By Maxey H.B. No. 415
77R438 YDB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the creation of the Texas Fair Drug Pricing Board;
1-3 providing a civil penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle A, Title 6, Health and Safety Code, is
1-6 amended by adding Chapter 442 to read as follows:
1-7 CHAPTER 442. TEXAS FAIR DRUG PRICING BOARD
1-8 SUBCHAPTER A. GENERAL PROVISIONS
1-9 Sec. 442.001. DEFINITIONS. In this chapter:
1-10 (1) "Board" means the Texas Fair Drug Pricing Board.
1-11 (2) "Department" means the Texas Department of Health.
1-12 Sec. 442.002. BOARD AS PRINCIPAL AUTHORITY. The Texas Fair
1-13 Drug Pricing Board is the principal authority in this state on
1-14 matters relating to the state's purchase of prescription drugs and
1-15 the setting of maximum prices of prescription drugs sold in this
1-16 state.
1-17 (Sections 442.003-442.050 reserved for expansion
1-18 SUBCHAPTER B. TEXAS FAIR DRUG PRICING BOARD
1-19 Sec. 442.051. COMPOSITION. (a) The board consists of 11
1-20 members as follows:
1-21 (1) one physician appointed by the governor with the
1-22 advice and consent of the senate;
1-23 (2) one physician appointed by the lieutenant governor
1-24 from a list of persons recommended by the speaker of the house of
2-1 representatives;
2-2 (3) four members of the public, each of whom is at
2-3 least 21 years of age, appointed jointly by the governor and
2-4 lieutenant governor with the advice and consent of the senate;
2-5 (4) one member of the medical community appointed by
2-6 the governor with the advice and consent of the senate, who
2-7 represents the interests of the elderly;
2-8 (5) one member of the nursing community appointed by
2-9 the lieutenant governor;
2-10 (6) one pharmacist appointed by the governor with the
2-11 advice and consent of the senate from a list of persons recommended
2-12 by the speaker of the house, who:
2-13 (A) is a licensed pharmacist in this state in
2-14 good standing;
2-15 (B) is engaged in the practice of pharmacy in
2-16 this state; and
2-17 (C) has a minimum of five years' experience as a
2-18 licensed pharmacist in this state;
2-19 (7) the commissioner of health, who serves as a
2-20 nonvoting member; and
2-21 (8) the director of the vendor drug program, who
2-22 serves as a nonvoting member.
2-23 (b) Each of the public members appointed under Subsection
2-24 (a)(3) must represent the interests of the elderly, persons with
2-25 disabilities, persons of low income, or consumer advocates. Each
2-26 interest described by this subsection must be represented by a
2-27 public member.
3-1 (c) Appointments to the board shall be made without regard
3-2 to the race, creed, sex, religion, or national origin of the
3-3 appointed member.
3-4 Sec. 442.052. MEMBERSHIP RESTRICTION. A person may not serve
3-5 on the board if the person is required to register as a lobbyist
3-6 under Chapter 305, Government Code, because of the person's
3-7 activities for compensation on behalf of a profession, business, or
3-8 association related to the operation of the board.
3-9 Sec. 442.053. TERMS. Appointed board members serve two-year
3-10 terms expiring February 1 of each odd-numbered year. A member may
3-11 be reappointed. Except for the pharmacist member, if the
3-12 profession or qualifications of an appointed board member change
3-13 during the term of board membership, the member may continue to
3-14 serve in the capacity for which the appointment was made.
3-15 Sec. 442.054. PRESIDING OFFICER. The governor shall
3-16 designate a presiding officer from among the appointed board
3-17 members. The presiding officer serves at the will of the governor.
3-18 Sec. 442.055. MEETINGS. The board shall hold four meetings
3-19 a year on dates determined by the presiding officer and may hold
3-20 other meetings at the call of the presiding officer.
3-21 Sec. 442.056. COMPENSATION; REIMBURSEMENT FOR EXPENSES. (a)
3-22 A board member is not entitled to receive a salary for duties
3-23 performed as a board member.
3-24 (b) A board member is entitled to receive reimbursement for
3-25 actual and necessary expenses incurred in discharging the member's
3-26 duties as a board member as provided by the General Appropriations
3-27 Act.
4-1 Sec. 442.057. EXECUTIVE DIRECTOR; PERSONNEL. (a) The board
4-2 shall employ an executive director.
4-3 (b) The board may employ personnel necessary for the board
4-4 to exercise its powers and perform its duties under this chapter.
4-5 Sec. 442.058. GIFTS TO BOARD MEMBERS; EX PARTE
4-6 COMMUNICATION. (a) Section 36.10, Penal Code, does not apply to a
4-7 board member's solicitation, acceptance, or agreement to accept a
4-8 benefit as defined by Section 36.01, Penal Code, from a person the
4-9 member knows to be subject to regulation, inspection, or
4-10 investigation by the member or the board.
4-11 (b) A board member may not engage in an ex parte
4-12 communication relating to a board action.
4-13 Sec. 442.059. COOPERATION WITH OTHER AGENCIES. In
4-14 performing its duties, the board shall cooperate with the Texas
4-15 State Board of Pharmacy, the department, and other state agencies.
4-16 (Sections 442.060-442.100 reserved for expansion
4-17 SUBCHAPTER C. PRESCRIPTION DRUG PRICES
4-18 Sec. 442.101. PRESCRIPTION DRUG PRICING. Each January, the
4-19 board shall adopt rules setting the maximum prices for prescription
4-20 drugs sold in this state.
