BILL ANALYSIS Senate Research Center C.S.S.B. 493 89R20775 DNC-D By: Kolkhorst Health & Human Services 3/26/2025 Committee Report (Substituted) AUTHOR'S / SPONSOR'S STATEMENT OF INTENT S.B. 493 prohibits "gag clauses" in contracts that prevent pharmacies from telling patients when the cash price for a drug is lower than the price under their insurance plan. S.B. 493 addresses contractual provisions between some health insurers, pharmacy benefit managers, and pharmacies that prohibit pharmacists from freely informing patients if paying out-of-pocket (cash price) for the prescription may be cheaper than the insured's copay. Prescription copays differ by health plan but are typically less for generics than name-brand drugs; however, patients sometimes pay more in copays for generics than if they bought the same drugs at the cash price. JAMA reviewed 9.5 million insurance claims and found that nearly a quarter of prescriptions cost patients more than if they had paid the cash price.1 In 2018, President Trump sought to close that information gap and since then signed into law two bills that ban these types of gag clause provisions and 44 states have passed legislation prohibiting gag clauses on pharmacies to align state law with federal protections. Currently, the Texas Insurance Code protects physician and provider communication with patients, but it does not address communication with the enrollee about the cost of prescription drugs. Last session, H.B. 711 banned anti-competitive clauses, including gag clauses in contracts between providers and health plans. However, it does not apply to pharmacists or pharmacy contracts, as they are not included in the definition of "providers" in Section 1458.001 of the Texas Insurance Code. S.B. 493 protects pharmacists' right to counsel patients on the best price option for prescription drugs and promotes greater cost transparency for the consumer by ensuring pharmacists can freely inform patients about the lowest cost prescription options. Key Provisions S.B. 493 amends Chapter 1369, Insurance Code, adding a new Subchapter R on Protected Practices Regarding Prescription Drug Charges. New subchapter prohibits health plans or pharmacy benefit managers (PBMs) from restricting pharmacists or pharmacies from informing patients about the potential cost difference between paying for their prescription either with insurance or without (a.k.a. the cash price). Applicable to all group and individual fully insured health benefit plans issued in the state and regulated by TDI and health plans for employees of A&M and UT, TRS, ERS, State Medicaid & CHIP, and county and city risk pools. Committee Substitute: Moves S.B. 493 to Chapter 562, Texas Occupations Code, making S.B. 493 specific to the kinds of contracts into which a pharmacist may enter. Maintains the original prohibitions on gag clauses, prohibiting pharmacists from entering contracts that prevent pharmacists from disclosing to patients when the cash price for a drug is lower than the price under their insurance plan. Adds an additional type of gag clause: pharmacists may not enter into a contract preventing the ability to directly communicate with the plan sponsor. 1 Journal of the American Medical Association "Frequency and Magnitude of Co-Payments Exceeding Prescription Drug Costs" Volume 319, No. 10 March, 13 2018. Accessed 1/15/2025 https://jamanetwork.com/journals/jama/fullarticle/2674655 C.S.S.B. 493 amends current law relating to certain protected disclosures or communications by pharmacists and pharmacies regarding prescription drug benefits. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 562, Occupations Code, by adding Section 562.0035, as follows: Sec. 562.0035. PROTECTED DISCLOSURES AND COMMUNICATIONS BY PHARMACISTS AND PHARMACIES REGARDING PRESCRIPTION DRUG BENEFITS. (a) Defines "enrollee." (b) Prohibits a pharmacist or pharmacy from entering into a contract or agreement or implementing or effectuating a policy that prohibits or restricts the pharmacist or pharmacy from: (1) informing an enrollee of any difference between the enrollee's out-of-pocket cost for a prescription drug under the enrollee's health benefit plan and the out-of-pocket cost without submitting a claim under the enrollee's health benefit plan; or (2) communicating with sponsors of an enrollee's health benefit plan regarding member services with respect to prescription drug benefits, pharmacy services and benefits, network access and adequacy with respect to prescription drug benefits, partnership opportunities, or prescription claim reimbursement. SECTION 2. Makes application of this Act prospective. SECTION 3. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center C.S.S.B. 493
89R20775 DNC-D By: Kolkhorst
Health & Human Services
3/26/2025
Committee Report (Substituted)
Senate Research Center
C.S.S.B. 493
89R20775 DNC-D
By: Kolkhorst
Health & Human Services
3/26/2025
Committee Report (Substituted)
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
S.B. 493 prohibits "gag clauses" in contracts that prevent pharmacies from telling patients when the cash price for a drug is lower than the price under their insurance plan. S.B. 493 addresses contractual provisions between some health insurers, pharmacy benefit managers, and pharmacies that prohibit pharmacists from freely informing patients if paying out-of-pocket (cash price) for the prescription may be cheaper than the insured's copay.
