Committee advances PBM oversight bill after stakeholders negotiate HMOs exemption

Chair Jerry Takayama opened discussion on SB2047, a bill expanding state oversight of pharmacy benefit managers (PBMs), and invited the state insurance division and stakeholders to testify.

The insurance division’s representative, Justin Chu, said the division supports the bill’s goals but warned it lacks in-house experience and therefore requested an appropriation of about $1,500,000 and five positions to implement enforcement and contract review. Chu said the appropriation covers salaries, fringe benefits, training and consulting from mainland experts to build needed capacity.

Pharmacy and PBM trade groups and providers offered mixed comments. Tonya Neal of PCMA said the latest draft and its third amendment broaden the bill operationally — for example, changing reimbursement rules — and offered targeted amendments to narrow those impacts. John Tiramitsu for Kaiser Permanente asked the committee to exempt integrated HMOs that own and operate their own pharmacies, saying the bill’s intent does not target those models.

Corey Sanders of the Hawaii Pharmacists Association urged caution on section 3 and warned the measure could create significant workload for pharmacies and the state. “This is a really significant burden to the general fund. $1,500,000 and 5 FTEs is higher than I’ve seen for PBM oversight,” Sanders said, urging time to work through PCMA’s many amendment proposals and to consult with the insurance commissioner’s office on fiscal calculations.

After discussion the chair moved to adopt amendments: (1) Kaiser’s exemption for HMOs that operate their own pharmacies; (2) the attorney general’s language clarifying that existing contracts are not impaired; and (3) report language noting the insurance division’s $1.5 million/5‑position implementation request. The committee voted to pass SB2047 with those amendments; the chair announced the motion was adopted.

What happens next: SB2047 advances as a house draft and still requires consideration in at least two other committees. The insurance division remains the likely implementing office and the bill’s fiscal impact will be reviewed further in finance.

Sources: Committee testimony by Justin Chu (Insurance Division), Tonya Neal (PCMA), John Tiramitsu (Kaiser Permanente), Corey Sanders (Hawaii Pharmacists Association).