Date Requested:March 03, 2005
Time Requested:01:17 PM
Agency: Health and Human Resources, Department of
CBD Number: Version: Bill Number: Resolution Number:
2005R1410 Intro HB2852
CBD Subject: Pharmaceutical Protection
FUND(S)
Various
Sources of Revenue
General Fund,Special Fund,Other Fund Federal
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

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

    "The purpose of this bill is to implement the recommendations of the West Virginia Pharmaceutical Cost Council created during the 2004 regular session of the Legislature. These recommendations include the creation of the Office of the Pharmaceutical Advocate. This Office would be headed by a Pharmaceutical Advocate. This would be a cabinet level position with managerial and administrative duties over the Office. An advisory council to be known as the Pharmaceutical Advocate Advisory Council is also created to offer input and guidance to the Office and the Pharmaceutical Advocate. The Office would have the sole responsibility for the purchase of prescription drugs for all state entities and agencies who are payors for prescription drugs. Other qualified entities may also be permitted to participate in certain programs under the direction of the Pharmaceutical Advocate. "
    
    This bill would also transfer all power currently vested in other state entities for the purchase of prescription drugs to the Office of the Pharmaceutical Advocate. The bill repeals the West Virginia Pharmaceutical Cost Council and vests in the Office of the Pharmaceutical Advocate most of the powers of that body.
    
    The Department of Health and Human Resources (Department) believes the proposed legislation could result in reduced prescription costs to several Bureaus, including the Bureau for Behavioral Health and Health Facilities, which currently purchases expensive psychotropic drugs through a negotiated contract, the Bureau for Medical Services (Medicaid), which would need approval by the Center for Medicare and Medicaid Services (CMS) in order to participate in this program, and the Bureau for Public Health, which purchases prescription drugs for a number of programs including Tuberculosis, Hepatitis, Hemophilia, Family Planning, Sexually Transmitted Disease, and the Aids Drug Assistance Program (ADAP). As written, the bill exempts Medicaid from participation in this program until approval by CMS has been granted. This approval would be requested once the program specifics are identified.
    
    Based on a review of the bill the Department is unable to assign a fiscal impact for the proposed legislation until such time as the variable situations regarding contract pricing, drug availability (what drugs, if any are excluded from the contract) and CMS approval are finalized.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
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
3. Explanation of above estimates (including long-range effect):
    Based on a review of the bill the Department is unable to assign a fiscal impact for the proposed legislation until such time as the variable situations regarding contract pricing, drug availability (what drugs, if any are excluded from the contract) and CMS approval are finalized.
    


Memorandum
Person submitting Fiscal Note:
Martha Yeager Walker
Email Address:
fnbudoff@wvdhhr.org
    It is anticipated that the bill will benefit the Department by reducing prescription drug costs.
    
    The rising cost of pharmaceuticals has had its impact on the Department's Bureau for Behavioral Health and Health Facilities, specifically the state-owned and operated hospitals. From 2000 to 2004, the cost of pharmaceuticals in the seven facilities increased 56% from $1.68M in 2000 to $2.62M in 2004. This trend is not expected to change. Three (3) of the seven (7) state-owned facilities are currently operating under a contract to obtain pharmaceutical services from one supplier. The Bureau is in the process of preparing a Request For Proposal (RFP) to provide drug services over the next three years to the three acute facilities - Mildred-Mitchell Bateman, William R. Sharpe Jr., and Welch Community Hospital. These three facilities account for over 95% of the drug costs borne by the Bureau. The main reason behind high prescription drug costs at Bateman and Sharpe is the reliance on increasingly expensive psychotropic drugs. It is hoped and anticipated that by providing the Pharmaceutical Advocate increased negotiating power and by reducing the need for the Bureau to independently pursue a contract, money and time will be saved.
    
    Two programs offered by the Bureau for Public Health, Family Planning and Aids Drug Assistance Program (ADAP), are eligible for the 340 Drug Pricing Program. This program resulted from enactment of Public Law 102-585, the Veterans Health Care Act of 1992, which is codified as section 340B of the Public Health Service Act. In addition, the ADAP program currently flows with Medicaid, therefore, inclusion of the ADAP program may be dependent on CMS approval of Medicaid participation.
    
    The Department spent approximately $12M on prescription drugs, excluding Medicaid, in FY2004. Based on these figures, if the Department were to experience savings based on this legislation, the effect of a 1% savings would be $120,000 and the effect of a 10% savings would be $1.2M.