Texas drug-pricing transparency bill passes full Legislature

A drug-pricing transparency bill that aims to establish reporting requirements for pharmaceutical drug manufacturers, health plans, and pharmacy benefit managers passed the full Texas Legislature this week. The House of Representatives concurred with Senate amendments to HB 2536 on Friday — now, it awaits signatures from both presiding officers and the governor.

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HB 2536 requires pharmaceutical drug manufacturers, health plans, and pharmacy benefit managers to report specific information regarding prescription drug prices and price increases, which would be publicly available online, in an effort to increase transparency.

Under the bill, drug manufacturers must submit an annual report to the Executive Commissioner of the Health and Human Services Commission in mid-January that includes the manufacturer’s list price charged to wholesalers or direct purchasers for pharmaceutical drugs sold in Texas. The provisions would only apply to drugs that cost at least $100 for a 30-day supply.

The bill also requires manufacturers to submit reports within 30 days if a drug’s price increases drastically — by 40% or more compared to the past three years or by 15% or more compared to the past year.

Reports on increased prices would need to, among other details, include: whether the drug is brand-name or generic; recent company-level research and development costs; “the name of each of the manufacturer’s prescription drugs that lost patent exclusivity in the United States in the previous five calendar years;” and a statement on the factor(s) that contributed to the increase, along with an explanation of the role each factor played in increasing cost.

The Executive Commissioner of the Health and Human Services Commission’s would be tasked with developing a website specifically for providing drug-pricing information within its existing site. Pricing information provided by manufacturers would be featured on the site, along with the reports on price increases.

The bill also requires Pharmacy Benefit Managers (PBMs) to submit an annual report — which would also be posted online — to the Commissioner of Insurance each February. PBMs’ reports would detail payments collected from manufacturers, including aggregated rebates, fees, and price protection payments, as well as such payments that were passed to health plan issuers, enrollees at point-of-sale, or that the PBM retained as revenue.

Each February, health plans would also be required to submit detailed reports to the Commissioner of Insurance that include: the 25 most frequently prescribed prescription drugs across plans; the percent increase in annual spending for drugs across plans; the percent increase in premiums attributable to drugs across plans; and information regarding utilization management and “specialty drugs” — drugs covered under Medicare Part D that exceed the specialty-tier cost threshold.

Senate amendments included in the final bill eased up on a few of the specific reporting requirements for manufacturers. They also introduced an additional requirement for PBMs: their first reports, due in February 2020, must also include all the information required for the preceding three years, not just the preceding year.

Sen. Kelly Hancock, who sponsored the bill in the Senate, said the following in a press release:

“Prescription drug costs are a significant portion of the household budget for many Texans. When the price of a prescription spikes, people deserve to know why their wallets are taking a hit. This legislation serves as a much-needed consumer price check on a complicated industry that, frankly, could do with a lot more transparency.”

If Gov. Greg Abbott signs the bill into law, it will take effect September 1 of this year; however, manufacturers, health plans, and PBMs wouldn’t be required to submit any reports before January 1, 2020.