Bill Summary – FastDemocracy

State of Alaska
                                                           Fiscal Note
                                                                                             Bill Version:                    CSSB 38(L&C)
 2018 Legislative Session
                                                                                             Fiscal Note Number:              2
                                                                                             (S) Publish Date:                4/4/2018
 Identifier:       SB038-DOA-DRB-03-15-18                                      Department:       Department of Administration
 Title:            PHARMACY BENEFITS MANAGERS                                  Appropriation: Centralized Administrative Services
 Sponsor:          GIESSEL BY REQUEST                                          Allocation:       Office of the Commissioner
 Requester: (S) L&C                                                            OMB Component Number:               45
 Expenditures/Revenues
 Note: Amounts do not include inflation unless otherwise noted below.                                                               (Thousands of Dollars)
                                                 Included in
                                    FY2019       Governor's
                                Appropriation      FY2019                                           Out-Year Cost Estimates
                                  Requested       Request
 OPERATING EXPENDITURES               FY 2019        FY 2019       FY 2020                     FY 2021            FY 2022           FY 2023         FY 2024
 Personal Services
 Travel
 Services                              2,800.0                      3,100.0                     3,400.0           3,800.0            4,100.0         4,500.0
 Commodities
 Capital Outlay
 Grants & Benefits
 Miscellaneous
 Total Operating                       2,800.0            0.0       3,100.0                     3,400.0           3,800.0            4,100.0         4,500.0
 Fund Source (Operating Only)
 1017 Group Ben (Other)                     2,800.0                           3,100.0           3,400.0           3,800.0            4,100.0         4,500.0
 Total                                      2,800.0               0.0         3,100.0           3,400.0           3,800.0            4,100.0         4,500.0
 Positions
 Full-time
 Part-time
 Temporary
 Change in Revenues
 None
 Total                                           0.0              0.0                 0.0            0.0                0.0              0.0              0.0
 Estimated SUPPLEMENTAL (FY2018) cost:            0.0                    (separate supplemental appropriation required)
 (discuss reasons and fund source(s) in analysis section)
 Estimated CAPITAL (FY2019) cost:                 0.0                    (separate capital appropriation required)
 (discuss reasons and fund source(s) in analysis section)
 ASSOCIATED REGULATIONS
 Does the bill direct, or will the bill result in, regulation changes adopted by your agency?                No
 If yes, by what date are the regulations to be adopted, amended or repealed?
 Why this fiscal note differs from previous version/comments:
 Previous note was indeterminate. The revision is based on actuarial analysis received.
 Prepared By:            Michele Michaud, Chief Health Official                                                    Phone:         (907)465-3225
 Division:               Retirement and Benefits                                                                   Date:          03/15/2018 05:00 PM
 Approved By:            Leslie Ridle                                                                              Date:          03/15/18
 Agency:                 Department of Administration
Printed 4/3/2018                                                        Page 1 of 2                                                        Control Code: lXjqM
                                                                                                           CSSB 38(L&C) - Fiscal Note 2
                                                  FISCAL NOTE ANALYSIS
STATE OF ALASKA                                                                    BILL NO. SB 38
2018 LEGISLATIVE SESSION
Analysis
   This proposed legislation may affect the ability of AlaskaCare to benefit from cost savings resulting from generic
   competition for brand name medications that have lost their patent, by mandating that the pharmacy benefits manager
   (PBM) must grant the appeal and allow for a higher reimbursement of a multisource generic drug.
   The actuarial analysis reviewed 2017 AlaskaCare plan appeals, cost and utilization data for multisource generic drugs
   dispensed in Alaska. Utilization of multisource generics is different for active and retirees, with variation as to where the
   prescriptions are dispensed (chain vs. independent pharmacy).
   In calendar year 2017, the AlaskaCare plans paid 1.2 million generic drug claims in the amount of $62.1 million. Of those
   2017 generic claims, over onehalf million claims were paid in Alaska and subject to MAC pricing for the approximate
   amount of $19.3 million. This data is further broken down to show 159,652 claims in the amount of $5,155,376 were filled
   at independent pharmacies in Alaska compared to 355,697 claims in the amount of $14,167,151 filled through a chain
   pharmacy in Alaska.
   During the data period, there were 83 appeals for actives and 721 for retirees for multisource generics. Of these, one active
   appeal and 12 appeals associated with retiree claims resulted in a price increase. This proposed legislation may significantly
   increase the volume of appeals for both plans. The anticipated impact is not limited to successful appeals, but that MAC
   pricing levels may be adjusted to minimize appeals which would impact both independent and chain pharmacy claim
   spend.
   The data indicates that the difference between MAC priced generic drugs and nonMAC priced generic drugs is greater for
   independent pharmacies than it is for chain pharmacies. This would suggest that a greater number of scripts for MAC listed
   drugs filled at independent pharmacies would be impacted by the proposed legislation.
   The analysis assumes that plan costs for generic drugs filled by independent pharmacies in Alaska would increase by 20%.
   The assumed impact on chain pharmacy pricing would be 10%.
   The table below reflect these anticipated costs (in millions) to AlaskaCare associated with this proposed legislation:
                            FY19    FY20             FY21             FY22            FY23             FY24
   Active Plan              $0.3    $0.4             $0.4             $0.5            $0.5             $0.5
   Retiree Plan             $2.5    $2.7             $3.0             $3.3            $3.6             $4.0
   Total                    $2.8    $3.1             $3.4             $3.8            $4.1             $4.5
(Revised 9/26/17 OMB/LFD)                                                                                              Page 2 of 2
SB038-DOA-DRB-03-15-18                                          Page 2 of 2                                                 Control Code: lXjqM
Statutes affected: 
SB0038A, AM SB 38, introduced 01/25/2017: 21.27.630, 21.27.945, 21.27.905, 21.27.910, 21.36.495, 21.27.915, 21.36.125, 21.27.920, 21.27.925, 21.27.930, 21.27.935, 21.27.940, 21.27.901, 21.27.955, 21.27.950, 21.06.170, 21.06.240, 08.80.480
SB0038B, AM CSSB 38(L&C), introduced 04/04/2018: 21.27.630, 21.27.945, 21.27.905, 21.27.910, 21.36.495, 21.27.915, 21.36.125, 21.27.920, 21.27.925, 21.27.930, 21.27.935, 21.27.940, 21.27.901, 21.27.955, 21.27.950, 21.06.170, 21.06.240, 08.80.480