FISCAL NOTE
Date Requested: February 20, 2020
Time Requested: 09:50 AM |
| Agency: |
Public Employees Insurance Agency (PEIA) |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3046 |
Introduced |
SB762 |
|
|---|
| 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 ensure that covered persons who are stable on their biological product prescription drug regimens, as determined by the prescribing provider, have continuous care and that third-party payers cannot make restrictive changes to their formularies after a plan year has begun or has been renewed, resulting in increased cost-sharing or loss of access to a medication—a practice referred to as “nonmedical switching.”
This bill will increase healthcare costs to PEIA’s members. By limiting the changing of formulary tiers, there is less ability to promote and increase lower cost generic drug utilization. Under current practice, members are notified of a formulary change and given an option to appeal and stay on their biologic product at the same tier cost. The Food and Drug Administration reviews new pharmaceuticals. When effective and cheaper drugs become available, there should not be prohibitions to its utilization in favor of more expensive options.
On February 20, 2020, the FDA issued a final rule defining the term “biological product” in an effort to increase patient access to insulin products and to codify the FDA’s interpretation of the statutory term “protein.” The agency says the final rule provides regulatory certainty and clarifies the statutory framework of the products’ regulation by the defining of a protein as polypeptide with a specific sequence. The ruling resulted in life-sustaining insulin, human growth hormone (somatropin), pancrelipase, chorionic gonadotropin, follitropinalfa, and menotropins’ products being formally defined as biologics.
With the inclusion of products newly defined as biologics the PEIA plan would see an estimated $30 million in increased costs due to loss of manufacturer rebates. Annually the PEIA plan would experience a loss of 30% of current manufacturer rebates going forward.
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 |
30,000,000 |
30,000,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
30,000,000 |
30,000,000 |
| 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):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
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: April Taylor
Email Address: april.a.taylor@wv.gov