1-1                                   AN ACT
 1-2     relating to bulk purchasing of prescription drugs by certain state
 1-3     agencies.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Subtitle E, Title 2, Health and Safety Code, is
 1-6     amended by adding Chapter 110 to read as follows:
 1-7                    CHAPTER 110.  INTERAGENCY COUNCIL ON
 1-8                       PHARMACEUTICALS BULK PURCHASING
 1-9           Sec. 110.001.  DEFINITION. In this chapter, "council" means
1-10     the Interagency Council on Pharmaceuticals Bulk Purchasing.
1-11           Sec. 110.002.  BULK PURCHASING COUNCIL. The Interagency
1-12     Council on Pharmaceuticals Bulk Purchasing is composed of an
1-13     officer or employee from each of the following agencies, appointed
1-14     by the administrative head of that agency:
1-15                 (1)  the Texas Department of Health;
1-16                 (2)  the Texas Department of Mental Health and Mental
1-17     Retardation;
1-18                 (3)  the Correctional Managed Health Care Committee;
1-19                 (4)  the Employees Retirement System of Texas;
1-20                 (5)  the Teacher Retirement System of Texas; and
1-21                 (6)  any other agency that purchases pharmaceuticals
1-22     designated by the commissioner of health and human services.
1-23           Sec. 110.003.  PRESIDING OFFICER. The position of presiding
1-24     officer rotates among the members of the council according to the
 2-1     procedures adopted by the council. A term as presiding officer is
 2-2     two years and expires on February 1 of each odd-numbered year.
 2-3           Sec. 110.004.  COMPENSATION. Service on the council is an
 2-4     additional duty of a member's office or employment.  A member of
 2-5     the council is not entitled to compensation, but is entitled to
 2-6     reimbursement of travel expenses incurred by the member while
 2-7     conducting the business of the council, as provided in the General
 2-8     Appropriations Act.
 2-9           Sec. 110.005.  SUPPORT STAFF. The council's member agencies
2-10     shall provide the staff for the council.
2-11           Sec. 110.006.  COUNCIL POWERS AND DUTIES. (a)  The council
2-12     shall develop procedures that member agencies must follow in
2-13     purchasing pharmaceuticals.  A member agency may elect not to
2-14     follow the council's procedures if the agency can purchase the
2-15     pharmaceuticals for a lower price than through the council.  An
2-16     agency that does not follow the council's procedures shall report
2-17     to the council:
2-18                 (1)  the purchase price for the pharmaceuticals; and
2-19                 (2)  the name of the wholesaler, retailer, or
2-20     manufacturer selling the pharmaceuticals.
2-21           (b)  The council shall designate one member agency to be the
2-22     central purchasing agency for purchasing pharmaceuticals.
2-23           (c)  The council shall use existing distribution networks,
2-24     including wholesale and retail distributors, to distribute the
2-25     pharmaceuticals.
2-26           (d)  The council shall:
2-27                 (1)  investigate any and all options for better
 3-1     purchasing power, including expanding Medicaid purchasing,
 3-2     qualifying for participation in purchasing programs under 42 U.S.C.
 3-3     Section 256b, as amended, and using rebate programs, hospital
 3-4     disproportionate share purchasing, and health department and
 3-5     federally qualified health center purchasing; and
 3-6                 (2)  make recommendations regarding drug  utilization
 3-7     review, prior authorization, the use of restrictive formularies,
 3-8     the use of mail order programs, and copayment structures to member
 3-9     agencies.
3-10           (e)  In conducting the investigation under Subsection (d),
3-11     the council shall monitor the progress of the demonstration project
3-12     for certain medications and related services established by Section
3-13     32.053, Human Resources Code, as added by S.B. 1156, Acts of the
3-14     77th Legislature, Regular Session, 2001, and make no
3-15     recommendations inconsistent with a prescribed medical regime for
3-16     those medications.
3-17           (f)  The council may enter into agreements with a local
3-18     governmental entity to purchase pharmaceuticals for the local
3-19     governmental entity.
3-20           (g)  The council shall develop procedures under which the
3-21     council may disclose information relating to the prices that
3-22     manufacturers or wholesalers charge for pharmaceuticals by category
3-23     of pharmaceutical.  The council may not disclose information that
3-24     identifies a specific manufacturer or wholesaler or the prices
3-25     charged by a specific manufacturer or wholesaler for a specific
3-26     pharmaceutical.
3-27           SECTION 2.  Subchapter E, Chapter 431, Health and Safety
 4-1     Code, is amended by adding Section 431.116 to read as follows:
 4-2           Sec. 431.116.  AVERAGE MANUFACTURER PRICE. (a)  In this
 4-3     section, "average manufacturer price" has the meaning assigned by
 4-4     42 U.S.C. Section 1396r-8(k), as amended.
 4-5           (b)  A person who manufactures a drug, including a person who
 4-6     manufactures a generic drug, that is sold in this state shall file
 4-7     with the department:
 4-8                 (1)  the average manufacturer price for the drug; and
 4-9                 (2)  the price that each wholesaler in this state pays
4-10     the manufacturer to purchase the drug.
4-11           (c)  The information required under Subsection (b) must be
4-12     filed annually or more frequently as determined by the department.
4-13           (d)  The department and the attorney general may investigate
4-14     the manufacturer to determine the accuracy of the information
4-15     provided under Subsection (b).  The attorney general may take
4-16     action to enforce this section.
4-17           (e)  The department shall report the information collected
4-18     under Subsection (b) to the Interagency Council on Pharmaceuticals
4-19     Bulk Purchasing.
4-20           SECTION 3.  Subchapter I, Chapter 431, Health and Safety
4-21     Code, is amended by adding Section 431.208 to read as follows:
4-22           Sec.  431.208.  REPORTING OF PURCHASE PRICE. (a)  On the
4-23     department's request, a person who engages in the wholesale
4-24     distribution of drugs in this state shall file with the department
4-25     information showing the actual price at which the wholesale
4-26     distributor sells a particular drug to a retail pharmacy.
4-27           (b)  The department shall adopt rules to implement this
 5-1     section.
 5-2           (c)  The department and the attorney general may investigate
 5-3     the distributor to determine the accuracy of the information
 5-4     provided under Subsection (a).  The attorney general may take
 5-5     action to enforce this section.
 5-6           (d)  The department shall report the information collected
 5-7     under Subsection (a) to the Interagency Council on Pharmaceuticals
 5-8     Bulk Purchasing.
 5-9           SECTION 4.  This Act takes effect September 1, 2001.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.B. No. 915 was passed by the House on April
         30, 2001, by a non-record vote; that the House refused to concur in
         Senate amendments to H.B. No. 915 on May 17, 2001, and requested
         the appointment of a conference committee to consider the
         differences between the two houses; and that the House adopted the
         conference committee report on H.B. No. 915 on May 27, 2001, by a
         non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
               I certify that H.B. No. 915 was passed by the Senate, with
         amendments, on May 15, 2001, by a viva-voce vote; at the request of
         the House, the Senate appointed a conference committee to consider
         the differences between the two houses; and that the Senate adopted
         the conference committee report on H.B. No. 915 on May 27, 2001, by
         a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
         APPROVED:  __________________________
                              Date
                    __________________________
                            Governor