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F I S C A L I M P A C T R E P O R T
SPONSOR Trujillo
ORIGINAL DATE
LAST UPDATED
1/26/06
HB HJM 25
SHORT TITLE Continue Pharmacy Benefit Manager Research
SB
ANALYST Lewis
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
NFI
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates SJM 22.
SOURCES OF INFORMATION
LFC Files
Responses Received From
Health Policy Commission (HPC)
Department of Health (DOH)
Public Regulation Commission (PRC)
SUMMARY
Synopsis of Bill
House Joint Memorial 25 requests that that the New Mexico Health Policy Commission continue
research and analysis of pharmacy benefit manager activities and laws that regulate pharmacy
benefit managers.
The joint memorial further requests that:
a report of the findings and recommendations be presented to the Legislative Health
and Human Services Committee at its October 2006 meeting; and
a copy of this memorial be sent to the director of the New Mexico Health Policy
Commission.
FISCAL IMPLICATIONS
No funds are appropriated to the Health Policy Commission (HPC) to finance the continuing re-
search and analysis.
pg_0002
House Joint Memorial 25 – Page
2
SIGNIFICANT ISSUES
According to the Health Policy Commission (HPC), The HPC convened the HJM98 task force in
2005 to study the need to regulate pharmacy benefit managers (PBMs) in New Mexico. The 16-
member task force included state agencies, health plans, pharmacists, consumers, and PBMs. Af-
ter months of discussion, and based on the information gathered through the process, the task
force could not reach a consensus on the need to regulate PBMs, and recommended that further
research continue led by the HPC.
The HPC commissioners supported the task force recommendations, adding their own recom-
mendation that all PBMs should be registered in New Mexico through an application process
which would include: 1) a description of how PBMs will educate the public about their role and
the prescriptions that are covered; and 2) disclosure of administrative costs and profits.
The HPC reports that a major concern of the HJM98 task force was financial transparency. Rap-
idly rising prescription drug prices have stimulated questions and suspicion among consumer ad-
vocates, legislators, pharmacists, and others as to how much of the increases might be related to
PBMs and their relationship with pharmaceutical manufacturers.
The National Community Pharmacists Association states that transparency would identify poten-
tial conflicts of interest and provide a clear roadmap on any savings earned through rebates and
discounts. However, PBM representatives argue that the imposition of fiduciary and disclosure
requirements on PBMs (is) unworkable, invalid, and unconstitutional.” The Pharmaceutical Care
Management Association has said that disclosing contract deals between PBMs and pharmaceu-
tical manufacturers “violates PBMs’ trade secret rights.”
According to the Public Regulation Commission (PRC), pharmacy benefit managers (PBMs) are
utilized by insurers, HMOs, government agencies and large, self-insured employers to lower and
control the cost of prescription drugs in health care programs. PBMs negotiate with pharmacies
to fill prescriptions on behalf of those plans. It is perceived by some that the large PBMs have
negotiating advantage over many pharmacies in setting the terms of these contracts. This is simi-
lar to the belief that many providers expressed when HMOs first began to dominate health care
coverage in New Mexico (i.e. the HMOs have negotiating advantage over the providers).
The PRC poses the question, “How do we protect the pharmacist (particularly the locally owned
and operated) without giving up the cost savings achieved by use of PBMs.”
ADMINISTRATIVE IMPLICATIONS
HPC notes that, as the lead agency, it will be responsible for providing intensive staff support to
facilitate meetings, follow up on task assignments, and conduct research, as well as writing and
distributing the final report.
OTHER SUBSTANTIVE ISSUES
The HPC suggests that it may be necessary to conduct a survey of pharmacists, pharmacies and
consumers to determine levels of satisfaction feedback and to address other PBM issues, and that
such a survey might require contractual services.
pg_0003
House Joint Memorial 25 – Page
3
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
According to the HPC, there will continue to be many unanswered questions about the activities
of PBMs in New Mexico, and what laws may already be in place to oversee those activities.
And, without additional, substantiated data it will be impossible to determine the need to regulate
or not regulate PBMs.
AMENDMENT
HPC proposes that an appropriation be added to
fund a statewide survey by the HPC of pharma-
cies, pharmacists and consumers.
ML/mt