NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

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(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

Health Policy Commission

Public Regulation Commission

SUMMARY

Synopsis of Bill

HB 303 amends the insurance code by adding new sections of law. These additions require that any health insurance contract that offers prescription drug benefits with co-payments shall require that co-payments shall be the same for any drug regardless of the method dispensed. HB 303 also amends NMSA 1978 Chapter 13 and applies to any health coverage offered under the Health Care Purchasing Act.

Significant Issues

Some plans offer different co-pays depending on whether or not the prescription is obtained from a retail pharmacy vs mail order. The different level of co-pay is used by the plan to give the insured an economic incentive to choose mail order. The plan usually has negotiated contracts through these suppliers that have lower costs. Plans use this method to lower health care costs.

RELATIONSHIP

Relates to -

SJM 8, Medicare Outpatient Pharmacy Benefit

SJM 9, Fill Prescriptions at Federal Health Centers

SB 140, Indian Prescription Drug Purchase

SB 141, Prescription Drug Fair Pricing Act

SB 142, NM Prescription Drug Senior Act

SB 143, Prescription Drug Senior Program

SB 144, Prescription Drug Bulk Purchasing

HJM 21, Affordable Drug Program Options for Seniors

HJM 22, Study Rising Costs of Prescription Drugs

HB 297, NM Prescription Drug Discount Act

HB 298, Native American Prescription Drug Program

HB 300, Special Prescription Drug Program for Seniors

HB 301, Prescription Drug Fair Pricing Act

HB 302, Prescription Drug Benefit for Seniors

TECHNICAL ISSUES

The Health Policy Commission states that Article 7 of Chapter 13 is a new section added to the Public Purchases and Property, which currently includes;

• Procurement
• Alternative Fuel Conversion
• Public Works Contracts
• Insurance on Public Buildings
• Sale of Public Property

There is a question as to whether the placement in this Chapter of the NMSA is appropriate.

SUBSTANTIVE ISSUES

• Hospitals, HMOs, insurance companies, government agencies and mail order companies are able to pay significantly lower prices than the drug stores from which millions of Americans buy their medications. Different government agencies (Medicaid, Medicare, Veterans Administration, Department of Defense) are charged widely different prices for the same drug.

• Covered persons may be stricted by a network of pharmacies to have their prescriptions filled, and those people living in rural or frontier communities may face a transportation burden to travel to a pharmacy assigned to their insurance network.
• Mail order prescriptions are often for more than 30-day supplies and are less expensive to the consumer as currently established in many health insurance plans, such as those offered to state employees. Consumers may prefer to continue with differing co-payments as incentives for mail order.
• If the intent of this bill is to decrease co-payments at retail outlets to match mail order or other hospital, HMO or government co-payments, there is a chance that the standardization may result in higher co-payments for all outlets providing drug coverage.

DW/ar:prr