COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:0404H.03C Bill No.:HCS for HB 197 Subject:Drugs and Controlled Substances; Pharmacy; Insurance - Health Type:Original Date:February 15, 2023Bill Summary:This proposal creates provisions relating to payments for prescription drugs.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2024FY 2025FY 2026General Revenue
Fund*
$0 to (Unknown)$0 to (Unknown)$0 to (Unknown)
Total Estimated Net
Effect on General
Revenue
$0 to (Unknown)$0 to (Unknown)$0 to (Unknown)
*Officials from the Missouri Consolidated Health Care Plan (MCHCP) state to the extent the
proposed language would not preclude MCHCP separately contracting with a specialty
pharmacy for supply and payment of specialty drugs, the expected fiscal impact would be $0.
However, should the language allow retail pharmacies to supply and bill for specialty drugs, then
MCHCP would likely have an unknown increase in cost of over $250,000. Oversight has
reflected a $0 or Unknown cost to various state and local funds that pay for health insurance.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Other State Funds$0 to (Unknown)$0 to (Unknown)$0 to (Unknown)Total Estimated
Net Effect on Other
State Funds
$0 to (Unknown)$0 to (Unknown)$0 to (Unknown)
Numbers within parentheses: () indicate costs or losses. L.R. No. 0404H.03C
Bill No. HCS for HB 197
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Federal Funds$0 to (Unknown)$0 to (Unknown)$0 to (Unknown)Total Estimated
Net Effect on All
Federal Funds
$0 to (Unknown)$0 to (Unknown)$0 to (Unknown)
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on FTE 000
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Local Government$0 to (Unknown)$0 to (Unknown)$0 to (Unknown) L.R. No. 0404H.03C
Bill No. HCS for HB 197
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FISCAL ANALYSIS
§§103.200, 338.015 and 376.387 - 376.689 – Payments for Prescription Drugs
Officials from the Missouri Consolidated Health Care Plan (MCHCP) state to the extent the
proposed language would not preclude MCHCP separately contracting with a specialty
pharmacy for supply and payment of specialty drugs, the expected fiscal impact would be $0.
However, should the language allow retail pharmacies to supply and bill for specialty drugs, then
MCHCP would likely have an unknown increased cost of over $250,000.
Oversight will range the fiscal impact to MCHCP as $0 (the language would not preclude
MCHCP from separately contracting with a specialty pharmacy for supply and payment of
specialty drugs) to a negative Unknown (retail pharmacies are allowed to supply and bill for
specialty drugs) to the General Revenue Fund, Other State Funds, Federal Funds and Local
Political Subdivisions.
Oversight notes §103.200.6 provides that the plan (MCHCP) may impose a penalty of no more
than $7,500 on its pharmacy benefits manager (PBM) for each violation of the provisions of the
section. Since the provisions are permissible, Oversight assumes a $0 to minimal fiscal impact to
MCHCP and will not present any penalty income for fiscal note purposes.
In addition, Oversight notes the provisions of §376.414.3 state the Department of Commerce
and Insurance shall impose a civil penalty on a health carrier, PBM or an agent/affiliate of such
entity that violates the provisions of the section in an amount not to exceed $5,000 per day.
Oversight assumes the amount of penalties collected will be minimal and will not present penalty
income for fiscal note purposes.
Officials from the Department of Commerce and Insurance, the Department of Social
ServicesCity of Kansas City and the City of Springfield each assume the proposal will
have no fiscal impact on their respective organizations. Oversight does not have any information
to the contrary. Therefore, Oversight will reflect a zero impact in the fiscal note for these
agencies.
Officials from the Department of Public Safety, Missouri Highway Patrol defer to the
MoDOT/MHP Health Care Board for response relating to the fiscal impact of this proposal on
their organization.
Officials from the Office of Administration defer to the MCHCP for any impact this legislation
may have. L.R. No. 0404H.03C
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In response to the previous version of this proposal, officials from the Missouri Department of
Conservation, the Missouri Department of Transportation, the
Administrative Hearing Commission, the City of Claycomo and the City of O‘Fallon each
assumed the proposal would have no fiscal impact on their organizations.
Rule Promulgation
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Oversight notes, in response to other legislation that contains similar rules language, officials
from the state many bills considered by the General
Assembly include provisions allowing or requiring agencies to submit rules and regulations to
implement the act. The SOS is provided with core funding to handle a certain amount of normal
activity resulting from each year's legislative session. The fiscal impact for this fiscal note to the
SOS for Administrative Rules is less than $5,000. The SOS recognizes that this is a small
amount and does not expect that additional funding would be required to meet these costs.
However, the SOS also recognizes that many such bills may be passed by the General Assembly
in a given year and that collectively the costs may be in excess of what the office can sustain
with its core budget. Therefore, the SOS reserves the right to request funding for the cost of
supporting administrative rules requirements should the need arise based on a review of the
finally approved bills signed by the governor.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other cities were requested to respond to this proposed legislation but did not. A
general listing of political subdivisions included in the Missouri Legislative Information System
(MOLIS) database is available upon request.
FISCAL IMPACT – State GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026GENERAL REVENUE FUNDCost – MCHCP (§§103.200-376.414)
Specialty Pharmacy for Specialty
Drugs
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
ESTIMATED NET EFFECT TO
THE GENERAL REVENUE FUND
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown) L.R. No. 0404H.03C
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FISCAL IMPACT – State Government
(continued)
FY 2024
(10 Mo.)
