FISCAL NOTE
Date Requested: February 21, 2020
Time Requested: 10:34 AM |
| Agency: |
Public Employees Insurance Agency (PEIA) |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3331 |
Comm. Sub. |
HB4543 |
|
|---|
| CBD Subject: |
|
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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 costs for insulin and provide certain coverage mandates.
Although this bill’s requirements are similar to PEIA’s current insulin benefits, there is a potential for increased costs. A significant level of appeals for non-formulary drugs could 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 to acquire access to a larger market share. A cap on member responsibility due to high levels of non-formulary insulin appeals could remove this differential resulting in no incentive for insulin manufacturers to offer a rebate. The loss of this rebate could 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, and a high level of appeals for non-formulary insulins, PEIA estimates an additional cost of $900 thousand annually for insulin prescriptions due to lost rebates.
PEIA’s analysis of 2006 insulin costs versus 2020 insulin costs indicates there will be no fiscal impact to the requirement the Department of Administration negotiate purchases on PEIA’s behalf if current list price is below 2006 levels. PEIA found minimal insulin prescriptions at 2006 list price levels. Although there are brand insulin formulations available today that were not in 2006, $150 was the average cost per insulin prescription in 2006 compared to $1516 today
PEIA currently provides diabetes education benefits and doesn’t assume additional costs from this benefit requirement.
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 |
900,000 |
900,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
900,000 |
900,000 |
| 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: Jason Haught
Email Address: jason.a.haught@wv.gov