Office of House Bill AnalysisH.B. 2999
By: Uresti
Public Health


Prescription drugs have become an increasingly important part of the
medical practice.  Yet many Texans do not have prescription drug coverage
to help pay soaring prescription drug prices.  Since Medicare does not
cover prescription drugs, the elderly are seriously affected by rising
prices of drugs.  As individuals, uninsured Texans do not have the
bargaining power to obtain cheaper prices, but the state could use its bulk
purchasing power to help make prescription drugs more affordable to
residents and to state programs. House Bill 2999 establishes a prescription
drug program to create pricing advantages for residents who do not have
prescription drug coverage, by directing the commissioner of public health
to negotiate rebates with drug manufacturers or labelers. 


It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commission (which commission cannot
be determined) in SECTION 1 (Section 48.054, Health and Safety Code),  the
Texas State Board of Pharmacy in SECTION 1 (Section 48.057, Health and
Safety Code), and the Texas Board of Health in SECTION 1 (Section 48.062,
Health and Safety Code) of this bill.  


House Bill 2999 amends the Health and Safety Code to establish a
prescription drug program (program) within the Texas Department of Health
(TDH) designed to lower prescription drug prices for uninsured and
underinsured residents of Texas (Sec. 48.051).  The bill provides that all
residents of the state are eligible to participate in the program. The bill
requires TDH to establish simplified procedures for issuing program
enrollment cards to eligible residents and to undertake outreach efforts to
build public awareness of the program and maximize enrollment (Sec.

The bill authorizes a manufacturer or labeler that sells prescription drugs
to voluntarily elect to enter into a rebate agreement with TDH, requires
the commissioner of public health (commissioner) to negotiate the terms of
the rebate, taking into consideration the rebate calculated under the
federal Medicaid Rebate Program, the average wholesale price of
prescription drugs, and any other available information on prescription
drug prices and price discounts (Secs. 48.052 and 48.053).  If the
commissioner and a manufacturer or labeler fail to reach an agreement on
the terms of a rebate, the bill requires the commissioner to determine
whether to place the  manufacturer's or labeler's products on the prior
authorization list for the state Medicaid program or any other state-funded
prescription drug program.  The bill requires the commission by rule to
implement these provisions and provides that the names of manufacturers and
labelers that do not enter into rebate agreements are public information.
The bill requires TDH to  publish the information on its Internet site.
The bill requires TDH  and to distribute information to health
professionals about the relative cost of drugs produced by rebate program
participants and nonparticipants (Sec. 48.054).  If TDH determines that it
is beneficial, the bill authorizes TDH to combine drug pricing negotiations
for the program and other state programs, including Medicaid, to maximize
drug rebates (Sec. 48.061).  

The bill requires a participating retail pharmacy to discount the price of
prescription drugs sold to  program  participants.  The bill requires TDH
to calculate and establish prescription drug prices and sets forth
provisions for the method of calculation used to determine the price at
which a pharmacy is required to offer the prescription drug (Sec. 48.055).
The bill sets forth a process for resolving discrepancies in rebate amounts
(Sec. 48.058). 

The bill requires the Texas State Board of Pharmacy to adopt rules
requiring participating retail pharmacies to disclose to program
participants the amount of savings provided as a result of the program and
provides that the rules must protect information that is proprietary in
nature.  The bill prohibits TDH from imposing transaction charges on
participating retail pharmacies that submit claims or receive payments
under the program.  The bill requires a  participating retail pharmacy to
submit claims to TDH to verify the amount charged to program participants.
On a weekly or biweekly basis, the bill requires TDH to reimburse a retail
pharmacy for discounted prices provided to program participants and
dispensing fees set by TDH. The bill requires TDH to collect from the
participating retail pharmacies utilization data necessary to calculate the
amount of the rebate from the manufacturer or labeler and to protect the
confidentiality of all information subject to confidentiality protection
under state or federal law, rule, or regulation (Sec. 48.057).  

The bill requires the Texas Board of Health to adopt rules necessary to
administer the  program (Sec. 48.062).  The bill establishes a dedicated
account for the program in the general revenue fund and authorizes the
legislature to appropriate funds from the account only to TDH to reimburse
participating pharmacies and TDH for certain costs of the program (Sec.
48.059).  Not later than January 1 of each year, the bill requires TDH to
report to the legislature the enrollment and financial status of the
program (Sec. 48.060). 


September 1, 2001.