Bill Text - SB117 (2013)

(New Title) establishing a commission to study the regulation of pharmacy benefits managers.


Revision: March 11, 2013, midnight

SB 117-FN – AS AMENDED BY THE SENATE

03/07/13 0523s

2013 SESSION

13-0957

01/09

SENATE BILL 117-FN

AN ACT establishing a commission to study the regulation of pharmacy benefits managers.

SPONSORS: Sen. Soucy, Dist 18

COMMITTEE: Commerce

AMENDED ANALYSIS

This bill establishes a commission to study the regulation of pharmacy benefits managers.

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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/07/13 0523s

13-0957

01/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Thirteen

AN ACT establishing a commission to study the regulation of pharmacy benefits managers.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Chapter; Commission to Study Pharmacy Benefits Managers. Amend RSA by inserting after chapter 420-N the following new chapter:

CHAPTER 420-O

COMMISSION TO STUDY PHARMACY BENEFITS MANAGERS

420-O:1 Commission Established.

I. There is established a commission to study the regulation of pharmacy benefits managers. The members of the commission shall be as follows:

(a) The insurance commissioner, or designee.

(b) The commissioner of administrative services, or designee.

(c) A representative of the pharmacy board, appointed by the board.

(d) A representative of the New Hampshire Medical Society, appointed by the society.

(e) A representative of the New Hampshire Nurses’ Association, appointed by the association.

(f) A representative of a large pharmacy chain, appointed by the governor.

(g) A representative of an independent pharmacy, appointed by the governor.

(h) A pharmacy benefit manager, appointed by the governor.

(i) A public member representing a public health advocacy group, appointed by the governor.

II. The commission shall study the regulation of pharmacy benefits managers. The commission’s study shall include, but not be limited to, whether pharmacy benefits managers should be regulated by the state and how and when the regulation should be implemented.

III. The members of the commission shall elect a chairperson from among the members. The first meeting of the commission shall be called by the representative of the pharmacy board. The first meeting of the commission shall be held within 45 days of the effective date of this section. IV. The commission shall make an interim report on or before November 1, 2013 and a final report on or before January 1, 2014 of its findings and any recommendations for proposed legislation to the president of the senate, the speaker of the house of representatives, the senate clerk, the house clerk, the governor, and the state library.

2 Repeal. RSA 420-O:1, relative to the commission to study the regulation of pharmacy benefits managers, is repealed.

3 Effective Date.

I. Section 2 of this act shall take effect January 1, 2014.

II. The remainder of this act shall take effect upon its passage.

LBAO

13-0957

Revised 02/05/13

SB 117 FISCAL NOTE

AN ACT relative to pharmacy benefits managers.

FISCAL IMPACT:

    The Board of Pharmacy states this bill, as introduced, will increase state revenue by $21,000 in FY 2014, $31,000 in FY 2015, $41,000 in FY 2016, and $50,000 in FY 2017. The Board of Pharmacy, Department of Justice, Judicial Branch, and Department of Health and Human Services state this bill may increase state expenditures by an indeterminable amount in FY 2014 and each fiscal year thereafter. The Insurance Department states this bill may increase state revenues by an indeterminable amount in FY 2014 and each year thereafter. There will be no fiscal impact on county and local revenues or expenditures.

METHODOLOGY:

    The Board of Pharmacy states this bill regulates the practice of pharmacy benefits management and establishes pharmacy benefits managers shall be licensed by the Board. Although the Board is unsure of the exact number of pharmacy benefits managers in the state, the Board notes the state of Mississippi has registered 42 pharmacy benefits managers and Forbes Magazine has estimated there are 100 pharmacy benefits managers. For the purposes of this estimate, the Board assumes they will license 42 pharmacy benefits managers in the first year of the enactment of the proposed legislation and an additional 20 pharmacy benefits managers in each subsequent year until 100 have been licensed. The Board also notes the proposed legislation requires the licenses to expire and requires renewal on an annual basis.

    Accordingly, the Board estimates the proposed legislation will increase state revenues as follows:

Fiscal Year

Estimated No. of Licenses Issued/Renewed

Fee Revenue per license

Increase in State Revenue

2014

42

$ 500

$ 21,000

2015

62

$ 500

$ 31,000

2016

82

$ 500

$ 41,000

2017

100

$ 500

$ 50,000

    Although the proposed legislation does not contain an appropriation, or authorize any additional positions; the Board notes the effective administration of the proposed legislation would require between 30 and 45 minutes of administrative personnel time and between 2 and 3 hours of investigative personnel time per application to administer the licenses and verify the information within each application. Additionally, the Board states there would be an additional annual cost of approximately $2,000 for travel associated with pharmacy benefits management conventions, personnel time for on-site inspections made in response to complaints, and personnel time for specialized training. The Board states the costs associated with the inspections and the specialized training could be absorbed within the Board’s current budget. The Board estimates the associated costs of implementation as follows:

Fiscal Year

Estimated No. of Licenses Issued/Renewed

Administrative Personnel Costs (37.5 min. avg. at $15 p/hr)

Investigative Personnel Costs (150 min. avg. at $44 p/hr)

Travel Costs

Total Costs

2014

42

$ 394

$ 4,620

$ 2,000

$ 7,014

2015

62

$ 581

$ 6,820

$ 2,000

$ 9,401

2016

82

$ 769

$ 9,020

$ 2,000

$ 11,789

2017

100

$ 938

$ 11,000

$ 2,000

$ 13,938

    The Department of Justice states a violation of the proposed legislation would be considered an unfair or deceptive act or practice under the Consumer Protection Act (RSA 358:A). The enforcement of such a violation could include injunctive relief as well as the imposition of civil or criminal penalties. The Department also notes they are required to provide administrative prosecution services to the Board. The Department is unable to determine the number of enforcement actions that would be required under the proposed legislation and states a significant number of actions would require additional resources within the Department.

    The Judicial Branch states the proposed legislation has the potential to generate complex equity cases, Supreme Court appeals of rulings made under the Consumer Protection Act, and administrative appeals of disciplinary actions taken by the Board of Pharmacy. The Branch is unable to determine the number of complex equity cases or appeals that may result from the proposed legislation and states even a small number of cases or appeals could result in an increase of state expenditures greater than $10,000.

    The Department of Health and Human Services notes pharmacy benefits management contracts are utilized in the administration of the Medicaid program. The Department notes the associated costs of those contracts would increase to the extent the proposed legislation increases the administrative costs of pharmacy benefits managers, which would in turn be passed on to the state.

    The Insurance Department states to the extent the proposed legislation increases insurance premiums, the resulting revenue derived from the insurance premium tax will increase. The Department is unable to estimate the proposed legislation’s impact on insurance premium tax revenues.

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