| TO: | Honorable Lois W. Kolkhorst, Chair, House Committee on Public Health |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB4596 by Kolkhorst (Relating to certain contracts between pharmacy benefit managers and the Employees Retirement System of Texas, the Teacher Retirement System of Texas, The Texas A&M University System, or The University of Texas System.), As Introduced |
The bill would amend the Insurance Code by adding a section relating to certain contracts with pharmacy benefit managers (PBMs) and the Employees Retirement System (ERS), the Teacher Retirement System (TRS), the Texas A&M University System, or The University of Texas System. The new contract requirements include:
(1) PBM must be selected on established criteria, not based on lowest bid.
(2) PBMs must contain documentation for each instance when therapeutic interchange is used.
(3) PBMs must disclose in writing the financial and medical reasons for the addition, removal, or change in placement of a prescription drug from the drug formulary used by the PBM.
(4) Identification of any specialty drugs on the formulary used by the PBM, along with the specialty drug’s associated costs, discounts and other fees related to services performed by the PBM.
(5) Disclosure of any policy, practice, or business relationship of the PBM that could conflict with the performance of their duties.
(6) Disclosure of any cost savings initiatives used by the PBM.
(7) PBM must state the maximum allowable cost (MAC) to be used by the PBM.
(8) Identification and labeling of specific information contained in the contract that is considered proprietary information belonging to the PBM.
(9) Disclosure of the conditions under which the PBM may sell the data, if the PBM has a revenue-sharing agreement concerning the sale of data related to the services performed under the contract.
(10) The right to audit the PBM.
(11) Definition of what information the PBM must provide auditors.
The bill would take effect September 1, 2009.
ERS, TRS, The University of Texas System, and The Texas A&M University System all report that the provisions of the bill would not have a significant fiscal impact.
| Source Agencies: | 323 Teacher Retirement System, 327 Employees Retirement System, 710 Texas A&M University System Administrative and General Offices, 720 The University of Texas System Administration
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| LBB Staff: | JOB, CL, MS, DEH, JW
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