Texas Governor Greg Abbot has signed a bipartisan measure, deemed to be one of the strongest in the nation, to bring greater transparency to drug pricing in the state.

Texas joins a number of other states that have either passed, or have legislation pending, designed to tackle the increasing costs of prescription drugs in the U.S.

The Texas law, HB 2356, requires pharmaceutical drug manufacturers, pharmacy benefit managers (PBMs) and health benefit plans to report drug pricing information to the Texas Health and Human Services Commission (HHSC). The annual reporting requirements begin in 2020, with HHSC tasked with enacting necessary rules for implementation and with providing access to the data on the HHSC website.

The reporting requirements for manufacturers, PBMs, and health plans can be summarized as follows:

Manufacturers – No later than January 15 of each year, drug manufacturers must submit a report to HHSC that specifies:

  • Current wholesale acquisition cost information for FDA-approved drugs sold in Texas by the manufacturer

For drugs with a wholesale acquisition cost of at least $100 for a 30-day supply before the effective date of a price increase, manufacturers must report additional information within 30 days after the effective date of an increase of 40 percent or more over the preceding three calendar years or 15 percent or more in the preceding calendar year in the wholesale acquisition cost of a drug as follows:

  • The name of the drug;
  • Whether the drug is a brand name or generic;
  • The effective date of the change in wholesale acquisition cost;
  • Aggregate, company-level research and development costs for the most recent year for which final audit data is available;
  • The name of each of the manufacturer’s prescription drugs approved by the United States Food and Drug Administration in the previous three calendar years;
  • The name of each of the manufacturer’s prescription drugs that lost patent exclusivity in the United States in the previous three calendar years; and
  •  A statement regarding the factor or factors that caused the increase in the wholesale acquisition cost and an explanation of the role of each factor’s impact on the cost.

Pharmacy Benefit Managers – PBMs must report information to HHSC by February 1 of each calendar year. That data must include the following information from the preceding calendar year:

  • The aggregated rebates, fees, price protection payments and any other payments collected from drug manufacturers
  • The aggregated rebates, fees, price protection payments and any other payments collected from drug manufacturers that were passed on to health plans, enrollees at the point of sale or retained by the PBMS

In the first year of reporting in 2020, PBMs must provide the above information for the preceding three calendar years.

Health Plans – By February 1 of each calendar year, health plans must submit:

  • The names of the 25 most frequently prescribed prescription drugs across all plans;
  • The percent increase in annual net spending for prescription drugs across all plans;
  • The percent increase in premiums that were attributable to prescription drugs across all plans;
  • The percentage of specialty drugs with utilization management requirements across all plans; and
  • The premium reductions that were attributable to specialty drug utilization management.

The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare, medical device, and pharmaceutical industries.

Questions may be directed to any of the following attorneys:
Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson
brian.dickerson@fisherbroyles.com
202.570.0248

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci
Anthony.calaunci@fisherbroyles.com
419.376.1776

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid
nicole.waid@fisherbroyles.com
202.906.9572

Amy Butler, FisherBroyles Partner
Amy Butler
amy.butler@fisherbroyles.com
419.340.8466