HBA-JRA H.B. 494 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 494
By: Maxey
Public Health
2/9/1999
Introduced



BACKGROUND AND PURPOSE 

In September, 1997, the Texas Department of Health implemented a drug
manufacturing rebate program for the Chronically Ill and Disabled
Children's Services Program and the Kidney Health Program through the
Vendor Drug Program.  Currently, the projected financial benefit to the
state is not being fulfilled because participation by a pharmaceutical
manufacturer in the rebate program is voluntary.  H.B. 494 requires
manufacturers to participate in the rebate program as a condition of
covering the cost of the product and ensures that rebate funds are returned
to the Chronically Ill and Disabled Children's Services Program and the
Kidney Health Program. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Texas Department of Health in
SECTION 2 (Section 12.0125, Health and Safety Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter B, Chapter 32, Human Resources Code, by
adding Section 32.0311, as follows: 

Sec. 32.0311.  DRUG REIMBURSEMENT UNDER CERTAIN PROGRAMS.  Requires the
Health and Human Services Commission to require a recipient of medical
assistance purchasing drugs under the Kidney Health Care Program or the
Chronically Ill or the Disabled Children's Services Program to exhaust drug
benefits available under the medical assistance program before reimbursing
the recipient, pharmacist, or other health care provider. 

SECTION 2.  Amends Subchapter B, Chapter 12, Health and Safety Code, by
adding Section 12.0125, as follows: 

Sec. 12.0125.  DRUG REBATES.  (a)  Requires the Texas Department of Health
(TDH) to develop a drug manufacturer rebate program for drugs purchased by
or on behalf of a client of the Kidney Health Care Program or the
Chronically Ill and Disabled Children's Services Program for which rebates
are not available under the Medicaid drug manufacturer rebate program. 

(b)  Requires TDH to consult with drug manufacturers to develop rebate
amounts for the new rebate program.  Prohibits the average percentage
savings from rebates in the new program from being less than the average
percentage savings in the Medicaid drug manufacturer rebate program. 

(c)  Requires TDH, by rule, to require all drug manufacturers to
participate in the rebate program established under this section as a
condition of reimbursement for the manufacturer's drugs under the Kidney
Health Care Program and the Chronically Ill and Disabled Children's
Services Program. 

(d)  Authorizes TDH to appropriate money received under the drug rebate
program  established under this section only for the Kidney Health Care
Program and the Chronically Ill and Disabled Children's Services Program. 

SECTION 3.  (a)  Requires TDH to consolidate the drug benefits components
of the Kidney Health Care Program and the Chronically Ill and Disabled
Children's Services Program with the Medicaid Vendor Drug Program, to the
extent authorized by federal law.   

(b)  Requires TDH to use the Medicaid Vendor Drug Program's claims
processing and program monitoring procedures, pharmacy network, and
reimbursement rates for the consolidated program, except as provided by
Subsection (c) of this section. 

(c)  Requires TDH to develop reimbursement rates for drugs purchased by or
on behalf of a client of the Kidney Health Care Program and the Chronically
Ill and Disabled Children's Services Program that are not included in the
Medicaid Vendor Drug Program's list of reimbursable drugs. 

(d)  Requires TDH to obtain drug manufacturer rebates for drug purchases by
or on behalf of a client of the Kidney Health Care Program or the
Chronically Ill and Disabled Children's Services Program under the Medicaid
drug manufacturer rebate program and the drug rebate program developed
under Section 12.0125, Health and Safety Code, as added by this Act. 

(e)  Requires TDH to update its computer system to facilitate the
consolidation. 

SECTION 4.  Requires TDH to complete the implementation of the drug
manufacturer rebate program required by Section 12.0125, Health and Safety
Code, as added by this Act, before September 1, 1999.  Requires TDH to
complete the implementation of the consolidated program required by SECTION
3 of this Act before March 1, 2001. 

SECTION 5.  Emergency clause.
  Effective date: upon passage.