86R9103 SCL-F
By: Reynolds H.B. No. 1794
A BILL TO BE ENTITLED
AN ACT
relating to price transparency for certain prescription drugs;
authorizing civil penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 6, Health and Safety Code, is
amended by adding Chapter 441 to read as follows:
CHAPTER 441. PRESCRIPTION DRUG PRICE TRANSPARENCY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 441.0001. DEFINITIONS. In this chapter:
(1) "Advisory committee" means the drug price
transparency advisory committee established under Subchapter D.
(2) "Average wholesale price" means the average
wholesale cost of an expensive drug that is based on the Medi-Span
price references for the drug's 11-digit national drug code as
submitted and used by the dispensing pharmacy to fill the
prescription for the drug.
(3) "Expensive drug" means a prescription drug made
available by a manufacturer in this state that has a wholesale
acquisition cost of $2,500 or more per year or through the course of
a patient's treatment.
(4) "Manufacturer" means a person who:
(A) is authorized by the United States Food and
Drug Administration to market and sell an expensive drug in the
United States as an originator or license holder; or
(B) directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with a person described by Paragraph (A).
(5) "Purchaser" means a person who purchases a
prescription drug under a health benefit plan, including:
(A) this state or an administrator of a health
benefit plan sponsored by this state, including:
(i) the state Medicaid program operated
under Chapter 32, Human Resources Code;
(ii) a basic coverage plan under Chapter
1551, Insurance Code; and
(iii) the child health plan program under
Chapter 62;
(B) a political subdivision of this state;
(C) a health benefit plan issuer subject to
regulation by this state; and
(D) a pharmacy benefit manager as defined by
Section 4151.151, Insurance Code.
(6) "Therapeutic class" means a therapeutic category
or class of prescription drugs established by the United States
Pharmacopeia that reflects therapeutic uses of drugs based on the
International Classification of Diseases diagnostic codes.
(7) "Wholesale acquisition cost" has the meaning
assigned by 42 U.S.C. Section 1395w-3a.
SUBCHAPTER B. MANUFACTURER REPORTING
Sec. 441.0051. ANNUAL REPORT REQUIRED. Not later than
March 31 of each year, a manufacturer of an expensive drug sold or
offered for sale in this state shall submit a report to the
department in the form and manner prescribed by department rule and
in accordance with this subchapter.
Sec. 441.0052. REPORT CONTENTS. A manufacturer shall
include in the report described by Section 441.0051 for each
expensive drug:
(1) the total research and development costs for the
drug, including the costs:
(A) incurred by the manufacturer;
(B) incurred by any predecessor to the
manufacturer;
(C) incurred by any other person; and
(D) paid by or through governmental sources or
grants;
(2) the intellectual property rights, approvals, and
associated regulatory costs for the drug, including:
(A) a list of all product and process patents and
all data market and exclusivity awarded by the United States Patent
and Trademark Office for the drug;
(B) all reverse payment settlements involving
the drug; and
(C) all regulatory costs paid by the manufacturer
or its predecessors in obtaining the rights and approvals,
including the United States Food and Drug Administration user and
filing fees and patent filing fees;
(3) the manufacturing, production, marketing, and
advertising costs, including:
(A) the total annual and cumulative itemized
costs to produce the drug from the time the manufacturer began
producing the drug;
(B) the manufacturer's total direct costs for
materials, manufacturing, and administration attributable to the
drug; and
(C) all marketing and advertising costs to
promote the drug directly to consumers, including:
(i) costs associated with consumer copay
coupons;
(ii) amounts redeemed with consumer copay
coupons; and
(iii) marketing and advertising costs for
promotion of the drug directly or indirectly to individuals who are
prescribed the drug;
(4) the prices of the drug and revenue from the drug's
sales, including:
(A) the total revenues from sales in this state
and in the United States, listed separately, for each of the
preceding five calendar years; and
(B) a cumulative monthly history of increases in
the average wholesale price or wholesale acquisition cost for the
drug in the preceding five calendar years, including each month in
