Texas 2019 - 86th Regular

Texas House Bill HB1794 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	86R9103 SCL-F
2	2	By: Reynolds H.B. No. 1794
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to price transparency for certain prescription drugs;
8	8	authorizing civil penalties.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle A, Title 6, Health and Safety Code, is
11	11	amended by adding Chapter 441 to read as follows:
12	12	CHAPTER 441. PRESCRIPTION DRUG PRICE TRANSPARENCY
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 441.0001. DEFINITIONS. In this chapter:
15	15	(1) "Advisory committee" means the drug price
16	16	transparency advisory committee established under Subchapter D.
17	17	(2) "Average wholesale price" means the average
18	18	wholesale cost of an expensive drug that is based on the Medi-Span
19	19	price references for the drug's 11-digit national drug code as
20	20	submitted and used by the dispensing pharmacy to fill the
21	21	prescription for the drug.
22	22	(3) "Expensive drug" means a prescription drug made
23	23	available by a manufacturer in this state that has a wholesale
24	24	acquisition cost of $2,500 or more per year or through the course of
25	25	a patient's treatment.
26	26	(4) "Manufacturer" means a person who:
27	27	(A) is authorized by the United States Food and
28	28	Drug Administration to market and sell an expensive drug in the
29	29	United States as an originator or license holder; or
30	30	(B) directly or indirectly, through one or more
31	31	intermediaries, controls, is controlled by, or is under common
32	32	control with a person described by Paragraph (A).
33	33	(5) "Purchaser" means a person who purchases a
34	34	prescription drug under a health benefit plan, including:
35	35	(A) this state or an administrator of a health
36	36	benefit plan sponsored by this state, including:
37	37	(i) the state Medicaid program operated
38	38	under Chapter 32, Human Resources Code;
39	39	(ii) a basic coverage plan under Chapter
40	40	1551, Insurance Code; and
41	41	(iii) the child health plan program under
42	42	Chapter 62;
43	43	(B) a political subdivision of this state;
44	44	(C) a health benefit plan issuer subject to
45	45	regulation by this state; and
46	46	(D) a pharmacy benefit manager as defined by
47	47	Section 4151.151, Insurance Code.
48	48	(6) "Therapeutic class" means a therapeutic category
49	49	or class of prescription drugs established by the United States
50	50	Pharmacopeia that reflects therapeutic uses of drugs based on the
51	51	International Classification of Diseases diagnostic codes.
52	52	(7) "Wholesale acquisition cost" has the meaning
53	53	assigned by 42 U.S.C. Section 1395w-3a.
54	54	SUBCHAPTER B. MANUFACTURER REPORTING
55	55	Sec. 441.0051. ANNUAL REPORT REQUIRED. Not later than
56	56	March 31 of each year, a manufacturer of an expensive drug sold or
57	57	offered for sale in this state shall submit a report to the
58	58	department in the form and manner prescribed by department rule and
59	59	in accordance with this subchapter.
60	60	Sec. 441.0052. REPORT CONTENTS. A manufacturer shall
61	61	include in the report described by Section 441.0051 for each
62	62	expensive drug:
63	63	(1) the total research and development costs for the
64	64	drug, including the costs:
65	65	(A) incurred by the manufacturer;
66	66	(B) incurred by any predecessor to the
67	67	manufacturer;
68	68	(C) incurred by any other person; and
69	69	(D) paid by or through governmental sources or
70	70	grants;
71	71	(2) the intellectual property rights, approvals, and
72	72	associated regulatory costs for the drug, including:
73	73	(A) a list of all product and process patents and
74	74	all data market and exclusivity awarded by the United States Patent
75	75	and Trademark Office for the drug;
76	76	(B) all reverse payment settlements involving
77	77	the drug; and
78	78	(C) all regulatory costs paid by the manufacturer
79	79	or its predecessors in obtaining the rights and approvals,
80	80	including the United States Food and Drug Administration user and
81	81	filing fees and patent filing fees;
82	82	(3) the manufacturing, production, marketing, and
83	83	advertising costs, including:
84	84	(A) the total annual and cumulative itemized
85	85	costs to produce the drug from the time the manufacturer began
86	86	producing the drug;
87	87	(B) the manufacturer's total direct costs for
88	88	materials, manufacturing, and administration attributable to the
89	89	drug; and
90	90	(C) all marketing and advertising costs to
91	91	promote the drug directly to consumers, including:
92	92	(i) costs associated with consumer copay
93	93	coupons;
94	94	(ii) amounts redeemed with consumer copay
95	95	coupons; and
96	96	(iii) marketing and advertising costs for
97	97	promotion of the drug directly or indirectly to individuals who are
98	98	prescribed the drug;
99	99	(4) the prices of the drug and revenue from the drug's
100	100	sales, including:
101	101	(A) the total revenues from sales in this state
102	102	and in the United States, listed separately, for each of the
103	103	preceding five calendar years; and
104	104	(B) a cumulative monthly history of increases in
105	105	the average wholesale price or wholesale acquisition cost for the
106	106	drug in the preceding five calendar years, including each month in
