Prescription for Fiscal Disaster

As legislators meet in Santa Fe to resolve the state’s hideous budget imbalance, one thing they might consider addressing is taxpayers’ tab for prescription drugs. A new report by the Legislative Finance Committee found that between fiscal 2014 and fiscal 2016, state spending on meds prescribed by healthcare professionals rose by 54 percent.

The report reviewed “prescription drug spending by 10 state agencies and entities,” including the Human Services Department (Medicaid), the Interagency Benefits Advisory Council, Department of Health, UNM and UNM Hospital employee plans, Albuquerque Public Schools, the General Services Department, the Corrections Department, and the Children, Youth and Families Department.

Given the governor’s profoundly unwise decision to expand Medicaid under Obamacare, it was no surprise that the healthcare program for “the poor” drove the spike in RX expenditures. Average recipients per month grew from 559,292 to 810,157. The annual number of prescriptions issued rose from 4.4 million to 6.6 million. Thus, total spending rose from $231.7 million to $423.7 million — an increase of 83 percent.

The DOH actually saw a decline in prescription costs, as did the CYFD. But the prison system’s bill ballooned by 160 percent. State-employee and retiree health plans were up 21 percent. APS’s costs rose 34 percent. UNM increased by 42 percent; UNMH by 76 percent.

Add it all up, and prescription drugs cost taxpayers $680.1 million in 2016. To put that amount in perspective, it’s more than 10 percent of the entire General Fund, and more than the estimated deficit for fiscal 2017.

The report makes a couple of vague cost-control recommendations, such as improving price transparency and using “a variety of options to increase negotiating power through collaborative purchasing agreements.” Missing, of course, is the suggestion that New Mexico finally right-size state government, and reap big RX savings through fewer employees and the elimination of ineffective, and sometimes counterproductive, welfare programs.