Prescription copays differ by health plan but are typically less for generics than name-brand drugs; however, patients sometimes pay more in copays for generics than if they bought the same drugs at the cash price. JAMA reviewed 9.5 million insurance claims and found that nearly a quarter of prescriptions cost patients more than if they had paid the cash price.1 In 2018, President Trump sought to close that information gap and since then signed into law two bills that ban these types of gag clause provisions and 44 states have passed legislation prohibiting gag clauses on pharmacies to align state law with federal protections.
Currently, the Texas Insurance Code protects physician and provider communication with patients, but it does not address communication with the enrollee about the cost of prescription drugs. Last session, H.B. 711 banned anti-competitive clauses, including gag clauses in contracts between providers and health plans.
However, it does not apply to pharmacists or pharmacy contracts, as they are not included in the definition of "providers" in Section 1458.001 of the Texas Insurance Code.
S.B. 493 protects pharmacists' right to counsel patients on the best price option for prescription drugs and promotes greater cost transparency for the consumer by ensuring pharmacists can freely inform patients about the lowest cost prescription options.
Key Provisions
S.B. 493 amends Chapter 1369, Insurance Code, adding a new Subchapter R on Protected Practices Regarding Prescription Drug Charges.
New subchapter prohibits health plans or pharmacy benefit managers (PBMs) from restricting pharmacists or pharmacies from informing patients about the potential cost difference between paying for their prescription either with insurance or without (a.k.a. the cash price).
Applicable to all group and individual fully insured health benefit plans issued in the state and regulated by TDI and health plans for employees of A&M and UT, TRS, ERS, State Medicaid & CHIP, and county and city risk pools.
Committee Substitute:
Moves S.B. 493 to Chapter 562, Texas Occupations Code, making S.B. 493 specific to the kinds of contracts into which a pharmacist may enter.
Maintains the original prohibitions on gag clauses, prohibiting pharmacists from entering contracts that prevent pharmacists from disclosing to patients when the cash price for a drug is lower than the price under their insurance plan.
Adds an additional type of gag clause: pharmacists may not enter into a contract preventing the ability to directly communicate with the plan sponsor.
1 Journal of the American Medical Association "Frequency and Magnitude of Co-Payments Exceeding Prescription Drug Costs" Volume 319, No. 10 March, 13 2018. Accessed 1/15/2025 https://jamanetwork.com/journals/jama/fullarticle/2674655
C.S.S.B. 493 amends current law relating to certain protected disclosures or communications by pharmacists and pharmacies regarding prescription drug benefits.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Subchapter A, Chapter 562, Occupations Code, by adding Section 562.0035, as follows:
Sec. 562.0035. PROTECTED DISCLOSURES AND COMMUNICATIONS BY PHARMACISTS AND PHARMACIES REGARDING PRESCRIPTION DRUG BENEFITS. (a) Defines "enrollee."
(b) Prohibits a pharmacist or pharmacy from entering into a contract or agreement or implementing or effectuating a policy that prohibits or restricts the pharmacist or pharmacy from:
(1) informing an enrollee of any difference between the enrollee's out-of-pocket cost for a prescription drug under the enrollee's health benefit plan and the out-of-pocket cost without submitting a claim under the enrollee's health benefit plan; or
(2) communicating with sponsors of an enrollee's health benefit plan regarding member services with respect to prescription drug benefits, pharmacy services and benefits, network access and adequacy with respect to prescription drug benefits, partnership opportunities, or prescription claim reimbursement.
SECTION 2. Makes application of this Act prospective.
SECTION 3. Effective date: September 1, 2025.