107	107	which an increase took effect;
108	108	(5) the manufacturer's federal, state, and local
109	109	income tax rates, governmental benefits, and credits, including:
110	110	(A) the federal income tax rate paid by the
111	111	manufacturer;
112	112	(B) the total amount paid by any person other
113	113	than the manufacturer for materials, manufacturing, marketing,
114	114	advertising, administration, and other costs associated with the
115	115	drug, including any federal, state, or local tax credits or
116	116	subsidies, tax deductions, grants, or other support received or
117	117	deferred; and
118	118	(C) income from any source for any of the
119	119	following activities occurring in a foreign country by or on behalf
120	120	of the manufacturer:
121	121	(i) the research, development,
122	122	manufacture, or production of the drug;
123	123	(ii) the sale, exchange, or disposition of
124	124	the drug; or
125	125	(iii) the lease, rental, or licensing of
126	126	the drug;
127	127	(6) the manufacturer's financial assistance to
128	128	patients, including:
129	129	(A) the total amount of financial assistance to
130	130	patients the manufacturer has provided for the drug during the
131	131	preceding five calendar years, including:
132	132	(i) discounts;
133	133	(ii) rebates and patient prescription
134	134	assistance programs;
135	135	(iii) copay assistance costs; and
136	136	(iv) total donations to patient assistance
137	137	nonprofits and the related tax deductions; and
138	138	(B) the number of patients who have benefited
139	139	from the manufacturer's financial assistance for each of the
140	140	preceding five calendar years;
141	141	(7) the comparative effectiveness of the drug,
142	142	including:
143	143	(A) the therapeutic class of the drug;
144	144	(B) the names of any other brand or generic drug
145	145	approved by the United States Food and Drug Administration in the
146	146	same therapeutic class; and
147	147	(C) any clinical or pharmacoeconomic evidence
148	148	indicating the drug's improved efficacy compared to all other brand
149	149	or generic drugs described by Paragraph (B); and
150	150	(8) any other information required to be included
151	151	under rules adopted under this chapter.
152	152	Sec. 441.0053. MANUFACTURER DUTIES. A manufacturer
153	153	required to submit a report under Section 441.0051 shall:
154	154	(1) separately identify by page number and line the
155	155	information included in the report to the maximum extent possible
156	156	to promote public transparency and understanding of the
157	157	information;
158	158	(2) provide documentation for the information
159	159	included in the report;
160	160	(3) have the information in the annual report audited
161	161	by an independent third-party auditor before the report is filed
162	162	with the department; and
163	163	(4) include information for the preceding calendar
164	164	year unless otherwise required under this subchapter or a rule
165	165	adopted under this chapter.
166	166	Sec. 441.0054. PUBLIC INFORMATION. (a) A report described
167	167	by Section 441.0051 is public information under Chapter 552,
168	168	Government Code.
169	169	(b) The department shall post each report described by
170	170	Section 441.0051 on the department's Internet website.
171	171	Sec. 441.0055. ENFORCEMENT. (a) If a manufacturer
172	172	violates this subchapter or a rule adopted under this subchapter:
173	173	(1) the manufacturer is liable for a civil penalty not
174	174	to exceed $10,000 for each day the violation continues; and
175	175	(2) the attorney general may bring a writ of mandamus
176	176	against the manufacturer to compel compliance with this subchapter.
177	177	(b) If the attorney general brings a writ of mandamus under
178	178	Subsection (a):
179	179	(1) the attorney general shall provide written notice
180	180	to the manufacturer not later than the seventh day before the date
181	181	the attorney general brings the writ; and
182	182	(2) the attorney general may recover attorney's fees
183	183	and costs if the attorney general prevails.
184	184	(c) The attorney general may sue to collect a civil penalty
185	185	imposed under this section and may recover attorney's fees and
186	186	costs if the attorney general prevails.
187	187	SUBCHAPTER C. DISCLOSURE OF PRICE INCREASES
188	188	Sec. 441.0101. NOTICE REQUIRED. (a) Not later than the
189	189	60th day before the date a price increase takes effect, a
190	190	manufacturer shall submit written notice to the department before
191	191	the manufacturer increases the average wholesale price or wholesale
192	192	acquisition cost of an expensive drug by more than:
193	193	(1) the lesser of 10 percent or $2,500 during a
194	194	12-month period; or
195	195	(2) 15 percent cumulatively during any 24-month
196	196	period.
197	197	(b) The notice described by Subsection (a) must state:
198	198	(1) the justification for the price increase;
199	199	(2) the marketing budget for the drug in the preceding
200	200	calendar year;
201	201	(3) if the drug was not developed by the manufacturer,
202	202	the date the drug was acquired by the manufacturer and the price of
203	203	the acquisition; and
204	204	(4) the history of all price increases for the drug
205	205	that took effect during the preceding five calendar years.
