Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR
Sens. Stefanics, Stewart and Hamblen/
Rep. Szczepanski
LAST UPDATED
ORIGINAL DATE 2/19/2025
SHORT TITLE Add Classes to Prior Authorization Drugs
BILL
NUMBER Senate Bill 39
ANALYST Esquibel
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
NMPSIA $950.0 $1,000.0 $1,950.0 Recurring NMPSIA Fund
RHCA $2,193.0 $2,302.0 $4,49 5.0 Recurring RHCA Fund
State Health
Benefit Plan
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
Recurring SHBP Fund
Total $3,143.0 $3,302.0 $6, 445.0 Recurring Multiple
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Department of Health (DOH) Health Care Authority (HCA)
New Mexico Public School Insurance Authority (NMPSIA)
Regulation and Licensing Department (RLD)
Retiree Health Care Authority (RHCA)
Office of Superintendent of Insurance (OSI)
University of New Mexico Health Sciences Center (UNMHSC)
SUMMARY
Synopsis of Senate Bill 39
Senate Bill 39 (SB39) would amend the Prior Authorization Act to prohibit prior authorization
and step therapy—the insurance plan practice of requiring patients to try less expensive
medication first—for medications that are prescribed for on-label or off-label use for the
treatment of rare disease or medical condition that affects fewer than 200 thousand people in the
United States.
Off-label use is defined as a medication or medication dosage not approved by the federal Food
and Drug Administration (FDA) for treatment of a specific condition or disease but has sufficient Senate Bill 39 – Page 2
evidence to consider the medication and dosage medically necessary for treatment. Medical
necessity determination requirements have been updated such that they must be completed by a
healthcare professional from the same or similar practice specialty that typically manages the
disease or condition in question. Medical necessity determinations are required to be completed
within seven days or 24 hours in cases where the condition or disease may seriously jeopardize a
person's life or health, affect a person's ability to regain maximum function, or subject a person
to severe and intolerable pain. Medical necessity determinations not completed within the
specified time limits will be deemed automatically approved.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
The New Mexico Public School Insurance Authority (NMPSIA) reports under the provisions of
the bill there could be a $1.9 million and potentially up to $12.9 million cost for medications and
administrative fees and the loss of potential savings from medication utilization and rebates.
The Retiree Health Care Authority (RHCA) reports the agency would incur additional claims
and administrative costs under the provisions of the bill and removing the need for prior
authorization and step therapy would impair cost-containment efforts. RHCA estimates the cost
at $2.1 million in the first year and an additional 5 percent in subsequent years.
The Health Care Authority (HCA) states health benefits plan would likely incur an indeterminate
cost associated with the provisions of the bill.
SIGNIFICANT ISSUES
RHCA reports the federal Centers for Medicare and Medicaid Services (CMS) has guidelines for
using on-label and off-label drugs in Medicare Advantage plans. CMS emphasizes that off-label
drug use in step therapy programs must be supported by clinical research and widely accepted
guidelines to ensure patient safety and efficacy. The National Committee for Quality Assurance
(NCQA), which evaluates health plans through its Health Plan Accreditation program, supports
policies that ensure step therapy protocols are transparent and evidence-based and include a
straightforward process for exceptions when medically necessary. NCQA advocates patient
protection and timely access to appropriate medications. Federal regulations ensure that step
therapy programs are reviewed and approved by a Pharmacy and Therapeutics Committee,
which includes practicing physicians and pharmacists. The committee bases its decisions on
scientific evidence and standards of practice. The bill does not provide guidance to healthcare
systems that might struggle to allocate resources appropriately, as it is unclear which diseases
qualify as rare.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
SB39 similar to Senate Bill 207, which also attempts to prohibit practices that restrict access to
certain medications.
Senate Bill 39 – Page 3
TECHNICAL ISSUES
The Office of Superintendent of Insurance (OSI) notes the term “off-label” may need to be
clarified that the drug must be approved by the FDA, but the indication or dosage to treat a
specific condition or disease may not be approved. As currently written, the bill may be
construed to require coverage of non-FDA approved medications which may be contrary to
federal law. OSI suggests on page 4, lines 1-7: "off-label" means an FDA approved medication
or a dosage of a medication that does not have an FDA approved indication ….”
OTHER SUBSTANT IVE ISSUES
The University of New Mexico Health Sciences Center (UNMHSC) notes prior authorization
requirements often delay patient care, which can negatively affect clinical outcomes. Limiting
step programs for vulnerable patients, such as those with cancer or autoimmune diseases, can
ensure timely care that may prevent long-term complications and increase morbidity, remove
unnecessary barriers to accessing care, and prevent adverse effects such as reduced quality of
life, disruption of work, and increased risk of worsening conditions due to treatment delays.
Reduced prior authorization requirements can also improve the efficiency of pharmacy
operations.
The Department of Health (DOH) notes for children with rare diseases, receiving an accurate
diagnosis and promptly starting treatment can be critical. Approximately 50 percent of
individuals with rare diseases are children. Only 5 percent to 7 percent of rare diseases have an
FDA-approved treatment. Due to the lack of FDA-approved treatments, most medication for rare
disease is prescribed off-label. In general, insurers and pharmacy benefit managers will not
reimburse off-label use of drugs or medical devices. To access therapies prescribed by their
physician, patients may be required to mostly pay out of pocket or provide additional paperwork
which delays medication access.
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