Amend SB 704 (house committee printing) by adding the 
following appropriately numbered SECTIONS to the bill and 
renumbering remaining SECTIONS of the bill accordingly:
	SECTION ____.  Subchapter B, Chapter 1551, Insurance Code, 
is amended by adding Section 1551.067 to read as follows:
	Sec. 1551.067.  PHARMACY BENEFIT MANAGER CONTRACTS.  (a)  In 
awarding a contract to provide pharmacy benefit manager services 
under this chapter, the board of trustees is not required to select 
the lowest bid but must select a contract that meets the criteria 
established by this section.
	(b)  The contract must state that:                                      
		(1)  the board of trustees is entitled to audit the 
pharmacy benefit manager to verify costs and discounts associated 
with drug claims, pharmacy benefit manager compliance with contract 
requirements, and services provided by subcontractors;
		(2)  the audit must be conducted by an independent 
auditor in accordance with established auditing standards; and
		(3)  to conduct the audit, the board of trustees and the 
independent auditor are entitled access to information related to 
the services and the costs associated with the services performed 
under the contract, including access to the pharmacy benefit 
manager's facilities, records, contracts, medical records, and 
agreements with subcontractors.
	(c)  The contract must define the information that the 
pharmacy benefit manager is required to provide to the board of 
trustees concerning the audit of the retail, independent, and mail 
order pharmacies performing services under the contract and 
describe how the results of these audits must be reported to the 
board of trustees, including how often the results must be 
reported.  The contract must state whether the pharmacy benefit 
manager is required to return recovered overpayments to the board 
of trustees.
	(d)  The contract must state that any audit of a mail order 
pharmacy owned by the pharmacy benefit manager must be conducted by 
an independent auditor selected by the board of trustees in 
accordance with established auditing standards.
	SECTION ____.  Subchapter C, Chapter 1575, Insurance Code, 
is amended by adding Section 1575.110 to read as follows:
	Sec. 1575.110.  PHARMACY BENEFIT MANAGER CONTRACTS.  (a)  In 
awarding a contract to provide pharmacy benefit manager services 
under this chapter, the trustee is not required to select the lowest 
bid but must select a contract that meets the criteria established 
by this section.
	(b)  The contract must state that:                                      
		(1)  the trustee is entitled to audit the pharmacy 
benefit manager to verify costs and discounts associated with drug 
claims, pharmacy benefit manager compliance with contract 
requirements, and services provided by subcontractors;
		(2)  the audit must be conducted by an independent 
auditor in accordance with established auditing standards; and
		(3)  to conduct the audit, the trustee and the 
independent auditor are entitled access to information related to 
the services and the costs associated with the services performed 
under the contract, including access to the pharmacy benefit 
manager's facilities, records, contracts, medical records, and 
agreements with subcontractors.
	(c)  The contract must define the information that the 
pharmacy benefit manager is required to provide to the trustee 
concerning the audit of the retail, independent, and mail order 
pharmacies performing services under the contract and describe how 
the results of these audits must be reported to the trustee, 
including how often the results must be reported.  The contract must 
state whether the pharmacy benefit manager is required to return 
recovered overpayments to the trustee.
	(d)  The contract must state that any audit of a mail order 
pharmacy owned by the pharmacy benefit manager must be conducted by 
an independent auditor selected by the trustee in accordance with 
established auditing standards.
	SECTION ____.  Subchapter B, Chapter 1579, Insurance Code, 
is amended by adding Section 1579.057 to read as follows:
	Sec. 1579.057.  PHARMACY BENEFIT MANAGER CONTRACTS.  (a)  In 
awarding a contract to provide pharmacy benefit manager services 
under this chapter, the trustee is not required to select the lowest 
bid but must select a contract that meets the criteria established 
by this section.
	(b)  The contract must state that:                                      
		(1)  the trustee is entitled to audit the pharmacy 
benefit manager to verify costs and discounts associated with drug 
claims, pharmacy benefit manager compliance with contract 
requirements, and services provided by subcontractors;
		(2)  the audit must be conducted by an independent 
auditor in accordance with established auditing standards; and
		(3)  to conduct the audit, the trustee and the 
independent auditor are entitled access to information related to 
the services and the costs associated with the services performed 
under the contract, including access to the pharmacy benefit 
manager's facilities, records, contracts, medical records, and 
agreements with subcontractors.
	(c)  The contract must define the information that the 
pharmacy benefit manager is required to provide to the trustee 
concerning the audit of the retail, independent, and mail order 
pharmacies performing services under the contract and describe how 
the results of these audits must be reported to the trustee, 
including how often the results must be reported.  The contract must 
state whether the pharmacy benefit manager is required to return 
recovered overpayments to the trustee.
	(d)  The contract must state that any audit of a mail order 
pharmacy owned by the pharmacy benefit manager must be conducted by 
an independent auditor selected by the trustee in accordance with 
established auditing standards.
	SECTION ____.  Subchapter B, Chapter 1601, Insurance Code, 
is amended by adding Section 1601.064 to read as follows:
	Sec. 1601.064.  PHARMACY BENEFIT MANAGER CONTRACTS.  (a)  In 
awarding a contract to provide pharmacy benefit manager services 
under this chapter, a system is not required to select the lowest 
bid but must select a contract that meets the criteria established 
by this section.
	(b)  The contract must state that:                                      
		(1)  the system is entitled to audit the pharmacy 
benefit manager to verify costs and discounts associated with drug 
claims, pharmacy benefit manager compliance with contract 
requirements, and services provided by subcontractors;
		(2)  the audit must be conducted by an independent 
auditor in accordance with established auditing standards; and
		(3)  to conduct the audit, the system and the 
independent auditor are entitled access to information related to 
the services and the costs associated with the services performed 
under the contract, including access to the pharmacy benefit 
manager's facilities, records, contracts, medical records, and 
agreements with subcontractors.
	(c)  The contract must define the information that the 
pharmacy benefit manager is required to provide to the system 
concerning the audit of the retail, independent, and mail order 
pharmacies performing services under the contract and describe how 
the results of these audits must be reported to the system, 
including how often the results must be reported.  The contract must 
state whether the pharmacy benefit manager is required to return 
recovered overpayments to the system.
	(d)  The contract must state that any audit of a mail order 
pharmacy owned by the pharmacy benefit manager must be conducted by 
an independent auditor selected by the system in accordance with 
established auditing standards.
	SECTION ____.  Sections 1551.067, 1575.110, 1579.057, and 
1601.064, Insurance Code, as added by this Act, apply only to a 
contract with a pharmacy benefit manager executed or renewed on or 
after the effective date of this Act.