Revision: Jan. 21, 2010, midnight
SB 110-FN-A – AS AMENDED BY THE HOUSE
03/24/05 0674s
18Jan2006… 0011h
2005 SESSION
01/10
SENATE BILL 110-FN-A
AN ACT establishing the New Hampshire Rx plus program for prescription drugs and continually appropriating a special fund.
SPONSORS: Sen. Larsen, Dist 15; Sen. Burling, Dist 5; Sen. D’Allesandro, Dist 20; Sen. Gatsas, Dist 16; Sen. Martel, Dist 18; Sen. Hassan, Dist 23; Sen. Estabrook, Dist 21; Sen. Gottesman, Dist 12; Sen. Foster, Dist 13; Rep. DeJoie, Merr 11
COMMITTEE: Health and Human Services
This bill establishes the New Hampshire Rx plus program for prescription drugs. Under this bill, participating pharmacies shall sell prescription drugs to qualified residents at a discounted price. The bill grants rulemaking authority to the commissioner of the department of health and human services for the purposes of the bill.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/24/05 0674s
18Jan2006… 0011h
05-0957
01/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT establishing the New Hampshire Rx plus program for prescription drugs and continually appropriating a special fund.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Statement of Purpose. The general court finds that affordability is critical in providing access to prescription drugs for New Hampshire residents. The general court hereby creates the New Hampshire Rx Plus Program to enable the state to make prescription drugs more affordable for qualified New Hampshire residents, thereby increasing the overall health of New Hampshire residents, promoting healthy communities, and protecting the public health and welfare. It is not the intent of this act to discourage employers from offering to pay or paying for prescription drug benefits for their employees or to supplant employer-sponsored prescription drug benefit plans.
2 New Chapter; New Hampshire Rx Plus Program for Prescription Drugs. Amend RSA by inserting after chapter 161-K the following new chapter:
CHAPTER 161-L
161-L:1 Definitions. In this chapter:
I. “Commissioner” means the commissioner of the department of health and human services.
II. “Committee” means the pharmacy and therapeutics advisory committee established in 2003, 319:176 that advises the department on the medicaid preferred drug list.
III. “Department” means the department of health and human services.
IV. “Initial discounted price” as it pertains to a drug means the average wholesale price less 10 percent.
V. “Participating pharmacy” or “retail pharmacy” means a retail pharmacy located in this state that elects to participate in the program.
VI. “Preferred drug” includes but is not limited to:
(a) A drug listed on the state’s medicaid preferred drug list;
(b) An antipsychotic drug;
(c) An antidepressant drug;
(d) A chemotherapy drug;
(e) An antiretroviral drug;
(f) An immunosuppressive drug; and
(g) Any other drug approved pursuant to this chapter.
VII. “Program” means the New Hampshire Rx plus program.
VIII. “Qualified resident” means a resident of the state who has a family income equal to or less than 300 percent of the federal poverty level, who does not have prescription drug coverage or has exceeded the extent of their benefits, and who is enrolled in the program.
IX. “Secondary discounted price” as it pertains to a drug means the initial discounted price less any further discounts paid out of the Rx plus fund.
161-L:2 Rx Plus Preferred Drug List; Duties of Committee.
I. The department shall establish a Rx plus preferred drug list that includes but is not limited to:
(a) Drugs listed on the state’s medicaid preferred drug list;
(b) Antipsychotic drugs;
(c) Antidepressant drugs;
(d) Chemotherapy drugs;
(e) Antiretroviral drugs;
(f) Immunosuppressive drugs; and
(g) Any other drugs approved pursuant to this chapter.
II. The committee shall review and recommend drugs for placement on the Rx plus preferred drug list, striving to identify the safest and most efficacious drugs that are available at the lowest cost. The committee’s recommendations may take into consideration any of the following factors:
(a) Therapeutic value for the disease or condition under treatment;
(b) Clinical efficacy;
(c) Safety;
(d) Cost; and
(e) Other relevant factors as determined by the committee.
III. When considering categories of drugs designed to treat specialized chronic medical conditions and diseases, the committee shall consult with physicians and other health care professionals with specialized clinical knowledge and expertise in this area, either in their capacity as consultants serving on the committee, or as physicians or pharmacists with a practice or specialty in chronic diseases.
