COMMONWEALTH OF KENTUCKY

							                                  COMMONWEALTH OF KENTUCKY
                                  STATE FISCAL NOTE STATEMENT
GENERAL ASSEMBLY                                                   LEGISLATIVE RESEARCH COMMISSION
2005 REGULAR SESSION                                                                           2004-2006 INTERIM

MEASURE

(X) 2004 BR No. 0404                                       (X)     HB             Bill No.     92/GA

( ) Resolution No.                                         ( ) Amendment No.

SUBJECT/TITLE            An Act relating to prescription drugs dispensed through programs under the
                         jurisdiction of the Cabinet for Health Services

SPONSOR            Representative Tom Burch

NOTE SUMMARY

Fiscal Analysis:                           Impact                     No Impact         X      Indeterminable Impact
Level(s) of Impact:                  X     State                      Local             X      Federal


Budget Unit(s) Impact     Department for Medicaid Services


Fund(s) Impact:                     X      General                    Road              X      Federal
                                           Restricted Agency (Type)                                      (Other)

FISCAL SUMMARY
_______________________________________________________________________________
                                                                                                         Future Annual
Fiscal Estimates              2003-2004                2004-2005                  2005-2006              Rate of Change
Revenues (+/-)
Expenditures (+/-)
Net Effect                                           Indeterminable           Indeterminable
______________________________________________________________________________

MEASURE'S PURPOSE:
HB 92/GA prohibits any department, office or agency within the Cabinet for Health Services from placing prior
authorization restrictions on HIV/AIDS drugs if prescribed and medically necessary. HB 92GA further specifies
classes of drugs that may not be limited to include, but not be limited to, antiretroviral medications, including, but
not limited to, protease inhibitors, nonnucleoside reverse transcriptease inhibitors, nucleoside reverse transcriptease
inhibitors, antivirals and fusion inhibitors, and any medications prescribed for HIV or AIDS for a person diagnosed
with an HIV or AIDS related illness. Requires the Cabinet to promulgate an administrative regulation that identifies
specific disease states, including but not limited to HIV and AIDS, that shall be exempt from all formulary
limitations that are identified in this Act and that are applicable to all programs operated by all offices, agencies or
departments within the Cabinet.

PROVISION/MECHANICS:
 HB 92/GA creates a new section of KRS Chapter 194A to prohibit the Cabinet for Health Services from placing
prior authorization restrictions on HIV/AIDS drugs if prescribed and medically necessary; Specifies classes of drugs
that may not be limited; Requires the Cabinet to make these exemptions and exclusions from limitations applicable
to all programs operated by all offices, agencies, and departments under the Cabinet's jurisdiction. Requires the
Cabinet to promulgate an administrative regulation that identifies specific disease states, including but not limited to
HIV and AIDS, that shall be exempt from all formulary limitations that are identified in this Act and that are
applicable to all programs operated by all offices, agencies or departments within the Cabinet.
2005RS BR 0404-HB 92HCS
February 18, 2005
Page 2



FISCAL EXPLANATION:

This fiscal impact is indeterminable because the number and cost of drugs exempted from all formulary limitations
number of HIV/AIDS patients or patients with disease states identified through administrative regulation to be
provided unlimited access to state-funded drugs are unknown.

Although this fiscal impact is indeterminable, the Cabinet for Health and Family Services provides the following
information:

Without an infusion of new state or federal funds, HB 92/GA would create an unfunded mandate for the Kentucky
AIDS Drug Assistance Program (“KADAP”). Currently, KADAP maintains a formulary designed to provide the
majority of HIV/AIDS medications to low income, uninsured or underinsured Kentuckians living with HIV disease.
If the formulary were mandatorily expanded to include more expensive medications, or drugs are exempted from
formulary requirements, the number of Kentuckians receiving life-sustaining medications would decrease in order for
the change to be budget neutral. The result would have a severe impact on their lives of those who were excluded
from or were not able to join the program.

If new drug therapies are FDA approved but are not on the formulary, this bill could require that the Department for
Medicaid Services (“DMS”) allow payment for the new drug therapy without preauthorization (“PA”), thereby
increasing costs significantly, depending on the cost of the drug/therapy/intervention prescribed. Additionally, due
to the high demand for HIV medications among KADAP's target population, funds are not available to support all
eligible Kentuckians. Over 210 Kentuckians are presently on the waiting list, with an average of 23 additions each
month. Mandating that KADAP provide all HIV medications to all enrollees would force more resources to go to
fewer people, if the budget remains the same.

DMS currently authorizes medications and services based upon medical necessity. Most prescription drugs for
HIV/AIDS are already on the Medicaid Drug Formulary and do not require PA. For the few drugs that might require
PA, emergency procedures are already in place that require the PA to be completed within a four-hour time frame. If
not an emergency, PA requests are completed within twenty-four hours.

Per the 2003 Kentucky HIV/AIDS Comprehensive State Plan, as of June 30, 2001 there were 4,334 Kentuckians
currently living with HIV disease. Of these, 1,774 had developed full-blown AIDS. Another 1,707 Kentuckians
have died of AIDs and its complications since the first case of AIDS in Kentucky was identified in 1982. By June
30, 2002, the number of Kentuckians living with AIDS had climbed to 1,958. According to the University of
Kentucky Center for Prevention Research, there may be many more Kentuckians who are currently HIV positive, but
are unaware they are carrying the disease.

DATA SOURCE(S) Cabinet for Health and Family Services and University of Kentucky

NOTE NO. 15.2 PREPARER             Cindy Murray                           REVIEW           JAM DATE 2/18/05
                                                                                        LRC 2005RS-BR 0404-HB 92/GA