HOUSE MEMORIAL 86
52nd legislature - STATE OF NEW MEXICO - second session, 2016
INTRODUCED BY
Jeff Steinborn and Paul C. Bandy
A MEMORIAL
REQUESTING THE LEGISLATIVE FINANCE COMMITTEE TO ANALYZE AND MAKE RECOMMENDATIONS REGARDING PRESCRIPTION DRUG COSTS AND POSSIBILITIES FOR MAXIMIZING THE USE OF DISCOUNT DRUG PRICING AVAILABLE UNDER FEDERAL LAW AND LEVERAGING THE STATE'S PURCHASING POWER; REQUESTING THE OFFICE OF THE STATE AUDITOR TO ASSESS FOR POSSIBLE DESIGNATION A STATE AGENCY OR AGENCIES FOR A SPECIAL AUDIT WITH REGARD TO PRESCRIPTION DRUG PURCHASING PRACTICES.
WHEREAS, in its 2013 report on health coverage for state employees and retirees, the legislative finance committee found that, despite an overall decline in state employee benefits membership and a requirement to increase the use of generic drugs, pharmaceutical costs continued to increase greatly; and
WHEREAS, between fiscal years 2014 and 2015, the average prescription drug costs for state employees covered through the risk management division of the general services department rose by fifteen percent, from sixty-five dollars seventy-five cents ($65.75) per prescription drug to seventy-five dollars fifty-nine cents ($75.59) per prescription drug; and
WHEREAS, between fiscal years 2014 and 2015, the average prescription drug costs for public school employees covered through the public school insurance authority rose by ten percent, from sixty-seven dollars ninety-seven cents ($67.97) per prescription drug to seventy-four dollars seventy-five cents ($74.75) per prescription drug; and
WHEREAS, between fiscal years 2014 and 2015, the average prescription drug costs for Albuquerque public school district employees covered through the Albuquerque public school district rose by thirteen and nine-tenths percent, from sixty-nine dollars four cents ($69.04) per prescription drug to seventy-eight dollars sixty-four cents ($78.64) per prescription drug; and
WHEREAS, between fiscal years 2014 and 2015, the average prescription drug costs for enrollees covered through retiree health care authority plans who were enrolled in federal medicare coverage rose by five and two-tenths percent, from ninety dollars seventy-two cents ($90.72) per prescription drug to ninety-five dollars forty-six cents ($95.46) per prescription drug, while the average prescription drug costs for those retiree health care authority plan enrollees not enrolled in medicare rose by four and four-tenths percent, from eighty-three dollars forty-eight cents ($83.48) per prescription drug to eighty-seven dollars nineteen cents ($87.19) per prescription drug; and
WHEREAS, excluding prescription drugs for retiree health care authority plan enrollees, prescription drug costs for state employees covered through the Health Care Purchasing Act rose on average by fifteen percent between fiscal years 2014 and 2015; and
WHEREAS, the corrections department's prescription drug costs have risen precipitously in recent years, mostly due to the high cost of drugs to cure hepatitis C, from approximately five million five hundred thousand dollars ($5,500,000) in fiscal year 2015 to twelve million four hundred thousand dollars ($12,400,000) in budget requests for fiscal year 2016; and
WHEREAS, the corrections department reports that its high prescription drug costs are due largely to the fact that roughly one-half of the inmates in corrections department custody are living with hepatitis C; and
WHEREAS, the corrections department currently provides prescription drugs and other health care to inmates in its custody through a contract with a private, for-profit managed care organization; and
WHEREAS, under the federal 340B drug pricing program, the federal government requires drug manufacturers to provide outpatient drugs to certain eligible outpatient health care providers at a significant discount; and
WHEREAS, historically, the corrections department availed itself of the 340B program's deep discounts for prescription drugs by contracting with the 340B-eligible department of health to deliver health care to inmates living with HIV/AIDS and hepatitis C; and
WHEREAS, the state's medicaid program, administered by the human services department, budgeted one hundred forty million dollars ($140,000,000) for hepatitis C treatments in fiscal year 2015 alone; and
WHEREAS, medicaid prescription drug costs rose by ninety-five million dollars ($95,000,000) in just one year, between fiscal years 2014 and 2015, from two hundred fourteen million seven hundred eight thousand five hundred eighty-eight dollars ($214,708,588) in fiscal year 2014 to three hundred nine million seven hundred seventy-three thousand nine hundred thirteen dollars ($309,773,913) in fiscal year 2015; and
