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.

As Amended by House "A" (LCO 5048)

House Calendar No.: 212


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 19 $

FY 20 $

Insurance Dept.

IF - Cost

None

225,000

Office of Health Strategy

GF - Cost

None

50,000

Insurance Dept.

GF - Potential Revenue Gain

None

None

Note: IF=Insurance Fund; GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 19 $

FY 20 $

Various Municipalities

STATE MANDATE - Potential Cost

None

None

Explanation

The bill establishes new requirements regarding the prescription drug market which result in an impact to the state and municipalities as described below.

The provisions of the bill result in (1) a cost to the Insurance Fund of approximately $100,000 in FY 20 (half year) and $200,000 annually thereafter for the Insurance Department (DOI) to support an insurance actuary,1 (2) a cost to the Insurance Fund of approximately $125,000 for consultant services for DOI in FY 20, which brings the bill's total cost to the Insurance Fund in FY 20 to $225,000, and (3) a cost to the General Fund of approximately $50,000 in FY 20 (half year) and $100,000 annually thereafter for the Office of Health Strategy to support a research analyst.2

The provisions of the bill result in a potential minimal revenue gain to the General Fund from penalties imposed under the bill, which may begin in FY 21.

Lastly, section 4 of the bill 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 4 may result in a cost to fully-insured municipal plans to the extent rebates are not currently passed through to the consumers in premiums. The impact will be reflected in fully insured premiums for policies issued on or after March 1, 2022. Due to federal law, this provision does not impact self-insured municipalities.

House “A” strikes the underlying bill and replaces it with the impact described above.

The Out Years

State Impact:

Agency Affected

Fund-Effect

FY 21 $

FY 22 $

FY 23 $

Insurance Dept.

IF - Cost

200,000

200,000

200,000

Office of Health Strategy

GF - Cost

100,000

100,000

100,000

Insurance Dept.

GF - Potential Revenue Gain

Minimal

Minimal

Minimal

Note: IF=Insurance Fund; GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 21 $

FY 22 $

FY 23$

Various Municipalities

STATE MANDATE - Potential Cost

None

See Below

See Below

The fiscal impact in the outyears is described above, and would continue into the future subject to inflation.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 The fringe benefit costs for employees funded out of other appropriated funds are budgeted within the fringe benefit account of those funds, as opposed to the fringe benefit accounts within the Office of the State Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes for other appropriated fund employees is 87.66% of payroll in FY 19 and FY 20.

2 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.