other health care offices; and

     WHEREAS, medication price transparency and the reduction of medication costs are priorities of the Legislature; and

     WHEREAS, over the past decade, pharmacy benefit managers (PBMs), the intermediary between pharmacies and insurance companies, have morphed into large health care conglomerates that exercise control over every link in the prescription drug delivery chain; and

     WHEREAS, the largest health care conglomerates each own PBMs, who pay for pharmacy services, as well as the pharmacy chains that provide those services.  This inherent conflict of interest results in higher drug costs for patients and increased profits for the corporate health care conglomerates; and

     WHEREAS, the three largest PBMs control eighty percent of the United States prescription drug market, profiting from the use of spread pricing models, also known as pay-to-play models, where the PBMs profit from the difference between what they charge health insurers for drugs and the amount they reimburse the pharmacies, which is often less than the actual costs for the pharmacies to acquire and dispense the drugs; and

     WHEREAS, the spread pricing model is criticized for incentivizing PBMs to charge more to health insurers, thereby leading to higher drug costs for patients, while negotiating lower reimbursement rates with pharmacies, leading to lower quality of care or restricted access to medications; and

     WHEREAS, both independent community pharmacies and unaffiliated pharmacies, or pharmacies that do not own or operate a PBM, are disproportionately affected by PBM price manipulation tactics and are ceasing operations at high rates across the country and in the State, impacting access to health care especially in rural areas; and

     WHEREAS, other states are enacting a wide range of PBM policy reforms that are resulting in millions of dollars in cost savings for the states, and their community pharmacies and patients, while simultaneously improving access to health care; and

     WHEREAS, oversight over PBMs is critically needed in the State to evaluate current PBM practices and their effects across the health care spectrum pertaining to both medication cost and access; and

     WHEREAS, S.B. No. 1509, introduced in the Regular Session of 2025, proposes to require PBMs and health insurers to pass on rebate savings to patient consumers to essentially create a reimbursement rate floor for and prohibit spread pricing of prescription drugs; and

     WHEREAS, the Legislature recognizes the urgent need for meaningful PBM policy reform to ensure transparency and fairness for consumers and in the pharmaceutical sector; now, therefore,

     BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, that the Administrator of the State Health Planning and Development Agency is requested to convene a Pharmacy Benefit Manager Working Group to determine the best policies to reform PBM practices in the State to ensure transparency and fairness for consumers and in the pharmaceutical sector, lower drug costs for patient consumers, and increase access to health care; and

     BE IT FURTHER RESOLVED that the Administrator of the State Health Planning and Development Agency, or the Administrator's designee, is requested to serve as chairperson of the Pharmacy Benefit Manager Working Group and to invite the following members to participate in the Working Group:

     (1)  A representative from the Insurance Division of the Department of Commerce and Consumer Affairs;

     (2)  A representative from the Department of the Attorney General;

     (3)  A representative from the MedQUEST Division of the Department of Human Services;

     (4)  A representative from the Board of Pharmacy;

     (5)  A representative from the Hawaii Pharmacists Association;

     (6)  A representative from the National Community Pharmacists Association;

     (7)  A representative from the Hawaii Association of Health Plans;

     (8)  Two representatives from independent community pharmacies; and

     (9)  Two representatives from unaffiliated pharmacies; and

     BE IT FURTHER RESOLVED that the Pharmacy Benefit Manager Working Group is requested to evaluate the following priority areas:

     (1)  The appropriate state agency to oversee PBM practices;

     (2)  PBM reporting requirements and intervals;

     (3)  Fair pharmacy audit procedures;

     (4)  Protections from medication under-reimbursements;

     (5)  Reimbursements to PBM-owned pharmacies compared to non-network or unaffiliated pharmacies;

     (6)  Prohibitions against arbitrary accreditation requirements; and

     (7)  Protections from patient steering practices; and

     BE IT FURTHER RESOLVED that the Pharmacy Benefit Manager Working Group is requested to submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2026; and

     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Administrator of the State Health Planning and Development Agency, Director of Commerce and Consumer Affairs, Insurance Commissioner, Attorney General, Director of Human Services, Administrator of the Med-QUEST Division of the Department of Human Services, and Chair of the Board of Pharmacy.