FY 2025FY 2026OTHER STATE FUNDSCost – MCHCP (§§103.200-376.414)
Specialty Pharmacy for Specialty
Drugs
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
ESTIMATED NET EFFECT ON
OTHER STATE FUNDS
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
FEDERAL FUNDSCost – MCHCP (§§103.200-376.414)
Specialty Pharmacy for Specialty
Drugs
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
ESTIMATED NET EFFECT ON
FEDERAL FUNDS
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
FISCAL IMPACT – Local GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026LOCAL POLITICAL
SUBDIVISIONS
Cost – MCHCP (§§103.200-376.414)
Specialty Pharmacy for Specialty
Drugs
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
ESTIMATED NET EFFECT TO
LOCAL POLITICAL SUBDIVISIONS
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal. L.R. No. 0404H.03C
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FISCAL DESCRIPTION
This bill is related to payments for prescription drugs. Beginning March 1, 2025, and annually
thereafter, a pharmacy benefits manager (PBM) utilized by the Missouri Consolidated Health
Care Plan shall file a report with the Plan for the immediately preceding calendar year regarding
rebates, as defined in the bill. The report shall include:
(1) The aggregate dollar amount of rebates collected from pharmaceutical manufacturers;
(2) The aggregate dollar amount of the rebates that were not passed on to the Plan, and
(3) The aggregate dollar amount of all fees and payments received from pharmaceutical
manufacturers.
The Plan shall establish a form for the reporting that minimizes administrative burden and cost.
Documents, materials, and other information submitted to the Plan shall not be subject to
disclosure or compromise the financial, competitive, or proprietary nature of the information, or
allow a third party to identify rebate values for a particular outpatient prescription drug, except to
the extent they are reported in the aggregate. The Plan shall annually report to the General
Assembly the aggregate dollar amount of pharmaceutical rebates and provide information
describing the rebate practices of health carriers utilizing pharmacy benefits managers. The Plan
may impose a penalty of up to $7,500 on its PBM for each violation of these provisions
(§103.200, RSMo).
The bill specifies that certain provisions of law pertaining to pharmacists and pharmacies shall
not be construed to prohibit patients' ability to obtain prescription services from any licensed
pharmacist "or pharmacy", and repeals language specifying that the provisions do not remove
patients' ability to waive their freedom of choice under a contract with regard to payment or
coverage of prescription expenses and no PBM shall penalize or restrict a health carrier or
enrollees from obtaining services from a contracted pharmacy (§338.015).
Additionally, the bill repeals a provision of law specifying that certain PBM regulations shall not
apply with regard to Medicare Part D, or other health plans regulated partly or wholly under
federal law. Pharmacy benefits managers shall notify health carriers and pharmacies in writing of
any potential conflict of interest, including but not limited to common ownership or any other
relationship between the PBM and any other health carrier or pharmacy with which the PBM
contracts. The bill provides standardized definitions for the terms "generic" and "rebate"
applicable to PBMs and health carriers, and specifies that PBMs shall owe a fiduciary duty to the
state or any health carrier, health benefit plan, or political subdivision with which it contracts
(§376.387).
The bill repeals a portion of a definition to specify that certain provisions relating to the
maximum allowable cost of a prescription drug are applicable to all pharmacies, rather than only
to contracted pharmacies. If the reimbursement for a drug to a contracted pharmacy is below the
pharmacy's cost to purchase the drug, the PBM shall sustain an appeal and increase L.R. No. 0404H.03C
Bill No. HCS for HB 197
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reimbursement for the pharmacy and other contracted pharmacies to cover the cost of purchasing
the drug (§376.388).
The bill specifies that health carriers or pharmacy benefits managers cannot discriminate against
a covered entity, as defined in the Public Health Service Act, or a pharmacy licensed under
Chapter 338 with which a covered entity has contracted to dispense 340B drugs on behalf of the
covered entity. The Director of the Department of Commerce and Insurance shall enforce these
rules and impose a civil penalty that shall not exceed $5,000 per violation per day on any health
carrier or pharmacy benefits manager that violates these provisions (§376.414).
This bill provides a definition for “prescription insulin drug” and states the provisions in the
section applies to any individual policy of accident and health insurance amended, delivered,
issued or renewed on/after August 28, 2023. An insurer that provides coverage for prescription
insulin drugs shall limit the total amount that an insured is required to pay for a thirty-day supply
of covered insulin drugs at an amount not to exceed $75, regardless of the quantity or type of
covered prescription insulin drug used. On January 1 of each year, the limit on the amount that
an insured is required to pay for a 30-day supply shall increase by a percentage equal to the
change in the Consumer Price Index of the preceding year. (§376.687)
Before November 2, 2023, the department of commerce, in conjunction with the department of
health and senior services and the department of social services, shall make available to the
public a report that details each department’s findings for the following:
a) Summary of insulin pricing practices and variable that contribute to the pricing of health
plans;
b) Public policy recommendations to control and prevent overpricing of prescription insulin
drugs, and
c) Any other information the department of commerce and insurance finds necessary.
These provisions terminate on January 1, 2024. (§376.689)
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space. L.R. No. 0404H.03C
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SOURCES OF INFORMATION
Office of Administration - Administrative Hearing Commission
Department of Commerce and Insurance
Department of Public Safety - Missouri Highway Patrol
Department of Social Services
Missouri Department of Conservation
Missouri Department of Transportation
Office of Administration
Office of the Secretary of State
Missouri Consolidated Health Care Plan
City of Claycomo
City of Kansas City
City of O’Fallon
City of Springfield
Joint Committee on Administrative Rules
Julie MorffRoss StropeDirectorAssistant DirectorFebruary 15, 2023February 15, 2023