5084 - Medical Services Program Fund

Sources of Revenue:

General Fund,Special Fund,Other Fund Federal

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The purpose of this bill is to exempt certain physicians from obtaining Medicaid preauthorization before dispensing or prescribing immunosuppressive or medications for treatment of cancer, human immunodeficiency virus, acquired immune deficiency syndrome, or hepatitis C or who are in need of transplant immunosuppressive.
    The Department of Health and Human Resources estimates the fiscal impact of the proposed legislation to be a total of $628,380, including $164,211 of State funds. This figure represents the Departments savings currently being realized by including the Hepatitis C related drugs in the Preferred Drug List (PDL). Not included in this estimated cost are costs of any programming changes to the claims processing system and any additional medical costs that may be generated from shifts in site of care.
    With the exception of two immunosuppressive drugs (not included in cost estimate due to low utilization), Hepatitis C Treatment agents are the only drugs that currently require prior authorization. None of the oral agents used in the treatment of cancer require preauthorization (PA) and very few injectibles are dispensed in the outpatient pharmacy program as most of them are billed through the physicians office and therefore are not subject to PA. The effects of this bill would be to remove drugs from Medicaid's PDL, thus resulting in increased drug costs.

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 0 628,380 628,380
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 628,380 628,380
2. Estimated Total Revenues 0 0 0

Explanation of above estimates (including long-range effect):

    The above estimate was based on the projections prepared by Provider Synergies, Medicaid's PDL vendor, by comparing projected spending on the Hepatitis drugs without including them in the Preferred Drug List and represented savings for this class of drug as a result of the PDL. The savings is a combination of supplemental drug rebates and the savings that would not be realized if non-preferred drugs were used.


    The Department is concerned about the potential impact of this legislation on the Medicaid PDL. There are concerns that this, as well as other requests to exempt specific classes of drugs from the PDL would negate the financial impact of the PDL causing pharmacy costs to increase significantly and eliminating Medicaid's ability to control drug costs. The average PDL savings to the Department is $10 million per quarter. This legislation could put these savings at future risk.

    Person submitting Fiscal Note: Martha Yeager Walker
    Email Address: