HBA-DMH H.B. 2999 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2999 By: Uresti Public Health 3/19/2001 Introduced BACKGROUND AND PURPOSE 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. RULEMAKING AUTHORITY 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. ANALYSIS 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. 48.056). 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). EFFECTIVE DATE September 1, 2001.