206	206	Sec. 441.0102. DEPARTMENT DUTIES; RULES. (a) Not later
207	207	than 15 days after the date a manufacturer submits a notice under
208	208	Section 441.0101, the department shall:
209	209	(1) post the notice on the department's Internet
210	210	website; and
211	211	(2) send electronic notice of the submission to:
212	212	(A) purchasers that have requested to receive
213	213	notification; and
214	214	(B) the Texas State Board of Pharmacy.
215	215	(b) The executive commissioner by rule shall establish a
216	216	process through which a purchaser may request to receive notice of a
217	217	submission under this subchapter.
218	218	Sec. 441.0103. PUBLIC INFORMATION. A notice described by
219	219	Section 441.0101 is public information under Chapter 552,
220	220	Government Code.
221	221	Sec. 441.0104. CIVIL PENALTY. (a) If a manufacturer
222	222	violates this subchapter or a rule adopted under this subchapter
223	223	the manufacturer is liable for a civil penalty in an amount not to
224	224	exceed $10,000 for each day the violation continues.
225	225	(b) The attorney general may sue to collect a civil penalty
226	226	imposed under this section and may recover attorney's fees and
227	227	costs if the attorney general prevails.
228	228	SUBCHAPTER D. DRUG PRICE TRANSPARENCY ADVISORY COMMITTEE
229	229	Sec. 441.0151. ESTABLISHMENT. The department shall
230	230	establish the drug price transparency advisory committee.
231	231	Sec. 441.0152. COMPOSITION. (a) The advisory committee
232	232	consists of nine members appointed by the commissioner as follows:
233	233	(1) the commissioner or the commissioner's designee;
234	234	(2) two academic public health researchers;
235	235	(3) one economist;
236	236	(4) one certified public accountant;
237	237	(5) one licensed physician who practices in this
238	238	state;
239	239	(6) one licensed pharmacist who practices in this
240	240	state; and
241	241	(7) two consumer representatives.
242	242	(b) An advisory committee member may not be affiliated with
243	243	a manufacturer or have any other conflict of interest regarding
244	244	advisory committee duties.
245	245	(c) The commissioner or the commissioner's designee serves
246	246	as the presiding officer of the advisory committee.
247	247	Sec. 441.0153. DUTIES. The advisory committee shall advise
248	248	the department or executive commissioner, as applicable,
249	249	regarding:
250	250	(1) the development of rules adopted under this
251	251	chapter;
252	252	(2) the review of annual reports required under
253	253	Section 441.0051; and
254	254	(3) the preparation of a report the department is
255	255	required to publish under Section 441.0202.
256	256	Sec. 441.0154. ADVISORY COMMITTEE RULES. The executive
257	257	commissioner shall adopt rules necessary to implement this
258	258	subchapter, including rules on:
259	259	(1) the number of times the advisory committee is
260	260	required to meet each year;
261	261	(2) the compensation for and reimbursement for
262	262	expenses incurred by advisory committee members; and
263	263	(3) the terms of advisory committee members.
264	264	SUBCHAPTER E. RULES AND DEPARTMENT REPORT
265	265	Sec. 441.0201. RULES. The executive commissioner, in
266	266	consultation with the advisory committee, shall adopt rules
267	267	necessary to implement this chapter. The rules must:
268	268	(1) facilitate public transparency regarding:
269	269	(A) the pricing of expensive drugs;
270	270	(B) the revenue realized by the manufacturers
271	271	from the sale of expensive drugs; and
272	272	(C) the return on public investment in the
273	273	development of expensive drugs made through federal, state, or
274	274	local grants or other governmental financial assistance;
275	275	(2) identify any additional specific information
276	276	within each of the categories listed in Section 441.0052 that a
277	277	manufacturer must include in the report; and
278	278	(3) include a uniform reporting form that a
279	279	manufacturer must use to facilitate the disclosure of information
280	280	required to be reported under this chapter and the department's
281	281	preparation of the report required under Section 441.0202.
282	282	Sec. 441.0202. DEPARTMENT REPORT. (a) Not later than
283	283	September 30 of each year, the department shall prepare and publish
284	284	on the department's Internet website a report that summarizes the
285	285	reports filed by manufacturers under Subchapter B during the
286	286	preceding calendar year.
287	287	(b) The department shall provide a copy of the report
288	288	described by Subsection (a) to the governor, lieutenant governor,
289	289	speaker of the house of representatives, and each member of the
290	290	legislature.
291	291	SECTION 2. (a) A manufacturer is not required to submit an
292	292	annual report under Section 441.0051, Health and Safety Code, as
293	293	added by this Act, before March 31, 2021.
294	294	(b) The Department of State Health Services is not required
295	295	to publish a report under Section 441.0202, Health and Safety Code,
296	296	as added by this Act, before September 30, 2021.
297	297	SECTION 3. As soon as practicable after the effective date
298	298	of this Act, the executive commissioner of the Health and Human
299	299	Services Commission shall adopt rules necessary to implement
300	300	Chapter 441, Health and Safety Code, as added by this Act.
301	301	SECTION 4. This Act takes effect September 1, 2019.