TO:	Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services
FROM:	Jerry McGinty, Director, Legislative Budget Board
IN RE:	SB2195 by Kolkhorst (Relating to the relationship between pharmacists or pharmacies and pharmacy benefit managers or health benefit plan issuers, including relationships governed by contracts with managed care organizations under Medicaid and the child health plan program.), As Introduced

General Revenue-Related Funds, Five- Year Impact:

All Funds, Five-Year Impact:

Fiscal Analysis

The bill would amend the Government Code, Occupations Code, and Insurance Code relating to the relationship between pharmacists or pharmacies and pharmacy benefit managers or health plan issuers, including organizations under Medicaid and the child health plan program. The bill would require a contract between a pharmacy benefit manager (PBM) and a managed care organization that contracts with the Health and Human Services Commission to provide pharmacy benefits under Medicaid or the child health plan program to contain a requirement that the PBM have a fee schedule that applies to each pharmacy or pharmacist with which the pharmacy manager contracts, prohibits a PBM from directly or indirectly reducing the amount of a claim payment to a pharmacist or pharmacy after adjudication of the claim, and prohibits a health benefit plan issuer from requiring higher accreditation standards or recertification requirements than the state or federal government. The bill would also prohibit a PBM from requiring an enrollee to use a mail order pharmacy, and a health benefit care issuer or pharmacy benefit manager from making it a condition of a contract to restrict the pharmacy/pharmacist from mailing or delivering a drug to a patient on their request. The bill would affect plans entered into or renewed on or after September 1, 2021.

Methodology

Based on information provided by the Teacher Retirement System (TRS), the bill would significantly impact the way PBMs manage the costs of certain specialty drugs. Currently, TRS requires members to purchase all specialty drugs via a specialty mail pharmacy. By prohibiting a PBM from requiring an enrollee to use a mail order pharmacy, costs may go up significantly. Estimated costs to the TRS-ActiveCare plans are $16.3 million in fiscal year 2022 and $16.9 million in fiscal year 2023.

According to the Health and Human Services Commission (HHSC), the provisions of the bill would limit a PBM's ability to recoup payment from a pharmacy after claims adjudication in cases where a pharmacy did not meet performance metrics. While HHSC anticipates this would result in an increase in pharmacy claims costs, the agency is unable to determine the cost at this time.

Local Government Impact

The fiscal implications of the bill cannot be determined at this time.