Despite efforts by legislative Democrats to force the issue, a program aimed at cutting prescription drug costs for more than 100,000 low-and-moderate income Hawai'i residents continues to struggle, a victim of the state's inability to negotiate deeper discounts with drug makers.

The program is called Hawaii Rx Plus. It is a free discount program for residents who earn too much money to qualify for Medicaid and either do not have insurance or have prescription drug needs not fully covered by their insurance.

The idea was that the state would negotiate with drug manufacturers to get discounts for participants. Democrats in the Legislature were unhappy that while the Lingle administration was empowered to enter into such negotiations, it failed to aggressively do so.

So this year lawmakers made a one-word change in the law, requiring the administration to negotiate by changing the word "may" negotiate to "shall."

Advocates hope this one-word change will get the Lingle administration to negotiate with drug manufacturers for lower prices on prescription drugs under the Hawai'i Rx Plus program.

Low- and middle-income residents of all ages have been able to buy prescription drugs at discount prices through the program since July 2004, but deeper price breaks originally envisioned by the law have not happened because the Lingle administration has not negotiated rebates with drug makers.

The administration says rebates are not likely because of the relatively small number of residents enrolled in the program — about 112,000 people — and because many prefer cheaper generic drugs to more expensive brand-name medicines that bring manufacturer incentives.

While the explanations may be legitimate, the administration has annoyed some advocates for the elderly by also claiming that the law made the negotiations optional.

State House and Senate Democrats, over Gov. Linda Lingle's veto, amended the law this year to require the administration to negotiate by simply changing the word "may" to "shall." The new law also requires the state to tell doctors about the differences in drug costs between manufacturers that offer rebates to the state and those that do not.

"We're not happy. We shouldn't have even gotten to this point," said Bruce McCullough, legislative committee chair for the Hawai'i Alliance for Retired Americans. "They did not negotiate. They kept saying it was 'may' and they did not have to."

Harry Mattson, associate state director for advocacy for AARP Hawai'i, said advocates recognize the challenges in getting rebates but want the administration to try anyway.

ADVOCATES WANT MORE

This year, the state Department of Human Services, which administers Hawai'i Rx Plus, did work through a Salt Lake City, Utah-based contractor, Rx America, to inquire about up-front discounts and rebates from drug manufacturers.

But advocates had expected what they said should have been more serious attempts to negotiate in the three years since the program began.

"All along the legislative intent was for the administration to make a good faith attempt to negotiate with the drug companies, which they have not done," Mattson said. "I think they were reluctant in picking up the ball."

Hawai'i Rx Plus, available to people who earn up to three-and-a-half times the federal poverty level, provides discount cards that can be used at most pharmacies statewide.

Participants can buy drugs at pharmacies for the same discounted price that the state Medicaid program pays. The savings are about 13.4 percent on brand-name drugs and 32.6 percent on generic drugs — or an average of 23 percent overall. Participants favor generics over brand-name drugs nearly three to one.

A CONTENTIOUS BIRTH

The Legislature first passed the discount program in 2002, when high prescription drug costs were among the most dominant political issues nationally.

Hawai'i Democrats modeled the program after a similar idea in Maine but delayed its start because the Maine program was under legal challenge by drug manufacturers. The U.S. Supreme Court ruled in 2003 that drug manufacturers could not prove the Maine program was an unconstitutional restriction on interstate commerce, which opened the door for Hawai'i to implement its program.

Hawai'i Democrats amended the law in 2004 to, like Maine, limit Hawai'i Rx Plus to low-and-middle income residents thought to be in the most need of drug discounts.

Lingle, as a Republican candidate for governor in 2002, opposed the program. After being elected, Lingle refused to release start-up money and warned of the possibility of further lawsuits, even after the Supreme Court ruling.

But Lingle signed the amended law in 2004 and described it as an improved, bipartisan effort to lower drug costs.

The administration estimated as many as 300,000 people would qualify and promoted Hawai'i Rx Plus when it took off in July 2004, urging people to enroll so the state would have more leverage to negotiate rebates with drug makers by the second year.

"The success of the program depends on the number of people we can enroll quickly," Lillian Koller, director of the state Department of Human Services, said at the time. "As enrollment grows, we will be able to leverage our purchasing power with drug manufacturers and achieve greater discounts for our participants."

But at an informational briefing at the state Capitol last August, Koller said the administration considered the negotiations optional.

Democrats responded this year by amending the law to make it more explicit. The governor vetoed the bill but her veto was overridden by lawmakers.

"I believe a good faith effort to negotiate with drug manufacturers will lead to more discounts on generic and brand-name drugs for those who are uninsured or underinsured," said state Rep. Roy Takumi, D-36th (Pearl City, Momilani, Pacific Palisades).

"By making that one-word change, we'll see whether the administration is committed to lowering the costs of prescription drugs."

FEWER PARTICIPANTS

Linda Smith, Lingle's senior policy adviser, said the governor vetoed the bill because it could cause drug manufacturers that voluntarily participate in Hawai'i Rx Plus to leave the program. She also said it does not specify what level of rebates are expected, so manufacturers could offer only token rebates that would make little difference.

Smith said the administration's alternative — rejected by lawmakers — was to combine Hawai'i Rx Plus with the state pharmacy assistance program, which helps low-income seniors with co-payments in the new prescription drug benefit in Medicare, the government health insurance program for the elderly and disabled.

The combined program could have much greater purchasing power to negotiate rebates with drug manufacturers.

But Takumi and other lawmakers said there was no guarantee the federal government would recognize the combined program, so they preferred nudging the administration toward following Hawai'i Rx Plus as it was intended.

"Basically, we all share the same goal, to lower the costs of prescription drugs as much as possible for the people who need them here in the state of Hawai'i," Smith said. "We will work with what's in the law right now, but we hope there will be an opportunity to make it even more effective by the changes we had suggested in the administration bill."

Participation in Hawai'i Rx Plus has fallen from about 150,000 people in 2005 to 112,000 last year. The administration believes the decline is due to people who have lost eligibility or who have opted to get their drugs solely through the Medicare prescription drug benefit that started in January 2006.

UNTAPPED BENEFITS

Mattson, at AARP Hawai'i, wonders if people are being told they can participate in both Hawai'i Rx Plus and the Medicare benefit. Hawai'i Rx Plus may help with drugs not covered by Medicare or when people fall into the Medicare coverage gap — known as the "doughnut hole" — and have to pay the full costs for their drugs.

The Medicare benefit is structured so that people pay an initial $265 deductible and co-payments on drugs up to an initial coverage limit — $2,400 this year — then pay the full costs of drugs until their out-of-pocket drug expenses reach a "catastrophic" level — $3,850 this year.

Advocates like Mattson said they see merit in the Lingle administration's plan to combine state prescription drug programs for greater leverage. But they also wanted lawmakers to close the loophole in Hawai'i Rx Plus they believe has given the administration an excuse for not negotiating rebates.

"The bottom line is that the Hawaii Rx Plus participants have not gotten the full benefit of the law," Mattson said.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.