FISCAL NOTE
Date Requested: January 21, 2020
Time Requested: 01:13 PM |
| Agency: |
Health and Human Resources, WV Department of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2527 |
Introduced |
SB567 |
|
|---|
| CBD Subject: |
Human Services |
|---|
|
FUND(S):
0403 - DIV OF HUMAN SERVICES GENERAL ADMINISTRATION FUND; 0407 - CENTRAL OFFICE GENERAL ADMINISTRATIVE FUND; 0525 - CONSOLIDATED MEDICAL SERVICES FUND; 8722 - CONS FEDERAL FUNDS DIV HUMAN SERVICES GEN ADMN FD
Sources of Revenue:
General Fund Federal
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The bill establishes the Wholesale Prescription Drug Importation Program for the purpose of importing drugs from Canada on behalf of the state. The program will operate in compliance with the federal Department of Health and Human Services (HHS) regulations governing importation of prescription drugs and with approval of the secretary of HHS.
This bill requires the Department of Health and Human Resources (Department), in consultation with appropriate federal and other state agencies, other states and interested parties, to establish the Wholesale Prescription Drug Importation Program pursuant to 21 U.S.C. § 384; and to propose legislative rules by September 1, 2020. Further, by April 1, 2021, DHHR must submit a request for certification of the Program to the U.S. Department of Health and Human Services. The Department cannot currently estimate the cost or benefit of such a program, due to the numerous unknowns to be considered. The Department would need to conduct an extensive market survey to determine the revenue and cost prospects contemplated in this proposed legislation. Also, with no other state having taken on such a program, it is difficult to anticipate some of the complications and costs that may be incurred.
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 |
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):
Memorandum
Canadian products, units, doses, instructions and packages may vary from those approved by the FDA. As referenced in 21 U.S.C. §384, importing wholesalers are to test the drug to authenticate it and confirm the labeling complies with FDA requirements before the drug may be imported. These and other federal limitations around drug importation may serve to limit the opportunities for such a program.
Medicaid benefits greatly from the Federal Drug Rebates, negotiated by the Federal Government, and State Supplemental Rebates, negotiated by the Bureau for Medical Services (BMS). Rebates are very significant. In rare cases, they can even provide an income to the State for a member’s use of a given drug. In negotiating these rebates, drug manufacturers begin with their domestic pricing strategies. If BMS were to start buying supplies from Canada, the individual rebate agreements could begin excluding that supply, if they do not already.
Unlike similar introduced legislation (SB89), this bill does not require any coordination with the federal 340B program to enable participants to participate in the Drug Importation Program as fully as possible without jeopardizing 340B eligibility. The 340B Program provides discounts on outpatient drugs to certain safety net health providers, including Title X agencies. These drugs are typically sold for a lower price than the resulting net Medicaid price after rebates are applied. Because the drugs are provided on a different wholesale pricing basis, Medicaid fills through the 340B Program must be specially accounted for and do not qualify for Federal and Supplemental Rebates.
BMS would most likely not have the option to claim federal financial participation for a drug purchased from Canadian supply, at least one for which a Federal Rebate is already in place. This is because CMS would expect a rebate to be paid by the manufacturer per the rebate agreement and, much like the different wholesale pricing basis through the 340B program, it is highly unlikely the manufacturer would be willing to pay a rebate on a Canadian drug entering domestic supply via State import.
The Bureau for Public Health (BPH) currently participates in the federal 340B Drug Pricing Program or has contracts in place to acquire prescription related products needed to accomplish program activities. Should the proposed legislation become effective, BPH could potentially see a cost savings for several of its programs, including Family Planning, Children with Special Health Care Needs, Newborn Metabolic Screening, Infectious Disease, Immunization, Tuberculosis, and Sexually Transmitted Diseases/HIV.
As a direct care service provider, the Office of Health Facilities may indirectly recognize cost saving through the purchase of pharmaceuticals at a lower rate. Without a detailed analysis of the potential cost savings a projection cannot be made at this time.
Person submitting Fiscal Note: Bill J. Crouch
Email Address: dhhrbudgetoffice@wv.gov