Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor


May 13, 2021


The Honorable Jeff Longbine, Chairperson
Senate Committee on Financial Institutions
Statehouse, Room 235A-E
Topeka, Kansas 66612
Dear Senator Longbine:
SUBJECT: Fiscal Note for SB 128 by Senate Committee on Public Health and Welfare
In accordance with KSA 75-3715a, the following fiscal note concerning SB 128 is
respectfully submitted to your committee.
SB 128 would prohibit disparate treatment of pharmacies and pharmaceutical services
providers participating in the federal 340B drug pricing program by Pharmacy Benefit Managers.

Estimated State Fiscal Effect
FY 2021 FY 2021 FY 2022 FY 2022
SGF All Funds SGF All Funds
Revenue -- -- -- ($30,740,000)
Expenditure -- -- $163,541 $375,793
FTE Pos. -- -- -- --
The State Employee Health Plan estimates additional pharmaceutical expenditures of
$3,250 in FY 2022 and $7,053 in FY 2023. The Kansas Department of Health and Environment
(KDHE) states that this bill would make state-level changes to how the federal 340B drug pricing
program would work in Kansas. The bill would decrease current exclusions for 340B drug use by
including contract pharmacies in the definition of “340B covered entity,” and would increase 340B
drug use by Medicaid patients by extending 340B eligibility to more pharmacies. KDHE estimates
additional FY 2022 pharmaceutical and administrative expenditures of $372,543, including
$163,541 from the State General Fund. Under federal law, states cannot claim a Medicaid rebate
for a drug that was purchased at a discount under the 340B program. To prevent duplicate
The Honorable Jeff Longbine, Chairperson
Page 2—SB 128

discounts, the Kansas Medicaid program would have to remove contract pharmacy 340B claims
from rebate invoicing. This would result in a loss of the state and federal rebate dollars that are
needed to fund the Medicaid program. KDHE estimates reduced drug rebate revenues of
$30,740,000 in FY 2022. Any fiscal effect associated with SB 128 is not reflected in The FY 2022
Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Alexandra Blasi, Board of Pharmacy
Jeff Scannell, Department of Administration
Dan Thimmesch, Health & Environment
Bobbi Mariani, Insurance