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 Hickey
LAST UPDATED
ORIGINAL DATE 3
/20/2025
SHORT TITLE No Prior Authorization for Certain Drugs
BILL
NUMBER Senate Bill 477
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 $10,800.0 $16,200.0 $27,000.0 Recurring NMPSIA Fund
RHCA $2,100.0 $2,300.0 $4,400. 0 Recurring RHCA Fund
Medicaid $292,084.9 $292,084.9 $584,169.8 Recurring
General Fund,
Matching
Federal Funds
State Health
Benefit Plan
$19,370.0 $21,190.0 $40,560. 0 Recurring SHBP Fund
UNMHSC Up to $23,000.0 Up to $23,700.0 $46,700.0 Recurring
Operating
Funds
Total $347,354.9 $355,474.9 $702,82 9.8 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 (UNM-HSC)
SUMMARY
Synopsis of Senate Bill 4777
Senate Bill 477 (SB477) would add medications for which prior authorization or step therapy
(the practice of requiring a patient to use less expensive and less effective medicine first) is
prohibited to include drugs used to (1) treat or prevent cholesterol disorders; (2) prevent
autoimmune disorders, cancer, and substance use disorders (current law already prohibits prior
authorization for drugs used to treat these disorders); (3) glucagon-like peptide-1 agonists,
glucose-dependent insulinotropic polypeptide, and glucagon-like peptide-1 receptor agonists
(GLP-1s).
Senate Bill 477 – Page 2
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 the authority could have an estimated impact of $10.8 million impact in the first year.
The estimate reflects the cost of the medications, loss of potential savings from improved
medication utilization, reduced costs from rebates, and administrative fees.
The Retiree Health Care Authority (RHCA) reports under the provisions of the bill the authority
could have an estimated impact of $2.1 million impact in the first year.
The Health Care Authority (HCA) estimates under the provisions of the bill the costs for
Medicaid would be $82.8 million a year from the general fund matched with $209.3 million in
federal funds, for a total of $292.1 million a year.
HCA estimates the state health benefits plan (SHB) would likely incur a cost of $19.4 million in
the first year under the provisions of the bill.
The University of New Mexico Health Sciences Center (UNM-HSC) reports the provisions of
SB477 could significantly increase pharmaceutical costs for UNM-HSC, both in the self-insured
health plan and in the UNM Care program. UNMH’s self-insured health plan does not currently
cover GLP-1s for the prevention of cholesterol disorders. Adding this coverage would cost
approximately $11 million annually. UNM Care covers the cost of care at UNMH for some low-
income New Mexicans. Approximately 5,000 patients are currently enrolled in UNM Care. If 20
percent of those patients were prescribed a GLP-1 to prevent high cholesterol, program costs
would increase by $12 million annually. The fiscal impact estimate assumes 3 percent annual
inflation.
OSI is unable to determine if the prior authorization and step-therapy prohibition will have an
impact on premiums because of the multiple uses of GLP-1s.
SIGNIFICANT ISSUES
UNM-HSC notes the legislation removes the requirement of a medical necessity determination in
the section prohibiting prior authorization but retains it in the section prohibiting step therapy.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
SB477 is similar to Senate Bill 39 and Senate Bill 207, which also attempt to prohibit practices
that restrict access to certain medications.
TECHNICAL ISSUES
The Regulation and Licensing Department notes compounded drugs are not FDA-approved.
HCA notes there is potential conflict with federal Medicaid requirements regarding medical Senate Bill 477 – Page 3
necessity.
OTHER SUBSTANT IVE ISSUES
RHCA notes GLP-1 research is not sufficiently mature to ensure safety and efficacy, particularly
regarding the side effects for the older population that RHCA serves. Many studies show muscle
loss, including of the heart, as a side effect, which is a concern in an older population related to
fall prevention. Although some research shows the drugs could help with Alzheimer’s.
RAE/hg/sgs