2019 has been a busy year for healthcare legislation in Texas and one bill, in particular, aimed to carve out PBM’s entirely. House Representative J.D. Sheffield (R) introduced HB 3388 on March 6th in an attempt to reform the delivery of prescription drugs to a fee-for-service model for Medicaid and other public benefit programs. However, during its time in the House, it underwent a series of significant changes.

Introduced HB 3388

Originally, HB 3388 was directed toward the delivery of outpatient prescription drug benefits. It proposed drastic changes such as:

•    Replacing the vendor drug program with a fee-for-service delivery model.

•    HHSC would eliminate any obligation to pay fees included in the capitation rate or other amounts paid to MCOs associated with the provision of outpatient prescription drug benefits.

•    If HHSC contracts with a claims processor to administer the outpatient prescription benefit program, HHSC would then reimburse the claims administrator for the prescription drugs and a contracted administrative fee.

•    HHSC would apply clinical prior authorization requirements statewide and use prior authorizations to control unnecessary utilization.

•    HHSC contracts with MCOs would be amended to prohibit the MCO from providing outpatient prescription drugs by December 31, 2019, and would prohibit an MCO from developing, implementing, or maintaining an outpatient pharmacy benefit plan for recipients beginning on the 180th day after the date HHSC begins providing outpatient prescription drug benefits.

Committee Substitute

During its time in the House, the bill’s language changed and the committee’s substitute did not include any provisions from the original. CSHB 3388 changed course and focused on the reimbursement of prescription drugs under Medicaid and CHIP rather than the delivery of drug benefits. Under the revised version:

•    MCOs providing services under Medicaid or CHIP would be required to reimburse retail and specialty pharmacies a minimum of the lesser of the reimbursement amount for the drug in the vendor drug program, including a dispensing fee that is not less than the dispensing fee under the vendor drug program, or the amount claimed by the pharmacy or pharmacist, including the gross amount due or the usual and customary charge to the public for the drug.

•    MCOs would be required to reimburse pharmacies that dispense a prescription drug at a discounted price under Section 340B of the Public Health Service Act not less than the reimbursement amount for the drug under the vendor drug program, including a dispensing fee that is not less than the dispensing fee under the vendor drug program.

•    HHSC would conduct a study every two years to examine Texas pharmacies’ actual acquisition costs and dispensing cost.

•    Bill 3388 would go into effect on March 1, 2020.

Supporters of the bill believe that pharmacies would receive fairer reimbursement of prescriptions filled for Medicaid and CHIP. They point out that the bill would improve transparency since it would utilize NADAC as a pricing benchmark. It would also not impact which drugs the programs covered.

On the other hand, opponents argue that the bill has the potential to increase state costs by altering reimbursement methodology. Their position is that PBMs serve to negotiate the best possible deals and protect patients from being prescribed unnecessary medications. They are concerned that the bill would negatively impact patient outcomes while increasing ER visits and opioid prescription rates, and decrease medication adherence.

HB 3388 was voted on in the House on May 4th and it has been referred to the Health and Human Services Committee. If the bill is approved it will surely impact healthcare within the state. While the revised bill does not include a pharmacy carve out, it’s a clear indication that lawmakers are focused on rising healthcare and prescription drugs costs and what they can do to remedy the problem.