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F I S C A L I M P A C T R E P O R T

SPONSOR Picraux

DATE TYPED 02/12/05 HB 763

SHORT TITLE Prescription Drug Discount Card Program

SB

ANALYST Weber

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Fiscal

Implication

below

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB 689

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department

Department of Health

Aging and Long Term Services Department

Pharmacy Board

SUMMARY

Synopsis of Bill

House Bill 763 mandates the Human Services Department (HSD) in collaboration with the

Department of Health (DOH), and the Aging and Long-Term Care Department to create and

actively promote membership in a prescription drug discount card program. Eligibility is

determined by voluntary enrollment of a person who is a state resident, under 65 years of age,

and has no other prescription drug benefit. The bill allows for HSD to enroll and provide

identification to each participant, whether electronic or other form of membership, for use by

pharmacies for each pharmacy transaction. The participants would receive medications at an

amount that does not exceed the total contracted discounted price plus a dispensing fee.

House Bill 763 Page 2

Significant Issues

The Department of Health indicates, in New Mexico, a large portion of the population is

uninsured, or are insured but without prescription drug benefits. There is a significant lack of

access and affordability of prescription drugs for many of New Mexico’s citizens. Many of these

underinsured residents are on a fixed income and are unable to afford prescription drugs. Some

will go without food or other essentials to buy medications, or do without drug therapy all

together. Participants of this program would be entitled to discounted prescription drug prices at

pharmacies willing to honor the contracted price.

PERFORMANCE IMPLICATIONS

Performance standards should be required in any contracts affiliated with such a program.

FISCAL IMPLICATIONS

The Human Services Department estimates the following costs would be incurred and potentially

require an appropriation.

Approximately $100 thousand annually would be needed for administrative costs.

This program would require two FTEs to administer the program as the bill is currently worded,

estimated to cost $80 thousand per FTE.

It would cost approximately $350 thousand to process the pharmacy claims.

OTHER SUBSTANTIVE ISSUES

The Department of Health adds, the Census Bureau reports that an average of 21.6% of New

Mexicans were without health insurance coverage in 2002-2003 (Income, Poverty and Health

Insurance Coverage in the United States 2003, Current Population Reports, P60-226, 2004).

New Mexicans who are uninsured or insured but without prescription drug benefits face the

problem of paying the continually rising costs for prescription drugs. There is substantial

anecdotal information available detailing the circumstances in which many people find

themselves, such as having to choose between purchasing prescription drugs and basic

necessities such as food, housing, clothing and utilities. It is not unreasonable to assume that

such occurrences exist in New Mexico with uninsured and underinsured populations, particularly

children and adults living with serious chronic conditions. When necessary prescription drugs

cannot be obtained, threats to the continuity and quality of health care occur and may result in

increasingly complicated health conditions and possible hospitalizations.

POSSIBLE QUESTIONS

Should a maximum income requirement be contained as affluent New Mexicans may not need

such a benefit and actually reduce pharmacy income if a member of the new benefit group.

Should an annual fee be required to offset the cost of administering the program. It could be on

a sliding scale based on income.

MW/rs/njw