IV. The determination of a drug’s safety and efficacy shall be consistent with the standards set forth in the peer-reviewed literature and other available sources including, but not limited to the American Hospital Formulary Service Drug Information, the United States Pharmacopoeia Drug Information, the DRUGDEX Information System, and the America Medical Association Drug Evaluations.
V. The determination of a drug’s net cost shall consider the pharmacy reimbursement amount, authorized under RSA 161-L:8, as adjusted by manufacturer’s rebates to be paid to the department. The committee shall not consider a drug’s net cost unless it determines that the drug has no significant clinical or safety advantages over one or more alternative drugs, when used for a given purpose.
161-L:3 New Hampshire Rx Plus Program.
I. There is established within the department, the New Hampshire Rx plus program. The program shall combine the purchasing power of all qualified residents to enable the state to reduce prescription drug costs and to improve the quality of health care for qualified New Hampshire residents in the program, thereby increasing the overall health of New Hampshire residents, promoting healthy communities, and protecting the public health and welfare, and to integrate the program as part of any statewide program for the uninsured.
II. The program shall utilize manufacturer rebates and pharmacy discounts to reduce prescription drug prices.
III. The department may administer the program or contract with a third party or third parties to administer any single component, or combination of components of the program including outreach, eligibility, claims, administration, rebate negotiations and recovery and redistribution in order to achieve the maximum possible discount for New Hampshire residents. Any contract to administer any program component shall prohibit the contractor from receiving any compensation or other benefits from any manufacturer participating in the program.
IV. The department shall conduct ongoing quality assurance activities similar to those used in the medicaid program.
161-L:4 Program Eligibility.
I. All qualified residents of the state shall be eligible to participate in the Rx plus program.
II. The department:
(a) Shall establish procedures to determine eligibility and shall issue program enrollment cards to eligible qualified residents;
(b) Shall undertake outreach efforts to build public awareness of the program and maximize the enrollment of eligible qualified residents; and
(c) May adjust the requirements and terms of the program by rule, pursuant to RSA 541-A, to accommodate any federally-funded or authorized prescription drug program.
161-L:5 Rebate Agreement.
I. A drug manufacturer or labeler that sells prescription drugs in the state may enter into a rebate agreement with the department for this purpose. The rebate agreement shall require the manufacturer to make rebate payments to the state each calendar quarter or according to a schedule established by the department.
II. The commissioner shall negotiate the amount of the rebate required from a manufacturer in accordance with this section.
III. The commissioner shall take into consideration the rebate calculated under the medicaid rebate program pursuant to title 42 U.S.C. section 1369r-8, the average wholesale price of prescription drugs, and any other information on prescription drug prices and price discounts.
IV. The commissioner shall use his or her best efforts to obtain an initial rebate amount equal to or greater than the rebate calculated under the medicaid program pursuant to 42 U.S.C. section 1369r-8.
V. With respect to rebates effective July 1, 2008, the commissioner shall use his or her best efforts to obtain a rebate amount equal to or greater than the amount of any discount, rebate, or price reduction for prescription drugs provided to the federal government.
161-L:6 Participating and Nonparticipating Manufacturers.
I. The names of manufacturers that enter and do not enter into rebate agreements pursuant to this chapter shall be deemed public information. The department shall release this information to health care providers and the public annually.
II. The department may also provide to health care providers information about the relative cost of drugs produced by manufacturers that enter into rebate agreements compared to the cost of drugs produced by those that do not enter into rebate agreements. The department shall adopt rules, under RSA 541-A, establishing procedures for the implementation of this section.
161-L:7 Discounted Retail Prices for Program Participants.
I. Each retail pharmacy participating in the program shall sell drugs to qualified residents at the lowered initial discounted price, in addition to the secondary discounted price as such discounted prices are determined by the department pursuant to this chapter.
II. The department shall establish discounts for drugs covered by a rebate agreement and shall promote the use of safe, efficacious, and cost-effective drugs, taking into consideration:
(a) Reduced prices for state and federally-capped drug programs;
(b) Differential dispensing fees;
(c) Administrative costs of the department; and
(d) The recommendation of the committee.
