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: HB2999 by Uresti (Relating to creating a prescription
drug purchasing program.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2999, As Introduced: negative impact of $(3,564,750,000) *
* 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. *
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General Revenue-Related Funds, Five-Year Impact:
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* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(1,425,900,000) *
* 2003 (2,138,850,000) *
* 2004 (2,851,800,000) *
* 2005 (2,851,800,000) *
* 2006 (2,851,800,000) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Probable Revenue Gain/(Loss) *
* Year General Revenue Fund from New General Revenue *
* 0001 Dedicated *
* 2002 $(1,425,900,000) $71,295,000 *
* 2003 (2,138,850,000) 106,942,500 *
* 2004 (2,851,800,000) 142,590,000 *
* 2005 (2,851,800,000) 142,590,000 *
* 2006 (2,851,800,000) 142,590,000 *
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Technology Impact
One-time automation costs are assumed for the Department of Human
Services (DHS) for 500 hours at $110 per hour. One-time automation
costs are assumed for the Department of Health (TDH) totaling
$5,000,000. Ongoing transaction processing costs totaling $3,000,000
per year are assumed for TDH.
Fiscal Analysis
The bill would create a state-financed Prescription Drug Program within
TDH to lower prescription drug prices for uninsured and underinsured
residents of the state. All residents of the state would be eligible to
participate in the program.
The bill would allow a manufacturer or labeler to enter into voluntary
rebate agreement with the TDH.
The bill would create the Prescription Drug Account as a dedicated
account in the General Revenue Fund. The account would consist of money
received from manufacturer or labeler rebates and any appropriations or
allocations designed for the fund. The bill specifies that the
Legislature may appropriate funds only to TDH to reimburse participating
retail pharmacies for discounted prices provided to program
participants, and TDH for the costs of administering the program.
Further, interest earned from investment of the account's funds would be
deposited to the account.
Methodology
1. It is assumed that the following number of Texans would participate
in the new program: 2.5 million in FY 2002, 3.75 million in FY 2003, and
5 million in each subsequent year. Participants would receive one
prescription per month at a cost of $47.53 per prescription per month.
Cost and utilization levels are assumed to remain constant.
2. It is assumed the prescription drug cost would include rebate amounts
for participating pharmacies.
3. It is assumed the voluntary rebates entered into with manufacturers
or wholesalers would equal 5% of the prescription purchase price paid by
the State. Rebate funding would be deposited to the newly created
General Revenue-Dedicated Prescription Drug Account. It is assumed this
funding would be appropriated to TDH as a method of financing for the
Prescription Drug Program.
Local Government Impact
Implementation of the Prescription Drug Program could have a positive
financial impact on local governments by reducing local expenditures on
prescriptions for the indigent, to the extent local governments provide
such benefits.
Source Agencies: 515 Texas State Board of Pharmacy, 529 Health and
Human Services Commission, 304 Comptroller of
Public Accounts, 501 Texas Department of Health
LBB Staff: JK, HD, PP, SW