WHEREAS, the department of health, which spent fifteen million six hundred seventy-five thousand five hundred fifty-seven dollars ($15,675,557) for prescription drugs and vaccines in fiscal year 2015, has requested twenty-one million seven hundred seventy-seven thousand dollars ($21,777,000) in its budget request for fiscal year 2016 and a budget adjustment request; and
WHEREAS, the university of New Mexico hospitals' outpatient pharmaceutical costs are projected to rise by twenty-three percent, or six million nine hundred sixty-eight thousand four hundred thirty-four dollars ($6,968,434), from fiscal year 2015 costs; and
WHEREAS, some states are taking advantage of their prescription drug purchasing power and see an opportunity to increase that purchasing power through collaboration among state agencies and through combining purchasing power with other states; and
WHEREAS, the states of Washington and Oregon have implemented a prescription drug discount card program for their residents, offering discounts that reportedly average forty-two percent off retail prices; and
WHEREAS, Delaware, Iowa, Maine, Mississippi, North Dakota, Oregon, Utah, Vermont, West Virginia and Wyoming have recently formed the sovereign states drug consortium, which is the first state-administered multistate medicaid supplemental drug rebate pool. Through the sovereign states drug consortium, these states deal directly with drug manufacturers rather than relying on middlemen, and they reap savings by directly negotiating discounts and rebates; and
WHEREAS, Louisiana, Maryland, Connecticut, Delaware, Idaho, Nebraska, Pennsylvania and Wisconsin have reported savings as much as twenty-seven million dollars ($27,000,000), nineteen million dollars ($19,000,000) and sixteen million dollars ($16,000,000) for their medicaid programs achieved by forming a buying pool organized by a third-party contractor, called the state medicaid pharmaceutical purchasing pool, to negotiate lower prescription drug prices for an estimated overall one million three hundred thousand medicaid recipients;
NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES OF THE STATE OF NEW MEXICO that the legislative finance committee be requested to perform an analysis of prescription drug costs across state agencies, including the human services department; the department of health; the children, youth and families department; the corrections department; the university of New Mexico hospitals system; and the agencies of the interagency benefits advisory committee; and
BE IT FURTHER RESOLVED that the legislative finance committee be requested to conduct an analysis of the potential savings of slowing the growth of prescription drug costs through consolidated purchasing among state agencies as well as the potential savings by entering into prescription drug buying pools or other such efforts to leverage buying power with other states; and
BE IT FURTHER RESOLVED that the legislative finance committee be requested to explore the potential for the state, by itself or in collaboration with other states, to use its purchasing power to achieve discounts in prescription drug costs for all New Mexico residents; and
BE IT FURTHER RESOLVED that the office of the state auditor be requested to assess for possible designation for a special audit pursuant to Subsection C of Section 12-6-3 NMSA 1978 the human services department, the department of health, the children, youth and families department, the corrections department, the university of New Mexico hospitals system, the risk management division of the general services department, the public school insurance authority, the Albuquerque public school district or the retiree health care authority with regard to prescription drug purchasing practices; and
BE IT FURTHER RESOLVED that the legislative finance committee be requested to update its 2013 report on health benefits for state employees and include in its analysis an examination of the costs that prescription drugs represent for state employees and retiree health care and an analysis of the potential for achieving greater savings in prescription drug costs through consolidated purchasing with other state agencies and possibly other states; and
BE IT FURTHER RESOLVED that the legislative finance committee staff be requested to report the findings of its study to the legislative health and human services committee and to the legislative finance committee by December 1, 2016; and
BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the governor, the state auditor, the chair, vice chair and director of the legislative finance committee and the chair and vice chair of the legislative health and human services committee.
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