LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 20, 2001
TO: Honorable Patricia Gray, Chair, House Committee on Public
Health
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB416 by Maxey (Relating to requiring drug wholesalers
to provide certain information to the Texas Department of
Health.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB416, As Introduced: positive impact of $6,287,761 through the *
* biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $1,945,508 *
* 2003 4,342,253 *
* 2004 4,490,834 *
* 2005 4,643,335 *
* 2006 4,801,016 *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Savings/(Cost) Savings/(Cost) Savings/(Cost) *
* from GR Match from GR Match from Federal from Federal *
* for Medicaid for Medicaid Funds - Federal Funds - Federal *
* 0758 0758 0555 0555 *
* 2002 $(148,000) $2,616,885 $(148,000) $3,958,202 *
* 2003 0 5,427,816 0 8,168,918 *
* 2004 0 5,613,542 0 8,444,916 *
* 2005 0 5,804,169 0 8,731,692 *
* 2006 0 6,001,270 0 9,028,206 *
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* Fiscal Year Probable Revenue Gain/(Loss) from *
* Vendor Drug Rebates (State Share) *
* 0706 *
* 2002 $(523,377) *
* 2003 (1,085,563) *
* 2004 (1,122,708) *
* 2005 (1,160,834) *
* 2006 (1,200,254) *
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Technology Impact
One-time automation costs at the Department of Health (TDH) are assumed
to include 1,000 hours at $76 per hour. One-time automation costs at
the Department of Human Services (DHS) are assumed to include 2,000
hours at $110 per hour. The federal share of automation expenses would
be 50%.
Fiscal Analysis
The bill would require wholesale drug distributors to file annually with
TDH information showing the purchase price the distributor pays for each
drug the distributor sells in this state. The bill would allow TDH and
the Office of the Attorney General to investigate the distributor to
determine the accuracy of information. The bill would become effective
September 1, 2001.
Methodology
It is assumed the availability of detailed cost information will allow
the Medicaid Vendor Drug program (operated by TDH) to negotiate a 1%
discount off of the current pricing structure, effective March 2001. The
unadjusted average cost (price) per prescription paid by the program in
FY 2001 is assumed to be $47.33. No increases are assumed for future
years. The estimated number of annual Medicaid prescriptions totals
27,784,015 in FY 2002, 28,727,517 in FY 2003, 29,703,059 in FY 2004,
30,711,729 in FY 2005, and 31,754,651 in FY 2006. Savings would accrue
to federal funds and State General Revenue Match for Medicaid. The
federal share would total 60.20% in FY 2002, 60.08% in FY 2003, and
60.07% in each subsequent year.
Approximately 20% of the General Revenue for the Vendor Drug program is
provided through manufacturer rebates. A reduction in General Revenue
costs would in turn reduce revenue (Vendor Drug Rebates). This reduction
would partially offset the savings identified above.
Potentially, the bill could result in savings to other prescription drug
programs operated by TDH and other state agencies. The fiscal impact to
other programs has not been estimated.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 302 Office of the Attorney General, 501 Texas
Department of Health
LBB Staff: JK, HD, PP, SW