LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 21, 2001 TO: Honorable Patricia Gray, Chair, House Committee on Public Health FROM: John Keel, Director, Legislative Budget Board IN RE: HB1116 by Maxey (Relating to establishing a maximum sales price for drugs sold to certain entities.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1116, As Introduced: positive impact of $703,000 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. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $329,000 * * 2003 374,000 * * 2004 418,000 * * 2005 469,000 * * 2006 522,000 * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings to General * * Revenue Fund * * 0001 * * 2002 $329,000 * * 2003 374,000 * * 2004 418,000 * * 2005 469,000 * * 2006 522,000 * ***************************************************** Fiscal Analysis The bill would prohibit a person from selling a drug to a public entity for more than the reimbursement rate for the Medicaid Vendor Drug Program. Methodology The term "public entity" is not defined in the bill. It is assumed to apply to state agencies. It is estimated TDH would realize General Revenue savings related to the purchase of prescription drugs provided through the following programs: South Texas Hospital, Texas Center for Infectious Disease, Primary Health Care, Hansen's Disease, and Refugee Health Screening. Savings related to the South Texas Hospital and the Texas Center for Infectious Disease would total $249,000 in FY 2002, $294,000 in FY 2003, $338,000 in FY 2004, $389,000 in FY 2005, and $442,000 in FY 2006. Combined savings for the Primary Health Care, Hansen's Disease, and Refugee Health Screening programs would total $80,000 each year. Other Potential Impacts: It is unclear whether the bill would have a fiscal impact on state agencies and institutions that purchase prescriptions through intermediaries or provide a reimbursement for the purchase of a prescription. The Employees Retirement System (ERS) and the Teacher Retirement System (TRS) have indicated the bill as introduced would not apply to their health insurance programs. A preliminary analysis of the unit cost on selected drugs indicates the purchase price or reimbursement level provided by ERS, TRS, the University of Texas System, and the Texas A&M University System was 38% to 55% more on average than the amount paid by the Medicaid program. This indicates a potential for General Revenue savings if these agencies were to be included within the scope of the bill. Local Government Impact If "public entities" is meant to include counties, municipalities, and districts, potentially, these entities could realize savings related to the purchase of prescription drugs. Source Agencies: 529 Health and Human Services Commission, 324 Texas Department of Human Services, 501 Texas Department of Health LBB Staff: JK, HD, PP, SW