Honorable Jaime Capelo, Chair, House Committee on Public Health
John Keel, Director, Legislative Budget Board
HB1545 by Raymond (Relating to a prescription drug purchasing program and an associated assistance program.), As Introduced
|Fiscal Year||Probable Net Positive/(Negative) Impact to General Revenue Related Funds|
|Fiscal Year||Probable Savings fromGENERAL REVENUE FUND
|Probable Savings fromGR MATCH FOR MEDICAID
|Probable (Cost) fromGR MATCH FOR MEDICAID
|Probable Savings/(Cost) fromFEDERAL FUNDS
|Fiscal Year||Probable Revenue Gain/(Loss) fromFEDERAL FUNDS
|Probable Revenue Gain/(Loss) fromVENDOR DRUG REBATES-MEDICAID
The bill would require the Health and Human Services Commission (HHSC) to negotiate with manufacturers and labelers to obtain supplemental Medicaid rebates or discount prices for prescription drugs sold in Texas, including those sold to a publicly-funded entity. If HHSC and the manufacturer or labeler do not reach an agreement on supplemental Medicaid rebates or discount pricing for the state pharmaceutical assistance program, the products of the manufacturer or labeler shall be placed on the state’s list of requiring prior authorization under the Medicaid program or any other state-funded program.
The bill would establish a state pharmaceutical assistance program for state residents to promote effective use of drugs by providing for the availability of discounted prices to program participants for each prescription drug available under an agreement with the commission. Program participants include state residents who qualify for the program procedures established by the commission, participates in any health program provided by a publicly-funded entity and is not covered by an insurance policy or health benefit plan, that provides benefits for prescription drugs.
To estimate the cost and savings associated with the implementation of the proposal, Medicaid Vendor Drug Program expenditures are held at fiscal year 2003 levels.
It is assumed that the program would be implemented by March 1, 2004.
For the Vendor Drug Program, the market shift created through prior authorization is assumed based upon an 80 percent redirection to a 20 percent less expensive drug, approximately $43.9 million per year. Supplemental rebates are assumed to be negotiated at 10 percent and are calculated after reducing the drug expenditures by the savings due to redirection. It is assumed that supplemental rebates would be expended to offset program costs.
It is assumed that the administration of the program would require a Pharmacy Benefit Manager (PBM) to manage the prior authorization process, perform pharmacy liaison functions, and other administrative tasks. The PBM-associated costs are estimated to be $5 million per year.
This proposal is assumed to result in a reduction of drug prices at state agencies as follows: Department of Mental Health/Mental Retardation (5 percent), Department of Criminal Justice (2 percent), Department of Health (2 percent), Employees Retirement System (ERS) (5 percent), and Teachers Retirement System (TRS) (5 percent). It is assumed that ERS and TRS would not be able to participate until fiscal year 2006 due to contractual obligations.
327 Employees Retirement System, 501 Department of Health, 529 Health and Human Services Commission, 655 Department of Mental Health and Mental Retardation, 696 Department of Criminal Justice, 710 Texas A&M University System Administrative and General Offices, 720 The University of Texas System Administration
JK, JO, EB, KF, AJ, KG