By Kevin Dayton
Advertiser Capitol Bureau
House lawmakers want the state to address sky-high prescription drug costs for the first time with a proposed discount program for people who pay cash for their medicine.
Officials with the state’s largest health insurer said they aren’t sure how much the program will actually save consumers, but Rep. Roy Takumi said he hopes the effort will cut participants’ drug costs by 15 percent.
"It’s just good public policy," said Takumi, D-36th (Pearl City, Waipahu). "Should we try to have a program that allows our residents to enjoy the same savings that all of us in a drug plan now enjoy? It’s a no-brainer."
Takumi said the program would be open to anyone, but the biggest beneficiaries would be 220,000 Hawai‘i residents who have no drug coverage. Others who might benefit are people who exceed the limits of their drug coverage, and have to pay for additional prescriptions out-of-pocket.
Under the bill, experts hired by the state would negotiate with pharmaceutical companies to develop a list of discounted prices for people in the program. The logic is that the consumers’ combined purchasing power would give the group leverage in the price negotiations.
Local pharmacies would then sell drugs to members of the program at the discounted price. The pharmaceutical companies would periodically pay rebates to the state based on the amount of drugs purchased through the program, and the state would forward the rebates to local pharmacies.
HMSA, the largest insurer in the Islands, negotiates with drug companies for discounts for about 500,000 of its members with drug coverage. The Hawaii Medical Service Association spends about $180 million a year on drugs for its members, and the negotiations allow the insurer to recoup about $7 million a year in rebates from the drug companies, said Jennifer Diesman, government relations manager for HMSA.
That’s a discount of about 4 percent. Diesman said it isn’t clear how the state could negotiate a better deal with a smaller pool of members.
Takumi, who argues that the uninsured are "grossly overcharged" for medicine, said he believes that a discount of even 10 percent would be worthwhile. With drug prices rising twice as fast as the inflation rate, he hopes to spark a public discussion about the wisdom of regulating drug prices, a concept he supports.
One skeptic is Rep. Charles Djou, R-47th (Kahalu‘u, Kane‘ohe), who wondered whether the bill would actually cut drug prices. "I’m awfully nervous anytime government tries to intervene and get involved in the market," he said.
Todd Inafuku, executive director of the Hawaii Pharmacists Association, told lawmakers his group wants to be sure the rebates are promptly paid to pharmacists so the pharmacists can pay their distributors.
The bill initially proposed a drug price control system modeled after a Maine law, but the Pharmaceutical Research and Manufacturers of America argued that price controls are unconstitutional. The Maine law has already been challenged in court.
House Bill 47 was introduced by Takumi, House Consumer Protection Committee Chairman Ken Hiraki, D-25th (Downtown, Ala Moana), Judiciary Chairman Eric Hamakawa, D-3rd (South Hilo, Puna), and Health Chairman Dennis Arakaki, D-28th (Kalihi Valley, Kamehameha Heights). It is scheduled for a House floor vote next week.
It’s unclear how the bill will fare in the Senate. Consumer Protection Chairman Ron Menor, D-18th (Waipi‘o, Gentry, Wahiawa) has said he believes that the drug pricing issue needs further study before the state attempts to intervene in the industry.
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