which an increase took effect;
(5) the manufacturer's federal, state, and local
income tax rates, governmental benefits, and credits, including:
(A) the federal income tax rate paid by the
manufacturer;
(B) the total amount paid by any person other
than the manufacturer for materials, manufacturing, marketing,
advertising, administration, and other costs associated with the
drug, including any federal, state, or local tax credits or
subsidies, tax deductions, grants, or other support received or
deferred; and
(C) income from any source for any of the
following activities occurring in a foreign country by or on behalf
of the manufacturer:
(i) the research, development,
manufacture, or production of the drug;
(ii) the sale, exchange, or disposition of
the drug; or
(iii) the lease, rental, or licensing of
the drug;
(6) the manufacturer's financial assistance to
patients, including:
(A) the total amount of financial assistance to
patients the manufacturer has provided for the drug during the
preceding five calendar years, including:
(i) discounts;
(ii) rebates and patient prescription
assistance programs;
(iii) copay assistance costs; and
(iv) total donations to patient assistance
nonprofits and the related tax deductions; and
(B) the number of patients who have benefited
from the manufacturer's financial assistance for each of the
preceding five calendar years;
(7) the comparative effectiveness of the drug,
including:
(A) the therapeutic class of the drug;
(B) the names of any other brand or generic drug
approved by the United States Food and Drug Administration in the
same therapeutic class; and
(C) any clinical or pharmacoeconomic evidence
indicating the drug's improved efficacy compared to all other brand
or generic drugs described by Paragraph (B); and
(8) any other information required to be included
under rules adopted under this chapter.
Sec. 441.0053. MANUFACTURER DUTIES. A manufacturer
required to submit a report under Section 441.0051 shall:
(1) separately identify by page number and line the
information included in the report to the maximum extent possible
to promote public transparency and understanding of the
information;
(2) provide documentation for the information
included in the report;
(3) have the information in the annual report audited
by an independent third-party auditor before the report is filed
with the department; and
(4) include information for the preceding calendar
year unless otherwise required under this subchapter or a rule
adopted under this chapter.
Sec. 441.0054. PUBLIC INFORMATION. (a) A report described
by Section 441.0051 is public information under Chapter 552,
Government Code.
(b) The department shall post each report described by
Section 441.0051 on the department's Internet website.
Sec. 441.0055. ENFORCEMENT. (a) If a manufacturer
violates this subchapter or a rule adopted under this subchapter:
(1) the manufacturer is liable for a civil penalty not
to exceed $10,000 for each day the violation continues; and
(2) the attorney general may bring a writ of mandamus
against the manufacturer to compel compliance with this subchapter.
(b) If the attorney general brings a writ of mandamus under
Subsection (a):
(1) the attorney general shall provide written notice
to the manufacturer not later than the seventh day before the date
the attorney general brings the writ; and
(2) the attorney general may recover attorney's fees
and costs if the attorney general prevails.
(c) The attorney general may sue to collect a civil penalty
imposed under this section and may recover attorney's fees and
costs if the attorney general prevails.
SUBCHAPTER C. DISCLOSURE OF PRICE INCREASES
Sec. 441.0101. NOTICE REQUIRED. (a) Not later than the
60th day before the date a price increase takes effect, a
manufacturer shall submit written notice to the department before
the manufacturer increases the average wholesale price or wholesale
acquisition cost of an expensive drug by more than:
(1) the lesser of 10 percent or $2,500 during a
12-month period; or
(2) 15 percent cumulatively during any 24-month
period.
(b) The notice described by Subsection (a) must state:
(1) the justification for the price increase;
(2) the marketing budget for the drug in the preceding
calendar year;
(3) if the drug was not developed by the manufacturer,
the date the drug was acquired by the manufacturer and the price of
the acquisition; and
(4) the history of all price increases for the drug
that took effect during the preceding five calendar years.
