HBA-TYH H.B. 1721 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1721 By: Edwards Insurance 4/19/1999 Introduced BACKGROUND AND PURPOSE A drug formulary is a list of prescription drugs that a health plan will pay for. As managed care has grown, health plans have increasingly relied on formularies to control the rising cost of prescription medicines. Currently, if a health plan's formulary does not have a consumer's prescribed drug, then the consumer will not be able to obtain the drug needed for the consumer's medical condition or mental illness. H.B. 1721 defines "drug formulary" and requires a provider to provide coverage for a drug not included in the provider's drug formulary, if that drug is in a class of drugs covered under the prescription drug benefit and has been approved and designated as safe and effective by the United States Food and Drug Administration (FDA) in compliance with federal law; and if a physician treating the enrollee under the health care plan determines that use of that drug, rather than a drug included in the formulary, is in the best interest of the enrollee. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 20A, Insurance Code (Texas Health Maintenance Organization Act), by adding Section 9A, as follows: Sec. 9A. DRUG FORMULARY. Defines "drug formulary." Requires a health maintenance organization that uses a drug formulary in providing a prescription drug benefit to provide the benefit to an enrollee for a drug not included in the formulary if that drug is in a class of drugs covered under the prescription drug benefit and has been approved and designated as safe and effective by the United States Food and Drug Administration (FDA) in compliance with federal law; and if a physician treating the enrollee under the health care plan determines that use of that drug, rather than a drug included in the formulary, is in the best interest of the enrollee. SECTION 2. Amends Subchapter A, Chapter 533, Government Code, by adding Section 533.0055, as follows: Sec. 533.0055. DRUG FORMULARY. Defines "drug formulary." Requires a managed care organization that uses a drug formulary in providing a prescription drug benefit to provide the benefit to a recipient for a drug not included in the formulary if that drug is in a class of drugs covered under the prescription drug benefit and has been approved and designated as safe and effective by the FDA in compliance with federal law, and if a physician treating the recipient under the managed care plan determines that use of that drug, rather than a drug included in the formulary, is in the best interest of the recipient. SECTION 3. Effective date: September 1, 1999. SECTION 4. Makes application of Section 1 of this Act prospective for an evidence of coverage that is delivered, issued for delivery, or renewed on or after January 1, 2000. SECTION 5. Makes application of Section 2 this Act prospective for a managed care plan provided under a contract that is entered into or renewed on or after January 1, 2000. SECTION 6. Provides that if, before implementing any provision of Section 2 of this Act, the Health and Human Services Commission (commission) determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, the commission is required to request the waiver or authorization and is authorized to delay implementing that provision until the waiver or authorization is granted. SECTION 7. Emergency clause.