FISCAL NOTE



FUND(S):

0403-Div of Human Services General Administration Fund, 8722-Cons Federal Funds Div Human Services Gen Admn Fd

Sources of Revenue:

General 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 exempt certain physicians from obtaining Medicaid preauthorization before dispensing or prescribing immunosuppressives or medications for treatment of cancer, human immunodeficiency virus, acquired immune deficiency syndrome or hepatitis C or who are in need of transplant immunosuppressive. The Department of Health and Human Resources (Department) estimates the fiscal impact of this legislation to be $750,000 ($146,625 state share). This amount represents the savings lost in supplemental rebates and switching to less costly agents that would result from exempting the hepatitis C related drugs from the Preferred Drug List (PDL). Currently, none of the oral agents used in the treatment of cancer require preauthorization. Only the injectible form of immunosuppressives purchased through an outpatient pharmacy require preauthorization; however, very few injectibles are dispensed in the outpatient pharmacy as most are billed through the physician's office. Medications used to treat AIDS are not included in the PDL and do not require preauthorization, therefore there would be no additional cost for excluding or exempting this class of drugs.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 750,000 750,000
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 750,000 750,000
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


The estimate was based on projections provided from the Department's Preferred Drug List (PDL) vendor, GHS. It assumes costs (loss of savings) for the hepatitis C drug class using a combination of the supplemental rebates and the increased CMS rebates collected from the more favorable preferred products, and the lower net cost attained by preventing the use of higher cost non-preferred products. They used the first three quarters in 2008 to project the results for an entire year, made adjustments for the different contract prices in CY 2009, and allowed room for the quarterly variance in CMS rebates and the upward trend in the manufacturer’s price for these products. The state funds are estimated based on the enhanced FMAP from the stimulus package. The state share would increase in SFY2011 as the enhanced FMAP from the stimulus package ends.



Memorandum


The Department is concerned about the potential future impact of this legislation on the PDL. If legislation is approved to exempt certain classes of drugs, it may set a precedent for removal of other or all drugs from the PDL. Each exemption would negate the financial impact of the PDL resulting in increased pharmacy costs and the Department's ability to effectively control these costs. Annual supplemental rebates total approximately $30 Million.



    Person submitting Fiscal Note: Martha Yeager Walker
    Email Address: dhhrbudgetoffice@wv.gov