OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sHB-5384

AN ACT CONCERNING PRESCRIPTION DRUG COSTS.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 19 $

FY 20 $

Insurance Dept.

IF - Cost

approx. 100,000

None

Insurance Dept.

IF - Potential Cost

None

approx. 160,000

Office of Health Strategy

GF - Cost

approx. 35,000

approx. 70,000

State Comptroller - Fringe Benefits1

GF - Cost

approx. 13,000

approx. 25,000

Resources of the GF

GF - Potential Revenue Gain

Minimal

Minimal

Note: IF=Insurance Fund; GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 19 $

FY 20 $

Various Municipalities

Potential Cost

See Below

See Below

Explanation

The bill establishes new requirements for state agencies and various entities that impact the prices of prescription drugs, resulting in the fiscal impact described below.

Section 1 provides definitions and has no fiscal impact.

Sections 2 and 3 allow the Insurance Commissioner to adopt regulations concerning reporting and web site posting requirements for PBMs and are not anticipated to have a fiscal impact as the Insurance Department has personnel for regulation development.

Section 4 requires certain health carriers to submit information on requests for coverage of non-covered benefits and prior authorizations to the Insurance Department in the form of an annual report beginning on or before 5/1/19 and has no fiscal impact as the Department already collects this information from such parties to prepare the Consumer Report Card on Health Insurance Carriers in Connecticut.

Section 5 creates a health carrier complaint review process and expands Insurance Department requirements as described in the bill. The Department does not currently oversee pharmaceutical manufacturers or have expertise in this area, therefore it is anticipated that they will need to hire consultants, an actuary and an analyst, to set up these programs at a cost to the Insurance Fund of approximately $100,000 in FY 19. To the extent that such expertise and additional personnel are required on an ongoing basis to assist with complaint reviews, there is a potential cost of approximately $160,000 to the Insurance Fund in FY 20 to support the salary and fringe benefit costs of a pharmacy manufacturing analyst.

Section 6 is anticipated to result in a state cost of approximately $50,000 in FY 19 and $100,000 in FY 20, and a potential minimal revenue gain to the General Fund annually. The state cost reflects: (1) approximately $35,000 in FY 19 (half-year) and $70,000 in FY 20 to support a Research Analyst in the Office of Health Strategy to fulfill requirements in this section, and (2) approximately $13,000 in FY 19 and $25,000 in FY 20 for fringe benefits. There is a potential minimal revenue gain to the General Fund from the establishment of a penalty for sponsors/pharmaceutical manufacturers of no more than $15,000 per violation of the section.

Section 7 makes changes to the information certain health carriers must provide to consumers and has no fiscal impact.

Section 8 does not result in a fiscal impact to the state employee and retiree health plan as the state plan currently complies with the rebate pass through requirements. Section 8 may result in an impact to fully-insured municipal plans to the extent rebates are not currently passed through to the consumers at the point of sale or in premiums. The impact will be reflected in fully insured premiums for policies issued on or after January 1, 2019. Due to federal law, this provision does not impact self-insured municipalities.

Section 9 results in a potential minimal revenue gain to the extent that additional PBMs register with the Commissioner and pay the $50 registration fee and any applicable renewal fees.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to increases in the costs identified above.

Sources:

Connecticut Insurance Department

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 36.33% of payroll in FY 19 and FY 20.