SB 2857 creates Chapter 446 of the Texas Health and Safety Code to establish a Prescription Drug Purchasing Pool administered by the Texas Health and Human Services Commission (HHSC). The bill authorizes health benefit plan issuers and both public and private employers to voluntarily participate in a state-facilitated program that negotiates prescription drug prices on behalf of its members. Eligible public employers include political subdivisions such as counties, municipalities, school districts, and higher education institutions. Qualified private employers must be self-insured entities conducting business in Texas.
The bill is structured to enhance purchasing power through group negotiation without forming a risk pool. Each participant remains individually responsible for the cost of prescription drugs under its health plan. The HHSC is tasked with setting administrative rules, including eligibility criteria, enrollment and disenrollment procedures, contribution methods, and terms of participation. Importantly, the HHSC may also offer participants the option to purchase stop-loss coverage, negotiated with private insurers, to help manage catastrophic claims exposure.
SB 2857 also allows for multi-employer purchasing arrangements, meaning multiple participants can jointly procure prescription drugs under the pool without triggering legal definitions of a multiple-employer welfare arrangement (MEWA), which are heavily regulated under insurance law. The bill emphasizes voluntary participation and is contingent upon legislative appropriation, thereby limiting its fiscal impact unless specifically funded by the state budget. This model aims to strike a balance between enabling collective bargaining for better drug prices and preserving autonomy and financial responsibility among private and public sector employers.
The Committee Substitute for SB 2857 introduces several notable changes from the originally filed version, primarily shifting administrative responsibilities and adding fiscal safeguards. The most prominent revision is the transfer of the program’s oversight from the Texas Comptroller of Public Accounts to the Health and Human Services Commission (HHSC). While the original bill tasked the comptroller with establishing and managing the prescription drug purchasing pool, the substitute vests that responsibility in HHSC, a more appropriate agency given its existing role in administering healthcare services in the state. This change ensures the program is operated by an entity with deeper experience in healthcare systems and vendor negotiations related to prescription drugs.
In line with the agency shift, the rulemaking authority is also transferred from the comptroller to the executive commissioner of HHSC. The committee substitute clarifies and expands on the administrative duties, including procedures for enrollment, eligibility duration, contribution methods, and disenrollment. These refinements offer clearer guidance and greater flexibility for implementation, which would be important for a voluntary program that must accommodate a diverse range of public and private participants.
Another key difference is the addition of a funding contingency clause. The Committee Substitute explicitly states that the HHSC is required to implement the program only if the Legislature appropriates funds for that purpose. This provision was not in the original bill and represents a clear legislative safeguard against unfunded mandates. It aligns with principles of limited government and fiscal responsibility, addressing concerns that the program could otherwise create obligations without designated resources.
Finally, while the core components of the policy—voluntary participation, stop-loss insurance options, and legal treatment of joint employer arrangements—remain intact, the Committee Substitute reflects improved statutory drafting. These edits enhance clarity, compliance, and administrative feasibility, increasing the likelihood of successful program implementation while maintaining the original bill's intent.
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Sen. Cesar Blanco