III. Beginning July 1, 2007, a participating pharmacy shall offer the initial discounted price.
IV. No later than July 1, 2008, a participating pharmacy shall offer the secondary discounted price, if available.
161-L:8 Pharmacy Reimbursement.
I. A pharmacy shall submit claims to the department to verify the amount charged to program participants. On a schedule to be determined by the department, the department shall reimburse each pharmacy for the discounts of prescription drugs provided to program participants less any administrative costs incurred by the department.
II. The department shall collect pharmacy use data necessary to calculate the amount of the manufacturer rebate under RSA 161-L:5. The department shall protect the confidentiality of information received as required under state or federal law, rule, or regulation.
III. The department shall not impose transaction charges on participating pharmacies that submit claims or receive payments under the program.
161-L:9 Rx Plus Fund Established.
I. There is hereby established in the office of the state treasurer a fund to be known as the Rx plus fund into which shall be deposited:
(a) All moneys received from manufacturers who pay rebates as provided in RSA 161-L:5.
(b) Appropriations made by the general court to the fund; and
(c) Any other revenues designated for the fund.
II. Moneys in the fund shall be used for the following purposes:
(a) Reimbursement payments to participating pharmacies for discounts provided to program participants;
(b) The cost of administering the Rx plus program, including salary and benefits of employees, computer costs, and contracted services as provided in RSA 161-L:3; and
(c) Any other purpose deemed necessary by the department for the purpose of operating and administering the Rx plus program.
III. All interest on Rx plus fund balances shall accrue to the Rx plus fund. Moneys in this fund shall be nonlapsing and continually appropriated to the department.
161-L:10 Annual Report. The department shall make a report relative to the enrollment and financial status of the Rx plus program to the speaker of the house of representatives, the president of the senate, and the governor no later than 20 days prior to the convening of each regular legislative session, beginning with the 2007 regular legislative session.
161-L:11 Rulemaking. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to:
I. The application process.
II. Rebate agreements under RSA 161-L:5.
III. The administration of the Rx plus fund established in RSA 161-L:9.
IV. The contracting process, including confidentiality procedures, under RSA 161-L:3.
V. Any adjustments to accommodate any federally-funded or authorized prescription drug program pursuant to RSA 161-L:4, II(c).
VI. The content and form of information to be provided under RSA 161-L:6.
VII. The schedule for reimbursement to pharmacies under RSA 161-L:8.
3 New Subparagraph; Rx Plus Fund. Amend RSA 6:12, I(b) by inserting after subparagraph (242) the following new subparagraph:
(243) Moneys deposited in the Rx plus fund pursuant to RSA 161-L.
4 Effective Date. This act shall take effect 60 days after its passage.
LBAO
05-0957
Amended 2/17/06
SB 110 FISCAL NOTE
AN ACT establishing the New Hampshire Rx plus program for prescription drugs and continually appropriating a special fund.
FISCAL IMPACT:
The Department of Health and Human Services states this bill, as amended by the House (Amendment #2006-0011h), will increase state restricted expenditures by $2,264,084 in FY 2007, $3,369,616 in FY 2008, $4,481,649 in FY 2009, and $5,840,466 in FY 2010. This bill will increase state restricted revenue by $917,029 in FY 2008, $2,407,200 in FY 2009, and $4,585,143 in FY 2010. This bill will have no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Health and Human Services stated this bill creates a state-sponsored pharmacy program called the New Hampshire Rx Plus Program. The program will be similar to programs started in Maine and Hawaii. The goal of the program would be to provide lower retail prices on prescription drugs for all state residents who have incomes under 300% of the federal poverty limit (FPL). Participating pharmacies would offer the prescription drugs at a discount from average wholesale price (AWP), and participating pharmaceutical manufacturers would pay state-negotiated manufacturer rebates. New Hampshire Rx Plus Program enrollees would receive a discount at participating pharmacies. The Department estimates 68,000 individuals would be eligible to participate in the program, of which 80% or 54,400 would enroll in the Rx Plus Program. The Department assumes the number of program enrollees would grow by 13,600 per year until reaching maximum enrollment of 80%. Enrollment figures are estimated to total 13,600 in FY 2007, 27,200 in FY 2008, 40,800 in FY 2009, and 54,400 in FY 2010.
