HBA-JRA C.S.H.B. 494 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 494 By: Maxey Public Health 4/19/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE In September, 1997, the Texas Department of Health implemented a drug manufacturing rebate program for the Chronically Ill and Disabled Children's Services Program and the Kidney Health Program through the Vendor Drug Program. Currently, the projected financial benefit to the state is not being fulfilled because participation by a pharmaceutical manufacturer in the rebate program is voluntary. C.S.H.B. 494 requires manufacturers to participate in the rebate program as a condition of covering the cost of the product and ensures that rebate funds are returned to the Chronically Ill and Disabled Children's Services Program and the Kidney Health Program. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 32, Human Resources Code, by adding Section 32.0311, as follows: Sec. 32.0311. DRUG REIMBURSEMENT UNDER CERTAIN PROGRAMS. Requires the Health and Human Services Commission to require a recipient of medical assistance purchasing drugs under the Kidney Health Care Program or the Chronically Ill or the Disabled Children's Services Program to exhaust drug benefits available under the medical assistance program before reimbursing the recipient, pharmacist, or other health care provider. SECTION 2. Amends Subchapter B, Chapter 12, Health and Safety Code, by adding Section 12.0125, as follows: Sec. 12.0125. DRUG REBATES. (a) Requires the Texas Department of Health (TDH) to develop a drug manufacturer rebate program for drugs purchased by or on behalf of a client of the Kidney Health Care Program or the Chronically Ill and Disabled Children's Services Program for which rebates are not available under the Medicaid drug manufacturer rebate program. (b) Requires TDH to consult with drug manufacturers to develop rebate amounts for the new rebate program. Prohibits the average percentage savings from rebates in the new program from being less than the average percentage savings in the Medicaid drug manufacturer rebate program. (c) Authorizes TDH to appropriate money received under the drug rebate program established under this section only for the Kidney Health Care Program and the Chronically Ill and Disabled Children's Services Program. SECTION 3. (a) Requires TDH to consolidate the drug benefits components of the Kidney Health Care Program and the Chronically Ill and Disabled Children's Services Program with the Medicaid Vendor Drug Program, to the extent authorized by federal law. (b) Requires TDH to use the claims processing and program monitoring procedures, prior authorization safeguards, dispute resolution procedures and approval criteria, emergency access procedures, the pharmacy network, and reimbursement rates of the Medicaid Vendor Drug Program for the consolidated program, except as provided by Subsection (c) of this section. (c) Requires TDH to develop reimbursement rates for drugs purchased by or on behalf of a client of the Kidney Health Care Program and the Chronically Ill and Disabled Children's Services Program that are not included in the Medicaid Vendor Drug Program's list of reimbursable drugs. (d) Requires TDH to obtain drug manufacturer rebates for drug purchases by or on behalf of a client of the Kidney Health Care Program or the Chronically Ill and Disabled Children's Services Program under the Medicaid drug manufacturer rebate program and the drug rebate program developed under Section 12.0125, Health and Safety Code, as added by this Act. (e) Requires TDH to update its computer system to facilitate the consolidation. SECTION 4. Requires TDH to complete the implementation of the drug manufacturer rebate program required by Section 12.0125, Health and Safety Code, as added by this Act, before September 1, 1999. Requires TDH to complete the implementation of the consolidated program required by SECTION 3 of this Act before March 1, 2001. SECTION 5. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original in SECTION 2 by deleting proposed Section 12.0125(c), which required TDH, by rule, to require all drug manufacturers to participate in the rebate program as a condition of reimbursement for manufacturer's drugs under the Kidney Health Care Program or the Chronically Ill and Disabled Children's Services Program. The substitute redesignates proposed Subsection (d) of the original to Subsection (c). The substitute modifies the original in SECTION 3 to require TDH to use the Medicaid Vendor Drug Program's prior authorization safeguards, dispute resolution procedures and approval criteria, and emergency access procedures for the consolidated program.