| TO: | Honorable Jane Nelson, Chair, Senate Committee on Health & Human Services |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | SB1392 by Janek (Relating to medical device licensing under the Texas Food, Drug, and Cosmetic Salvage Act.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2004 | ($400,083) |
| 2005 | ($396,783) |
| 2006 | ($396,783) |
| 2007 | ($396,783) |
| 2008 | ($396,783) |
| Fiscal Year | Probable (Cost) fromGENERAL REVENUE FUND 1 |
Probable Revenue (Loss) fromGENERAL REVENUE FUND 1 |
|---|---|---|
| 2004 | ($303,283) | ($96,800) |
| 2005 | ($299,983) | ($96,800) |
| 2006 | ($299,983) | ($96,800) |
| 2007 | ($299,983) | ($96,800) |
| 2008 | ($299,983) | ($96,800) |
| Fiscal Year | Change in Number of State Employees from FY 2003 |
|---|---|
| 2004 | 2.0 |
| 2005 | 2.0 |
| 2006 | 2.0 |
| 2007 | 2.0 |
| 2008 | 2.0 |
The bill would amend Chapter 432, Texas Food, Drug, Device, and Cosmetic Salvage Act, Health and Safety Code to remove all existing provisions relating to the salvaging of distressed medical devices. The provisions currently include licensure of device salvage establishments and brokers and compliance with minimum standards established by the Department of Health. The bill would amend Chapter 432, Health and Safety Code to establish an exemption for a person or organization that engages in refurbishing medical devices for the purpose of selling. The bill would further amend Chapter 431, Texas Food, Drug and Cosmetic Act, Health and Safety Code to remove conforming language that acknowledges certain activities performed by medical device salvagers licensed under Chapter 432, Health and Safety Code.
This bill would take effect on passage or on September 1, 2003.
The bill would eliminate the device salvage establishment and broker license fee revenue generated by the Texas Department of Health (TDH). According to TDH, the loss of license fee revenue would be $96,800 per year ($550 x 176 device salvage firms).
The bill would also eliminate requirements and minimum operational standards for device salvagers. TDH would have the responsibility to assess and determine compliance with provisions of Chapter 341, Health and Safety Code. It is estimated that 33 salvage firms (25 percent of 132 inspected annually) would require enforcement action to ensure that adulterated and/or misbranded medical devices are effectively removed from commerce (including adulterated and/or misbranded medical devices involved in natural or man-made disasters). According to TDH, investigating, reviewing and preparation activities by the program for 33 annual enforcement actions would require two (2) full-time positions, a cost of $124,983 per year to General Revenue.
It is assumed that an estimated 25 (75 percent of 33 salvage firms) would require TDH to rely on expert testimony in order to determine specific elements of proof necessary to assert devices are in violation of state laws. According to TDH, salvagers would not voluntarily agree to refurbish and/or destroy distressed devices. It is assumed that TDH would have to contract for professional services to have certified biomedical technicians prove in a condemnation proceeding that the particular device was adulterated and could not be refurbished. It is assumed that TDH would perform an estimated 2,500 annual evaluations of defective or noncompliant devices (an average of 100 devices per action x 25 enforcement actions). The costs associated with these contract services would be $175,000 (2,500 evaluations x $70 per hour evaluation charge) per year for direct evaluation and related travel expenses.
The bill would require a one-time purchase of 1 desktop computer and 1 laptop (a total cost of $3,300) for use by the two full-time positions.
| Source Agencies: | 501 Department of Health
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| LBB Staff: | JK, EB, KF, MH
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