SENATE BILL REPORT

SB 5027

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As of January 16, 2001

Title:  An act relating to the purchase of prescription drugs by public entities.

Brief Description:  Providing for a study of the feasibility of aggregating the purchase and distribution of prescription drugs for certain programs.

Sponsors:  Senators Franklin, Winsley, Regala and Costa.

Brief History:

Committee Activity:  Health & Long‑Term Care:  1/11/01.

______________________________________________________________________________SENATE COMMITTEE ON HEALTH & LONG‑TERM CARE

Staff:  Jonathan Seib (786‑7427)

Background:  Influenced by price increases, greater utilization, and changes in the types of prescriptions used, national expenditures for prescription drugs have been one of the fastest growing components of health care spending in the past decade, increasing 15 percent from 1997 to 1998, compared to 5 percent for all personal health care spending.  In the past five years, the increases in prescription expenditures have been two to four times the percent change in expenditures for most other health care services.

This increase in prescription drug expenditures has contributed to the significant growth in the cost of state and local health care programs in recent years.  Some suggest that these agencies could better maximize their purchasing power, and thereby reduce the amount they pay for prescription drugs,  by aggregating their drug purchases.  Although current law makes indirect reference to this strategy, the practice is apparently not widespread.

Interest also exists in extending this aggregate purchasing strategy to the private sector, both to take advantage of, and to benefit, those who purchase drugs outside of current government programs.

Summary of Bill:  The Health Care Authority must contract for a study to determine the feasibility of aggregate purchasing of prescription drugs by state and local governments, and for those residents with limited insurance coverage for prescription drugs.  The study must separately assess the feasibility of including in the aggregate large private sector prescription drug purchasers.

If the aggregate purchasing program is deemed feasible, the study must identify the optimal program structure, the number of persons it would cover, and the specific steps that would be necessary to implement the program, including any changes in state law.

Appropriation:  None.

Fiscal Note:  Requested on January 4, 2001.

Effective Date:  Ninety days after adjournment of session in which bill is passed.