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

SPONSOR Feldman

DATE TYPED 02/13/05 HB

SHORT TITLE Prescription Drug Discount Card Program

SB 689

ANALYST Weber

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Fiscal Im-

plication below

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates HB 763

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

Senate Bill 689 mandates the Human Services Department (HSD) in collaboration with the De-

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

tively promote membership in a prescription drug discount card program. Eligibility is deter-

mined 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.

Significant Issues

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

Senate Bill 689-- Page 2

sured, 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 un-

derinsured 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 to-

gether. 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 $100,000 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 $80,000 per FTE.

It would cost approximately $350,000 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 anec-

dotal 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 compli-

cated 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