According to the Legislative Budget Board (LBB), HB 4638 is not expected to have a significant fiscal implication for the State of Texas. The analysis assumes that any costs associated with implementing the changes outlined in the bill, such as expanding the board from three to five members, preparing more comprehensive business plans, and extending the sunset date, can be absorbed within existing agency resources, specifically those of the Health and Human Services Commission.

Similarly, the bill is projected to have no significant fiscal impact on units of local government. This suggests that the legislation does not impose mandates or require expenditures by counties, municipalities, or other local entities that would exceed their normal operational capacity.

While the bill does authorize the Texas Pharmaceutical Initiative to pursue ambitious operational goals, including the manufacture of generic drugs and development of distribution infrastructure, these activities are framed within a business planning context rather than requiring immediate appropriations or infrastructure investments. Therefore, the near-term financial impact remains neutral, though long-term implications would depend on subsequent implementation decisions and funding appropriations.

HB 4638 expands and entrenches the Texas Pharmaceutical Initiative (TPI), a state-run program initially established in 2023 to address prescription drug costs. While framed as a governance improvement measure—adding members to the board, requiring biennial planning, and extending the program’s lifespan—the bill represents a significant growth of state power into areas traditionally served by the private sector. It authorizes broad operational capacities, including drug manufacturing, distribution networks, and advanced therapeutic services, all under state coordination or contract. These provisions elevate the role of the state from regulator or coordinator to active market participant.

A central concern is the bill’s expansion of the scope of government. By enabling the TPI to manufacture generic drugs and provide gene therapies, the state risks crowding out private innovation and investment. These functions are already fulfilled by a robust private pharmaceutical and biotechnology sector that relies on competition, not central planning, to drive cost efficiency and innovation. The bill accelerates a state-centered model of pharmaceutical services without establishing any market safeguards, performance caps, or limitations on scope, inviting long-term government expansion under the guise of cost containment.

Moreover, the bill extends the sunset date of the TPI from 2025 to 2031, removing a timely opportunity for the legislature to reassess, repeal, or correct the program. For lawmakers who opposed the creation of the TPI in the 88th Legislature, this bill further entrenches a policy direction fundamentally inconsistent with free-market and limited-government principles. Instead of scaling back or sunsetting the program, HB 4638 ensures its continued growth and permanence in the state’s health infrastructure.

Although the Legislative Budget Board's fiscal note states that there is no significant cost anticipated in the short term, this assumption is contingent on existing resources and early-stage implementation. The activities authorized by the bill—such as infrastructure for distribution networks and manufacturing laboratories—will likely require substantial public investment in future biennia. Once the state takes on these roles, it also assumes the long-term liabilities and operational risk associated with them, potentially increasing the burden on taxpayers over time. This raises serious concerns about the financial sustainability and mission drift of the program.

Additionally, while the bill does not impose new regulations on private entities directly, it introduces indirect market distortions by allowing the state to compete with or replace private pharmaceutical service providers. Businesses engaged in pharmacy benefit management, drug distribution, or manufacturing may face unfair competition from a publicly funded alternative. This undermines the principle of equal competition in a free market and could lead to less innovation, reduced investment, and fewer choices for consumers in the long run.

From an ideological standpoint, HB 4638 contradicts the core liberty principles of limited government, personal responsibility, and free enterprise. By voting against this bill, lawmakers reaffirm a commitment to restraining the role of government, promoting fiscal discipline, and preserving a competitive, private-sector-driven healthcare system.

For all these reasons—its expansion of state power, erosion of market competition, long-term fiscal risk, and departure from core liberty values—Texas Policy Research recommends that lawmakers vote NO on HB 4638.

• Individual Liberty: While the Texas Pharmaceutical Initiative (TPI) was created with the stated aim of improving access to affordable prescription drugs—a goal that could theoretically support individual liberty by expanding treatment options—the mechanism it employs relies on centralized, government-led coordination and service delivery. By positioning the state to potentially become a pharmaceutical manufacturer, distributor, and provider of gene therapies, the bill shifts power over drug access from market choice to state planning. This shift can undermine individual liberty by reducing consumer options if private competition is displaced or discouraged.
• Personal Responsibility: The bill expands state services and authority in a way that disincentivizes private initiative and personal responsibility in health care decisions. Shifting the role of pharmaceutical access from private providers and market actors to a state-administered framework reduces the individual’s reliance on voluntary market choices and increases reliance on publicly designed systems. Instead of empowering individuals to navigate a competitive marketplace, it creates a model in which the state curates access, eroding self-determination and fostering government dependency.
• Free Enterprise: This is the principle that has been most affected. The bill enables the state to engage in activities traditionally left to private enterprise, such as drug manufacturing, pharmacy benefit management, and gene therapy services. Even if these services are contracted out, the state will be controlling the system, setting terms, and competing with private firms using taxpayer-supported infrastructure. Such public-sector encroachment distorts competition, risks displacing private businesses, and creates an uneven playing field. It violates the foundational idea that innovation, pricing, and service quality are best driven by the incentives of open, private markets.
• Private Property Rights: While the bill does not directly impact land use or expropriation, its long-term implementation could require the acquisition or leasing of facilities for pharmaceutical production, distribution, or research. If such activities expand through eminent domain or crowd out private sector investments in pharmaceutical infrastructure, the principle of private property rights may be indirectly affected. However, absent explicit language, this impact remains speculative at this stage.
• Limited Government: The bill clearly grows the size, role, and permanence of state government. It expands a state board, extends the program’s life from 2025 to 2031, and broadens the state’s operational authority into new and complex domains, many of which require continuous oversight, planning, contracting, and potentially staffing. Rather than limiting the role of government, this bill entrenches a top-down health policy framework and builds the administrative infrastructure to support it. It represents a long-term commitment to a public-sector role in health care delivery that is inconsistent with the principle of limited, constitutionally restrained government.

• SB 2336 (Same As)