FISCAL NOTE

Date Requested: January 22, 2020
Time Requested: 01:10 PM
Agency: Administration, WV Department of
CBD Number: Version: Bill Number: Resolution Number:
2538 Introduced SB577
CBD Subject: Insurance


FUND(S):

PEIA Basic Insurance

Sources of Revenue:

Special Fund

Legislation creates:

Increases Existing Expenses



Fiscal Note Summary


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


     The purpose of this bill is to cap, under an insurance policy or a discount prescription drug plan, the total amount that a covered person is required to pay for a covered prescription insulin drug. The cap may not exceed $100 per 30-day supply of the drug, regardless of the amount or type of insulin needed to fill the covered person’s prescription.
    
     This bill will increase costs and significantly undermine the ability of the plan to acquire affordable insulin for its members. The unfortunate reality of the current prescription drug acquisition process in this country is that it requires member cost differentials through tiered copays.
    
     These differentials provide incentives for insulin manufacturers to offer rebates due to their access to a larger market share. A cap on member responsibility will remove this differential resulting in no incentive for insulin manufacturers to offer a rebate. The loss of this rebate will significantly increase the cost of the insulin.
    
     PEIA members currently pay $50 for a formulary 90-day prescription of insulin. PEIA had a 99.46% formulary compliance rate for the antidiabetics category as of October 2019.
    
     Assuming a rebate worth 50% of the plan costs for insulin, PEIA estimates an additional cost of $2.6 million annually for insulin prescriptions due to lost rebates.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 2,600,000 2,600,000
Personal Services 0 0 0
Current Expenses 0 2,600,000 2,600,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


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


     Assuming a rebate worth 50% of the plan costs for insulin, PEIA estimates an additional cost of $2.6 million annually for insulin prescriptions due to lost rebates.
    



Memorandum


    Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.



    Person submitting Fiscal Note: Jason Haught
    Email Address: jason.a.haught@wv.gov