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.