LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 7008 NOTE PREPARED: Jan 1, 2020
BILL NUMBER: HB 1232 BILL AMENDED:
SUBJECT: Interstate Compact on Curing Diseases.
FIRST AUTHOR: Rep. Baird BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: This bill establishes the Solemn Covenant of the States to Award Prizes for
Curing Disease Compact. It establishes responsibilities and duties within the compact. It provides for
immunity for members, officers, executive director, employees, and representatives of the Solemn Covenant
of States Commission.
Effective Date: July 1, 2020.
Explanation of State Expenditures: Summary - The fiscal impact of this bill is contingent upon passage
of legislation authorizing the Compact in at least six states. If the compact is formally established, additional
state expenditures required by the bill would be equal to the sum of:
(1) Indiana’s annual membership dues set by the Compact’s governing Commission;
(2) Any additional contributions made by Indiana to fund the Commission’s start-up costs; and
(3) Indiana’s share of prize payments for each curative treatment or therapy (“cure”) selected by the
Commission.
Indiana would be responsible for contributing prize payments for five years for awardees selected by the
Commission. The bill provides that these prize payments are equal to the estimated five-year total savings
to all taxpayers in the state as a result of a selected cure being made widely available. The combined
expenditures are indeterminable but will likely be significant.
Additional Information - Annual Dues: Dues for compacting states would be set by the Commission in an
amount proportionate to Indiana’s population in relation to the population of all the compacting states. These
dues would be used for daily operating expenses of the Commission, and not for prize payments. Operating
HB 1232 1
expenses may include holding meetings, establishing rules and bylaws, reviewing cure submissions, hiring
staff, and potential legal expenses.
Commission: Each compacting state would be represented in the Commission by one member selected by
each state in a manner determined by each individual state. The bill does not specify how Indiana’s
Commission member would be selected. It is assumed that any travel expenses required for the member to
attend Commission meetings would be paid for out of the Commission’s operating budget from each state’s
annual dues. The bylaws and rules of the Commission have the full effect of law and are binding. In addition,
the Commission will monitor and enforce compliance by the members.
Initial Operations: The bill provides that the Commission may accept contributions from compacting states
to fund start-up costs needed to begin the Commission’s initial operations. Unlike the annual dues, the bill
does not make these contributions mandatory. If Indiana becomes one of the compact’s founding states, it
is unclear to what extent the state may be obligated to fund start-up costs in excess of Indiana’s contribution
in annual dues.
Prize Payments: The Commission will award monetary prizes to researchers in exchange for patents and
other intellectual properties necessary to make newly developed cures widely available in the compacting
states. Eligible cure submissions must:
(1) address one of at least ten major diseases as determined by the Commission;
(2) have approval from the federal Food and Drug Administration, or other legal status necessary
for immediate manufacture and distribution in the United States;
(3) yield a significant increase in survival rates for patients of a given disease; and
(4) require less than one year of treatment or therapy to completely cure the disease.
Each state’s contribution to prize payments is equal to the state’s actual five-year savings in total health
expenses paid by taxpayers as a result of the selected cure being made widely available in the state. States
are to make these payments in annual installments starting one year following the date the cure becomes
widely available in that state, for a total of five years. Payment amounts are determined by actuaries
employed or contracted by the Commission. Each state’s annual prize payment may vary widely depending
on the cure and could be substantial. The bill permits compacting states to meet prize responsibilities by any
method, including issuing bonds or other debt.
Withdrawal from Compact: The bill provides that a compacting state may withdraw from the compact upon
enactment of legislation repealing the compact’s authorizing statute in that state. The withdrawing state
would still be responsible for all liabilities incurred through the effective date of withdrawal, including
liabilities for which payment is scheduled for beyond the date of withdrawal.
Explanation of State Revenues: Summary - Indiana may receive an indeterminate amount of annual royalty
fee disbursements from the Commission.
Additional Information - The bill allows the Commission to collect royalty fees from manufacturers,
producers, and providers in non-compacting states or foreign countries in exchange for making a cure
available in the non-contracting jurisdiction. Royalty fees may not exceed the estimated five-year savings
in public health expenses for the non-compacting state or country as a result of the cure being made widely
available. The Commission may use royalty fee revenue to (1) employ or contract with actuaries to calculate
annual public health savings amounts for selected cures; and (2) pay interest on loans taken out by the
Commission for awarding prizes. Each year, excess royalty revenue may be disbursed to the compacting
HB 1232 2
states in an amount proportionate to the state’s population in relation to all compacting states.
Explanation of Local Expenditures: The bill is silent on whether local governments would be responsible
for a portion of Indiana’s prize payments relative to local savings in public health expenditures.
Explanation of Local Revenues:
State Agencies Affected: State Department of Health; Family and Social Services Administration.
Local Agencies Affected: Local Health Departments.
Information Sources:
Fiscal Analyst: Adam White, 317-234-1360.
HB 1232 3