LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 26, 1995



 TO:     Honorable David Sibley, Chair          IN RE:  Senate Bill No. 628
         Committee on Economic Development              By: Madla
         Senate
         Austin, Texas






FROM: John Keel, Director

In response to your request for a Fiscal Note on Senate Bill No.
628 (relating to access to pharmaceutical services through
certain managed care health plans) this office has determined the
following:

The bill would amend state law so that managed care plans are
prohibited from entering into contracts that prevent a
participant from selecting a pharmacy of the participant's
choice.  Also, a managed care plan would not be able to limit the
quantity or dosage supply of pharmaceuticals; however, a managed
care plan may allow the participant's physician to prescribe
drugs in a quantity or dosage supply that the physician
determines appropriate and that is compliance with state and
federal law.

The bill may significantly affect the ability of the managed care
plans under contract with the Employees Retirement System, the
University of Texas System, and the Texas A&M University System
to provide prescription drug discounts.  The University of Texas
System group insurance program staff have indicated that
"providers in networks are willing to give sizable discounts
because they believe that additional business will be directed to
them as a member of the network.  If any pharmacy is allowed in
the network, there will no longer be the anticipation of
receiving additional business due to being a member of the
network.  Consequently, discounts given by pharmacies will
decrease."

The overall fiscal implication to the three insurance programs
for state employees cited above cannot be determined.  The    




University of Texas System anticipates a cost in health plan 
premiums to the state of $257,000 in FY1996 increasing to
$1,216,000  in FY2000 with similar fiscal implications
thereafter.


The overall fiscal implication to the State or units of local
government cannot be determined.


Source:   Teacher Retirement System , The University of Texas
System,
                         Texas A&M System, Employees Retirement
System
          LBB Staff: JK, RN, RR