Sec. 441.0102. DEPARTMENT DUTIES; RULES. (a) Not later
than 15 days after the date a manufacturer submits a notice under
Section 441.0101, the department shall:
(1) post the notice on the department's Internet
website; and
(2) send electronic notice of the submission to:
(A) purchasers that have requested to receive
notification; and
(B) the Texas State Board of Pharmacy.
(b) The executive commissioner by rule shall establish a
process through which a purchaser may request to receive notice of a
submission under this subchapter.
Sec. 441.0103. PUBLIC INFORMATION. A notice described by
Section 441.0101 is public information under Chapter 552,
Government Code.
Sec. 441.0104. CIVIL PENALTY. (a) If a manufacturer
violates this subchapter or a rule adopted under this subchapter
the manufacturer is liable for a civil penalty in an amount not to
exceed $10,000 for each day the violation continues.
(b) The attorney general may sue to collect a civil penalty
imposed under this section and may recover attorney's fees and
costs if the attorney general prevails.
SUBCHAPTER D. DRUG PRICE TRANSPARENCY ADVISORY COMMITTEE
Sec. 441.0151. ESTABLISHMENT. The department shall
establish the drug price transparency advisory committee.
Sec. 441.0152. COMPOSITION. (a) The advisory committee
consists of nine members appointed by the commissioner as follows:
(1) the commissioner or the commissioner's designee;
(2) two academic public health researchers;
(3) one economist;
(4) one certified public accountant;
(5) one licensed physician who practices in this
state;
(6) one licensed pharmacist who practices in this
state; and
(7) two consumer representatives.
(b) An advisory committee member may not be affiliated with
a manufacturer or have any other conflict of interest regarding
advisory committee duties.
(c) The commissioner or the commissioner's designee serves
as the presiding officer of the advisory committee.
Sec. 441.0153. DUTIES. The advisory committee shall advise
the department or executive commissioner, as applicable,
regarding:
(1) the development of rules adopted under this
chapter;
(2) the review of annual reports required under
Section 441.0051; and
(3) the preparation of a report the department is
required to publish under Section 441.0202.
Sec. 441.0154. ADVISORY COMMITTEE RULES. The executive
commissioner shall adopt rules necessary to implement this
subchapter, including rules on:
(1) the number of times the advisory committee is
required to meet each year;
(2) the compensation for and reimbursement for
expenses incurred by advisory committee members; and
(3) the terms of advisory committee members.
SUBCHAPTER E. RULES AND DEPARTMENT REPORT
Sec. 441.0201. RULES. The executive commissioner, in
consultation with the advisory committee, shall adopt rules
necessary to implement this chapter. The rules must:
(1) facilitate public transparency regarding:
(A) the pricing of expensive drugs;
(B) the revenue realized by the manufacturers
from the sale of expensive drugs; and
(C) the return on public investment in the
development of expensive drugs made through federal, state, or
local grants or other governmental financial assistance;
(2) identify any additional specific information
within each of the categories listed in Section 441.0052 that a
manufacturer must include in the report; and
(3) include a uniform reporting form that a
manufacturer must use to facilitate the disclosure of information
required to be reported under this chapter and the department's
preparation of the report required under Section 441.0202.
Sec. 441.0202. DEPARTMENT REPORT. (a) Not later than
September 30 of each year, the department shall prepare and publish
on the department's Internet website a report that summarizes the
reports filed by manufacturers under Subchapter B during the
preceding calendar year.
(b) The department shall provide a copy of the report
described by Subsection (a) to the governor, lieutenant governor,
speaker of the house of representatives, and each member of the
legislature.
SECTION 2. (a) A manufacturer is not required to submit an
annual report under Section 441.0051, Health and Safety Code, as
added by this Act, before March 31, 2021.
(b) The Department of State Health Services is not required
to publish a report under Section 441.0202, Health and Safety Code,
as added by this Act, before September 30, 2021.
SECTION 3. As soon as practicable after the effective date
of this Act, the executive commissioner of the Health and Human
Services Commission shall adopt rules necessary to implement
Chapter 441, Health and Safety Code, as added by this Act.
SECTION 4. This Act takes effect September 1, 2019.