Fiscal impact
reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for
standing finance committees of the NM Legislature. The LFC does not assume
responsibility for the accuracy of these reports if they are used for other
purposes.
Current FIRs (in
HTML & Adobe PDF formats) are available on the NM Legislative Website (legis.state.nm.us). Adobe PDF versions include all attachments,
whereas HTML versions may not.
Previously issued FIRs and attachments may also be obtained from the LFC
in
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SPONSOR |
SFC |
DATE TYPED |
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HB |
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SHORT
TITLE |
Revise Pharmaceutical Business License Fees |
SB |
536/SFCS |
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ANALYST |
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REVENUE
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Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY04 |
FY05 |
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Indeterminate
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LFC Files
Responses
Received From
Regulation
and Licensing Department (RLD)/Board of Pharmacy
Department
of Health (DOH)
SUMMARY
Synopsis of Bill
Senate Finance Committee Substitute for Senate
Bill 536 increases the license fee for a wholesale drug distributor, drug
manufacturer or drug warehouse from the current annual fee of “not to exceed
$300” to a new annual fee that will not exceed $5,000, provided the annual fee
shall not exceed $1,000 upon the implementation of Medicare prescription drug
benefit program as provided under Public Law 108-173, the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003.
The bill eliminates the registration fee charged
by the Board to pharmaceutical sales representatives who carry dangerous
drugs. It is proposed that
pharmaceutical sales representative shall provide the Board with a written
statement from the representative’s employer that describes the employer’s
policy relating to the safety and security of the handling of dangerous drugs
and to the employer’s compliance with the federal Prescription Drug Marketing
Act of 1987.
Significant Issues
The bill would allocate amounts paid into the
pharmacy fund pursuant to Paragraph (2) of Subsection C of Section 61-11-14
NMSA 1978. The increased fees for
wholesale drug distributor, drug manufacture or drug warehouses shall be used
for a prescription drug program for persons over the age of sixty-five, provided
that the Board enters into an arrangement with a state agency or a
state-created entity for the operation of the program.
Although the bill does not contain an emergency
clause, the “applicability” section provides for the provisions of Paragraph
(2) of Subsection C of Section 61-11-14 NMSA to become effective in calendar
year 2004.
FISCAL IMPLICATIONS
The current level of funds generated from
wholesale licenses (distributors, manufacturers and their reps,) and
non-resident pharmacies is approximately $350,000 a year.
According to the NM Medical Insurance (a
non-profit entity) indicates this bill will have a positive fiscal impact on the
General Fund of $1.5 million a year in 2004 and 2005. Absent legislation contained
in this bill, the prescription drug program referred to in this bill will be
funded by assessments to insurance companies who will receive a 50% credit on
the premium taxes. The program is estimated
to cost around $3.0M a year in 2004 and 2005.
Approximately 598 drug manufacturers,
wholesalers and warehouses will be assessed $5000 for each license which has
the potential to generate $2.9 million in additional fee revenue.
ADMINISTRATIVE IMPLICATIONS
The Board of Pharmacy would have to amend
regulations relating to wholesale drug distribution and manufacturers’
representatives including changes in fees.
TECHNICAL ISSUES
The Board of Pharmacy is in the process of
converting all licenses to 2-year options. Wholesale drug licensees were
converted last year and given 2-year licenses effective
OTHER SUBSTANTIVE ISSUES
RLD reports the number of instate (small
businesses) wholesale licenses issued by the Board are likely to decrease. The number of wholesale distribution licenses
issued to instate operators is 36. Several of those instate licensees do not have
the volume of prescription drug distribution business to support a licensee fee
increase. They typically offer durable medical supplies and other health
related items to practitioners in this state.
However,
the LFC understands that the sponsor is considering a friendly amendment (appeal
process) to address the above issue.
The Board has had several instances with
prescription drug samples being left in open trash con-tainers and other places
and was unable to determine their source. The Board recently adopted stricter
record keeping requirements for sales representatives in order to remedy any
such occurrences in the future. Reference “Amendments” below.
The cost of prescription drugs is a major obstacle
for senior citizens. The bill would attempt
to support the funding of programs to provide relief to this group by
significantly raising the pharmacy licensing fees of three specific types of
facilities: wholesale drug distributors, drug manufacturers, or drug
warehouses. DOH acknowledges SB356 is
written in such a manner to not adversely impact in-state retail pharmacies or
other smaller pharmacy operations.
AMENDMENTS
RLD suggests the following language addition:
q NMSA
61-11-14K (line 14) “Pharmaceutical sales representatives must maintain appropriate
receipt and distribution records of dangerous drugs as required by the Board.”
However, the
legislation as per the handling of dangerous drugs refers to the compliance
with the federal “Prescription Drug Marketing Act of 1987”.
BD/njw:yr:dm:lg