TPA Encourages House Insurance Committee to Expand PBM Reform Laws

The Texas House Insurance Committee held a hearing on May 18 concerning the interim charge requested by the Texas Pharmacy Association to study the impact of the U.S. Supreme Court’s decision in Rutledge v. Pharmaceutical Care Management Association on the Texas insurance market. The Rutledge decision, a unanimous 8–0 opinion issued in December 2020, affirmed that states can broadly regulate pharmacy benefit managers (PBMs) to protect local businesses and their patients from PBM overreach. The committee's report will be very important in laying the groundwork for TPA's legislative priorities during the 2023 legislative session, and TPA thanks Chairman Tom Oliverson for his leadership on this issue.

A number of TPA pharmacist members were present in the hearing room to support pharmacy’s position. Oliverson invited a three-person panel to discuss the topic. TPA secured Matt Seiler, vice president and general counsel for the National Community Pharmacists Association (NCPA), to represent pharmacy. “Texas has been a leader in enacting commonsense laws that regulate PBMs. So far, however, Texas has not extended these laws to apply to PBMs when they are serving ERISA plans,” Seiler said. “Rutledge clears a path for Texas to regulate PBMs even when they are serving ERISA plans—and that makes good sense from a policy perspective, because the PBM-function does not vary depending on which type of plan a PBM serves.” A representative from the Pharmaceutical Care Management Association, which represents PBMs, argued that the Rutledge decision was more narrow and that such regulation would increase costs to employers and patients—both assertions that pharmacy disputes.

Additionally, TPA CEO Debbie Garza testified about the implementation of PBM reform legislation HB 1763 and HB 1919, both passed in 2021. Garza focused on some of the challenges and difficulties observed since the provisions of the bills have taken effect, and noted that TPA continues to meet with the Texas Department of Insurance (TDI) regarding implementation of these bills. Garza explained that enforcement of these new measures has been largely complaint-driven, which presents challenges to pharmacists, particularly when trying to determine whether a patient has a TDI-regulated plan. TPA suggested that one potential solution would be for TDI to require all plans subject to its regulatory oversight to have unique BIN and PCN numbers, but that “the better long-term solution would be to utilize the authority granted through the Rutledge v. PCMA Supreme Court decision and standardize PBM rules and regulations across all PBM activity in the state of Texas, regardless of plan type.” TPA also provided documented examples of apparent violations of the new laws, including PBM steerage to an affiliated mail-order pharmacy and higher payment to a PBM-affiliated pharmacy than a non-affiliated pharmacy.

Click here to view a recording of the hearing. Seiler’s testimony begins at 55:50, and Garza’s testimony begins at 1:51:30.