Report Title: 

SHPDA; Pharmacy Benefit Manager; Working Group; Reform

SENATE RESOLUTION

REQUESTING the Director of Health to convene a Pharmacy Benefit Manager Working Group to determine the best policies to reform Pharmacy Benefit Manager practices in the State to ENSURE TRANSPARENCY AND FAIRNESS FOR CONSUMERS AND IN THE PHARMACEUTICAL SECTOR, lower drug costs to patient consumers, and increase access to health care.

     WHEREAS, community pharmacies remain the most accessible health care locations, servicing remote and underserved communities with hours that often extend beyond those of other health care offices; and

     WHEREAS, medication price transparency and the reduction of medication costs are priorities of the Legislature; and

     WHEREAS, over the past decade, pharmacy benefit managers (PBMs), the intermediary between pharmacies and insurance companies, have morphed into large health care conglomerates that exercise control over every link in the prescription drug delivery chain; and

     WHEREAS, the largest health care conglomerates each own PBMs, who pay for pharmacy services, as well as the pharmacy chains that provide those services.  This inherent conflict of interest results in higher drug costs for patients and increased profits for the corporate health care conglomerates; and

     WHEREAS, the three largest PBMs control eighty percent of the United States prescription drug market, profiting from the use of spread pricing models, also known as pay-to-play models, where the PBMs profit from the difference between what they charge health insurers for drugs and the amount they reimburse the pharmacies, which is often less than the actual costs for the pharmacies to acquire and dispense the drugs; and

     WHEREAS, the spread pricing model is criticized for incentivizing PBMs to charge more to health insurers, thereby leading to higher drug costs for patients, while negotiating lower reimbursement rates with pharmacies, leading to lower quality of care or restricted access to medications; and

     WHEREAS, both independent community pharmacies and unaffiliated pharmacies, or pharmacies that do not own or operate a PBM, are disproportionately affected by PBM price manipulation tactics and are ceasing operations at high rates across the country and in the State, impacting access to health care especially in rural areas; and

     WHEREAS, other states are enacting a wide range of PBM policy reforms that are resulting in millions of dollars in cost savings for the states, and their community pharmacies and patients, while simultaneously improving access to health care; and

     WHEREAS, oversight over PBMs is critically needed in the State to evaluate current PBM practices and their effects across the health care spectrum pertaining to both medication cost and access; and

     WHEREAS, S.B. No. 1509, introduced in the Regular Session of 2025, proposes to require PBMs and health insurers to pass on rebate savings to patient consumers to essentially create a reimbursement rate floor for and prohibit spread pricing of prescription drugs; and

     WHEREAS, the Legislature recognizes the urgent need for meaningful PBM policy reform to ensure transparency and fairness for consumers and in the pharmaceutical sector; now, therefore,

     BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, that the Director of Health is requested to convene a Pharmacy Benefit Manager Working Group to determine the best policies to reform PBM practices in the State to ensure transparency and fairness for consumers and in the pharmaceutical sector, lower drug costs to patient consumers, and increase access to health care; and

     BE IT FURTHER RESOLVED that the Director of Health, or the Director's designee, is requested to serve as chairperson of the Pharmacy Benefit Manager Working Group and to invite the following members to participate in the Working Group:

     (1)  A representative from the Insurance Division of the Department of Commerce and Consumer Affairs;

     (2)  A representative from the Department of the Attorney General;

     (3)  A representative from the MedQUEST Division of the Department of Human Services;

     (4)  A representative from the Board of Pharmacy;

     (5)  A representative from the Hawaii Pharmacists Association;

     (6)  A representative from the National Community Pharmacists Association;

     (7)  A representative from the Hawaii Association of Health Plans;

     (8)  Two representatives from independent community pharmacies; and

     (9)  Two representatives from unaffiliated pharmacies; and

     BE IT FURTHER RESOLVED that the Pharmacy Benefit Manager Working Group is requested to evaluate the following priority areas:

     (1)  The appropriate state agency to oversee PBM practices;

     (2)  PBM reporting requirements and intervals;

     (3)  Fair pharmacy audit procedures;

     (4)  Protections from medication under-reimbursements;

     (5)  Reimbursements to PBM-owned pharmacies compared to non-network or unaffiliated pharmacies;

     (6)  Prohibitions against arbitrary accreditation requirements; and

     (7)  Protections from patient steering practices; and

     BE IT FURTHER RESOLVED that the Pharmacy Benefit Manager Working Group is requested to submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2026; and

     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of Health, Director of Commerce and Consumer Affairs, Insurance Commissioner, Attorney General, Director of Human Services, Administrator of the Med-QUEST Division of the Department of Human Services, and Chair of the Board of Pharmacy.

Report Title: 

DOH; Pharmacy Benefit Manager; Working Group; Reform

STAND. COM. REP. NO. 1538

Honolulu, Hawaii

RE:    S.R. No. 53

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Health and Human Services, to which was referred S.R. No. 53 entitled:

"SENATE RESOLUTION REQUESTING THE DIRECTOR OF HEALTH TO CONVENE A PHARMACY BENEFIT MANAGER WORKING GROUP TO DETERMINE THE BEST POLICIES TO REFORM PHARMACY BENEFIT MANAGER PRACTICES IN THE STATE TO ENSURE TRANSPARENCY AND FAIRNESS FOR CONSUMERS AND IN THE PHARMACEUTICAL SECTOR, LOWER DRUG COSTS TO PATIENT CONSUMERS, AND INCREASE ACCESS TO HEALTH CARE,"

begs leave to report as follows:

     The purpose and intent of this measure is to request the Director of Health to convene a Pharmacy Benefit Manager Working Group to determine the best policies to reform pharmacy benefit manager practices in the State to ensure transparency and fairness for consumers in the pharmaceutical sector, lower drug costs for patient consumers, and increase access to health care.   

     Your Committee received testimony in support of this measure from the State Health Planning and Development Agency, University of Hawaiʻi at Hilo, Hawaiʻi Pharmacists Association, Walgreen Co., and eight individuals.

     Your Committee received comments on this measure from the Department of Health.

     Your Committee finds that over the past decade, pharmacy benefit managers (PBMs), the intermediary between pharmacies and insurance companies, have morphed into large health care conglomerates that exercise control over every link in the prescription drug delivery chain, resulting in higher drug costs for patients and increased profits for the corporate health care conglomerates that own PBMs.  Your Committee further finds that the three largest PBMs control eighty percent of the United States prescription drug market, profiting from the use of spread pricing models, also known as pay-to-play models, where the PBMs profit from the difference between what they charge health insurers for drugs and the amount they reimburse the pharmacies, which is often less than the actual costs for the pharmacies to acquire and dispense the drugs.  Your Committee believes that oversight over PBMs is critically needed in the State to evaluate current PBM practices and their effects across the health care spectrum pertaining to both medication cost and access.  This measure's PBM Working Group, consisting of key stakeholders, represents a measured strategy for identifying the best options to ensure fairness, transparency, and access to needed medications for patients and communities in the State.

     Your Committee has amended this measure by:

     (1)  Requesting the Administrator of the State Health Planning and Development Agency, rather than the Director of Health, to convene the Pharmacy Benefit Manager Working Group;

     (2)  Requesting the Administrator of the State Health Planning and Development Agency or the Administrator's designee, rather than the Director of Health or the Director's designee, to serve as the chairperson of the Pharmacy Benefit Manager Working Group;

     (3)  Amending its title accordingly; and

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

     Your Committee notes the request of $100,000 to enable the State Health Planning and Development Agency to contract with a third party to provide assistance to the Pharmacy Benefit Manager Working Group in carrying out its duties requested in this measure.

     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 concurs with the intent and purpose of S.R. No. 53, as amended herein, and recommends its adoption in the form attached hereto as S.R. No. 53, S.D. 1.

Respectfully submitted on behalf of the members of the Committee on Health and Human Services,