HBA-TBM, EDN H.B. 915 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 915 By: Gray Public Health 7/16/2001 Enrolled BACKGROUND AND PURPOSE Several different Texas state agencies purchase prescription drugs for the individuals they serve. The Medicaid Vendor Drug Program at the Texas Department of Health pays for prescription drugs for those enrolled in the state Medicaid program. The Texas Department of Mental Health and Mental Retardation and the Texas Department of Criminal Justice purchase prescription drugs for the populations they serve. Both the Employees Retirement System of Texas and the Teacher Retirement System of Texas administer prescription drug benefit programs for the individuals they insure. Finally, many state higher education institutions operate hospitals or clinics which purchase drugs for their patients. Prior to the 77th Legislature, all of these agencies used different methods to purchase these drugs. By coordinating the purchasing efforts of the agencies Texas can negotiate lower prices on drugs by purchasing in bulk. House Bill 915 creates the Interagency Council on Pharmaceuticals Bulk Purchasing (council) to provide pharmaceutical purchasing procedures and options for Texas state agencies and requires manufactures and wholesale distributors of pharmaceuticals in Texas to report purchase prices of drugs to the council. 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 3 (Section 431.208, Health and Safety Code) of this bill. ANALYSIS House Bill 915 amends the Health and Safety Code to create the Interagency Council on Pharmaceuticals Bulk Purchasing (council) to facilitate the bulk purchasing of prescription drugs by certain state agencies. The bill requires the council to develop procedures that member agencies must follow in purchasing pharmaceuticals. The council is also required to designate one member agency to be the central purchasing agency for purchasing pharmaceuticals and to use existing distribution networks to distribute the pharmaceuticals. The bill provides for the council's composition, administration, and operation. The bill requires the council to develop procedures that member agencies must follow in purchasing pharmaceuticals. The bill authorizes an agency to elect not to follow the council's procedures if the agency can purchase the pharmaceuticals for a lower price than through the council, in which case the agency is required to report to the council the purchase price and the name of the wholesaler, retailer, or manufacturer selling the pharmaceuticals. The bill requires the council to use existing distribution networks to distribute the pharmaceuticals. The bill requires the council to investigate options for better purchasing power and make recommendations concerning prescription drug procedures. In conducting the investigation, the council is required to monitor the progress of the demonstration project for certain medications and related services and make no recommendations inconsistent with a prescribed medical regime for those medications. The council is authorized to enter into agreements with a local governmental entity to purchase pharmaceuticals for the local governmental entity. The council is required to develop procedures under which the council may disclose information relating to the prices that manufacturers or wholesalers charge for pharmaceuticals by category of pharmaceutical. The bill prohibits the council from disclosing information that identifies a specific manufacturer or wholesaler or the prices charged for a specific pharmaceutical. The bill requires the manufacturer of a drug that is sold in Texas to file with the Texas Department of Health (TDH) annually or more frequently as decided by TDH the average manufacturer price for the drug and the price that each wholesaler in Texas pays the manufacturer to purchase the drug. On TDH's request, a person who engages in the wholesale distribution of drugs in this state shall file with TDH information showing the actual price at which the wholesale distributor sells a particular drug to a retail pharmacy. TDH and the attorney general are authorized to investigate the manufacturer and distributor to determine that the information filed is accurate. The attorney general is authorized to take action to enforce these provisions. The bill requires the TDH to report the information collected to the council. EFFECTIVE DATE September 1, 2001.