LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 78TH LEGISLATIVE REGULAR SESSION
 
March 31, 2003

TO:
Honorable Carlos Uresti, Chair, House Committee on Human Services
 
FROM:
John Keel, Director, Legislative Budget Board
 
IN RE:
HB2298 by Uresti (Relating to the authority of certain state agencies to purchase prescription drugs and other medications jointly with other states.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB2298, As Introduced: a positive impact of $5,345,687 through the biennium ending August 31, 2005.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2004 $2,662,932
2005 $2,682,755
2006 $2,727,359
2007 $2,776,997
2008 $2,829,843




Fiscal Year Probable Savings from
GR MATCH FOR MEDICAID
758 		Probable Savings from
FEDERAL FUNDS
555
2004 $2,662,932 $4,027,852
2005 $2,682,755 $4,119,363
2006 $2,727,359 $4,193,116
2007 $2,776,997 $4,269,430
2008 $2,829,843 $4,350,678

Fiscal Analysis

The bill would authorize the Health and Human Services Commission to enter into agreements with other states for the joint bulk purchasing of prescription drugs.

Methodology

It is assumed that savings achieved through bulk purchasing with other states would be similar to estimated savings achieved through bulk purchasing of prescription drugs within Texas agencies. The Department of Mental Health and Mental Retardation indicates that its practices include the negotiation of the best price and bulk purchasing with other states would not significantly impact its drug prices. The Texas Department of Health and the Department of Human Services indicate no significant fiscal impact.

The Interagency Council of Pharmaceutical Bulk Purchasing has already implemented cost savings strategies related to bulk purchasing; therefore it is assumed that the Medicaid Vendor Drug Program (VDP) could save an additional 1 percent through bulk purchasing with other states. Estimated drug expenditures are as follows: $669,078,300 in fiscal year 2004, $680,211,180 in fiscal year 2005, $692,047,500 in fiscal year 2006, $704,642,700 in fiscal year 2007, $718,052,100 in fiscal year 2008.

A reduction in manufacturers' rebates would partially offset these savings.


Local Government Impact

No significant fiscal implication to units of local government is anticipated.


Source Agencies:
324 Department of Human Services, 501 Department of Health, 529 Health and Human Services Commission, 655 Department of Mental Health and Mental Retardation
LBB Staff:
JK, JO, EB, KF, AJ