Priority Alliance Commercial PBM Reform Legislation Filed Today

HB 2231 Brings Transparency to Prescription Drug Market

AUSTIN -- Texas pharmacists applauded Rep. Tom Oliverson, M.D. on Thursday for filing House Bill 2231, which would protect patients and small businesses from the predatory practices of pharmacy benefit managers.

Pharmacy benefit managers, also known as PBMs, are facing mounting scrutiny across the country for their role in driving up the costs of prescription drugs. PBMs serve as middlemen between drug manufacturers and insurers, and they control which drugs a plan will cover. Manufacturers pay rebates in order to get their drugs covered on provider network formularies, but PBMs tend to pocket those rebates instead of passing them along to consumers. In addition, PBMs reimburse pharmacies for dispensing medications, but they often reimburse pharmacies at a much lower amount than what they charged the plan sponsor for the same drug. But pharmacies lack a mechanism to dispute those low reimbursements.

House Bill 2231 would bring long-needed reforms to PBMs, which, unlike most sectors of health care, are subject to surprisingly little oversight.

"PBMs make prescription drugs more expensive and punish small businesses with their anti-competitive practices," said Lee Ann Hampton, R.Ph., owner of Paris Apothecary and president of the Alliance of Independent Pharmacists of Texas. "Dr. Oliverson's bill would bring needed transparency to the prescription drug market and help lower costs for patients. Community pharmacists are grateful for Dr. Oliverson's leadership."

The bill establishes PBMs have a fiduciary duty to plan sponsors, which would help ensure rebates are passed on to payers and patients and ultimately help lower the cost of prescription drugs.

The legislation would give the Texas Department of Insurance (TDI) authority to establish a process to allow pharmacies to appeal PBM reimbursement decisions and it would empower TDI to penalize PBMs who engage in dishonest contract practices. In addition, the bill would increase transparency by ensuring contracts adequately describe how reimbursements will be calculated.

To align with federal legislation, the bill would also prohibit PBMs from putting "gag clauses" in their contracts with pharmacies. PBMs have used these clauses to prevent pharmacists from telling patients when it would cost less to pay cash rather than use insurance to pay for a medication. President Trump recently signed federal legislation that aims to outlaw gag clauses, and this provision would ensure Texas statutes are in line with the new federal law.

"The Trump administration and other states have acted to rein in the abusive practices of PBMs," said J.D. Fain, R.Ph., president of Texas Independent Pharmacies Association. "This bill would allow Texas to catch up with those efforts and provide the transparency that's long been missing. Pharmacists know this bill is critical because we see how our patients struggle with prescription drug costs, and we also know PBMs' tactics contribute to those high prices."

The Trump administration recently proposed a rule that would require PBMs to pass on to consumers any discounts they receive from drugmakers. In addition, legislators in several states are pushing PBMs to disclose more information about rebates and other practices.

"This legislation would provide the oversight needed to combat PBMs' abuses and protect patients," said Audra Conwell, CEO of the Alliance of Independent Pharmacists. "We appreciate Dr. Oliverson's sincere and thoughtful efforts to lower prescription drug costs, and we hope the rest of the Legislature will join him and support this important bill."