4-21 Sec. 442.102. MAXIMUM MANUFACTURER PRICE. (a) The board by
4-22 rule shall set a maximum manufacturer price for each prescription
4-23 drug sold in this state.
4-24 (b) In setting the maximum manufacturer price for a
4-25 prescription drug, the board shall consider:
4-26 (1) the price charged for the drug in Mexico and
4-27 Canada;
5-1 (2) the price listed on the federal supply schedule
5-2 for pharmaceuticals and drugs maintained by the United States
5-3 Department of Veterans Affairs; and
5-4 (3) any other relevant information.
5-5 (c) The maximum manufacturer price of a prescription drug
5-6 may not exceed the manufacturer price for that drug sold in Mexico
5-7 or Canada, whichever is lower. The maximum manufacturer price of a
5-8 prescription drug that is not sold in Mexico or Canada may not
5-9 exceed the maximum price for all other prescription drugs within
5-10 the same classification of drugs.
5-11 Sec. 442.103. MAXIMUM WHOLESALE PRICE. (a) The maximum
5-12 price a wholesaler may charge for a prescription drug sold in this
5-13 state is the sum of:
5-14 (1) the maximum manufacturer price under Section
5-15 442.102; and
5-16 (2) any reasonable and customary cost of doing
5-17 business and profit markup by the wholesaler, as determined by the
5-18 wholesaler.
5-19 (b) A wholesaler shall provide information to the department
5-20 showing the purchase price paid by the wholesaler for each
5-21 prescription drug. The department shall collect the information
5-22 from wholesalers and distribute any requested information to the
5-23 board along with guidance on interpreting the information provided.
5-24 Sec. 442.104. MAXIMUM RETAIL PRICE. The maximum price a
5-25 retailer may charge for a prescription drug sold in this state is
5-26 the sum of:
5-27 (1) the maximum wholesale price under Section 442.103;
6-1 and
6-2 (2) any reasonable and customary cost of doing
6-3 business and profit markup by the retailer, as determined by the
6-4 retailer.
6-5 Sec. 442.105. EFFECTIVE DATE OF MAXIMUM PRICES. (a) The
6-6 maximum prices for prescription drugs set under this chapter take
6-7 effect on September 1 of the year in which the prices are set
6-8 unless by August 1 of that year the board, after a public hearing,
6-9 determines that:
6-10 (1) prescription drug prices are less than or equal to
6-11 the maximum prices set under this chapter; or
6-12 (2) nonregulatory mechanisms ensure that prescription
6-13 drugs are sold in this state at prices that do not exceed the
6-14 maximum prices set under this chapter.
6-15 (b) In making a determination under this section, the board
6-16 shall consider the effect of nonregulatory initiatives undertaken
6-17 by the state and other factors, including:
6-18 (1) the implementation and effect of the Medicaid drug
6-19 rebate program;
6-20 (2) the effect on prescription drug prices of patient
6-21 access to pharmaceutical manufacturer patient assistance programs;
6-22 and
6-23 (3) the effect on prescription drug prices of any
6-24 regional purchasing alliances implemented in this state.
6-25 (Sections 442.106-442.150 reserved for expansion
6-26 SUBCHAPTER D. GENERAL ENFORCEMENT
6-27 Sec. 442.151. CIVIL PENALTY. (a) A person who violates this
7-1 chapter or a rule adopted under this chapter is liable for a civil
7-2 penalty of not less than $25,000 for each act or violation.
7-3 (b) On request by the board, the attorney general may
7-4 institute an action in a district court to collect a civil penalty
7-5 under this section.
7-6 SECTION 2. Section 531.001(4), Government Code, as amended by
7-7 Chapters 7 and 1460, Acts of the 76th Legislature, Regular Session,
7-8 1999, is amended to read as follows:
7-9 (4) "Health and human services agencies" includes the:
7-10 (A) Interagency Council on Early Childhood
7-11 Intervention;
7-12 (B) Texas Department on Aging;
7-13 (C) Texas Commission on Alcohol and Drug Abuse;
7-14 (D) Texas Commission for the Blind;
7-15 (E) Texas Commission for the Deaf and Hard of
7-16 Hearing;
7-17 (F) Texas Department of Health;
7-18 (G) Texas Department of Human Services;
7-19 (H) Texas Juvenile Probation Commission;
7-20 (I) Texas Department of Mental Health and Mental
7-21 Retardation;
7-22 (J) Texas Rehabilitation Commission;
7-23 (K) Department of Protective and Regulatory
7-24 Services; [and]
7-25 (L) Children's Trust Fund of Texas Council;[.]
7-26 (M) [(L)] Texas Health Care Information Council;
7-27 and
8-1 (N) Texas Fair Drug Pricing Board.
8-2 SECTION 3. (a) The provisions of Chapter 442, Health and
8-3 Safety Code, as added by this Act, establishing maximum prices for
8-4 prescription drugs do not apply to prices subject to a contract
8-5 entered into before September 1, 2001.
8-6 (b) The Texas Fair Drug Pricing Board shall adopt rules
8-7 setting the maximum prices for prescription drugs in January 2002.
8-8 A prescription drug manufacturer, wholesaler, or retailer is not
8-9 required to comply with those prices until September 1, 2002.
8-10 SECTION 4. This Act takes effect September 1, 2001.