FISCAL NOTE
Date Requested: January 11, 2019
Time Requested: 02:20 PM |
| Agency: |
Public Employees Insurance Agency (PEIA) |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1100 |
Introduced |
HB2319 |
|
|---|
| CBD Subject: |
Health |
|---|
|
FUND(S):
PEIA Basic Insurance
Sources of Revenue:
Special Fund
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to permit the state to designate a state agency to become a drug wholesaler to import pharmaceuticals from Canada to provide cheaper drugs to West Virginians.
The PEIA plans currently incur prescription drug costs at approximately $200 million a year. Any program providing prescription drugs to our members at lower costs is welcome and necessary. PEIA will most assuredly work with the newly created agency to assure any pharmaceutical products acquired from Canadian suppliers resulting in savings will be incorporated into PEIA’s benefit design. However, there are many unknown variables affecting savings realization:
1. There will most likely be unknown costs to the Plan from the pharmacy benefit manager (PBM) to keep a separate pricing structure loaded and updated for claims adjudication,
2. This could negate rebates due to PBM contracts, so this could reduce or remove the Plan’s savings,
3. Pharmacy participation is voluntary, so pharmacy participation rates will impact potential savings. Chain pharmacies may not participate as it is mandated only in WV,
4. Plans are to reimburse at actual acquisition cost of the imported product with a fee to cover agency costs. Currently PEIA pays a very low or no dispensing fees. The eventual fee will impact potential savings.
The greater the number of prescription drugs that can be purchased through the new state drug wholesaler below current costs, the greater the savings and fiscal impact to the plan and members. Without more data on the specifics, PEIA cannot provide an estimated fiscal impact until the prescription drugs and all prices and additional fees are known.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2019
Increase/Decrease
(use"-") |
2020
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| 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
There are many unknown variables affecting savings realization:
1. There will most likely be unknown costs to the Plan from the pharmacy benefit manager (PBM) to keep a separate pricing structure loaded and updated for claims adjudication,
2. This could negate rebates due to PBM contracts, so this could reduce or remove the Plan’s savings,
3. Pharmacy participation is voluntary, so pharmacy participation rates will impact potential savings. Chain pharmacies may not participate as it is mandated only in WV,
4. Plans are to reimburse at actual acquisition cost of the imported product with a fee to cover agency costs. Currently PEIA pays a very low or no dispensing fees. The eventual fee will impact potential savings.
Person submitting Fiscal Note: Jason Haught
Email Address: jason.a.haught@wv.gov