The Department states operating expenses for the program would include the cost to underwrite the front-end outreach and marketing campaign, establish information technology systems, hire program and enrollment staff, and develop an enrollment system or engage a contractor to administer the program. If the state were to hire staff, the Department anticipates a staff of family services specialists at the rate of 800 cases per worker with 3.2 enrollees per case. The Department estimates the number of full-time equivalent (FTE) staff at 6.1 FTE’s in FY 2007, 12.1 FTE’s in FY 2008, 18.2 FTE’s in FY 2009, and 24.3 FTE’s in FY 2010. Assuming staff salaries based on wage scales effective January 1, 2006, benefits at 44% of salary, and operating expenses of $1,500 per employee, the Department estimates staff costs at $262,310 in FY 2007, $666,069 in FY 2008, $676,328 in FY 2009, and $883,371 in FY 2010. The Department estimates marketing costs at $400,000 in FY 2007, $200,000 in FY 2008, $100,000 in FY 2009, and $50,000 in FY 2010. The Department states information technology (IT) costs for an enrollment and pharmacy reimbursement system will total approximately $400,000 in FY 2007, and $100,000 in FY 2008 and each year thereafter to maintain. The Department estimates the cost of rebate negotiation and processing by a PBM at $0.34 per member per month (PMPM), and estimates these costs would total $55,488 in FY 2007, $110,976 in FY 2008, $166,464 in FY 2009, and $221,952 in FY 2010. Total program operating expenses are as follows:
Operating Expenses FY 2007 FY 2008 FY 2009 FY 2010
Staff Costs $ 262,310 $ 666,069 $ 676,328 $ 883,371
Marketing Costs 400,000 200,000 100,000 50,000
IT System Costs 400,000 100,000 100,000 100,000
PBM Rebate & Negotiation 55,488 110,976 166,464 221,952
Total Operating Expenses $1,117,798 $1,077,045 $1,042,792 $1,255,323
The Department states they may be able to reduce total operating costs by contracting out the operations of the program, to include marketing, eligibility determination and enrollment, pharmacy reimbursement, and rebate negotiation and collection. The Department states the breakeven contracted price would total $1.93 per member per month once the program became fully operational and obtains the maximum estimated program enrollment figures.
The Department assumes participating pharmacies would provide a 10% discount to enrollees off the average wholesale price (AWP) of prescription drugs, and that the pharmacies would be reimbursed monthly from the Rx Plus Fund for the discounts granted. Using estimated enrollment figures, assuming an AWP of $70.24 (based on the Medicaid AWP), a discount of 10%, and 12 prescriptions per year per enrollee the Department estimates reimbursements to pharmacists from the Rx Plus Fund would be as follows:
FY 2007 FY 2008 FY 2009 FY 2010
Pharmacy Reimbursements
From Rx Plus Fund $1,146,286 $2,292,571 $3,438,857 $4,585,143
Revenue deposited into the Rx Plus Fund would consist of rebates negotiated with drug manufacturers by the PBM. The Department does not anticipate any rebates in the first year of the program when enrollment and prescription drug purchasing begins. The Department assumes rebate percentages would increase as the number of participants increase and the negotiating power increases. Based on the assumptions stated above, rebate percentages and revenue are estimated as follows:
Fiscal Year Rebate Percentage Rebate Revenue
FY 2007 0% $ 0
FY 2008 4% $ 917,029
FY 2009 7% $2,407,200
FY 2010 10% $4,585,143
FY 2011 & thereafter 12% $5,502,171
In summary, the Department estimates the fiscal impact of the bill as follows:
FY 2007 FY 2008 FY 2009 FY 2010
Operating Expenses $1,117,798 $1,077,045 $ 1,042,792 $ 1,255,323
Pharmacy Reimbursement 1,146,286 2,292,571 3,438,857 4,585,143
Total Program Costs $2,264,084 $3,369,616 $4,481,649 $5,840,466
Total Rebate Revenue 0 917,029 2,407,200 4,585,143
Net Impact (Revenue – Costs) ($2,264,084) ($2,452,587) ($2,074,449) ($1,255,323)
The Department indicates state funds would be needed to finance start-up costs of the program until sufficient rebate revenue can be generated to cover the ongoing costs of the program, otherwise the Rx Plus Fund will run a deficit.