TITLE 25. HEALTH SERVICES

PART 1. DEPARTMENT OF STATE HEALTH SERVICES

CHAPTER 229. FOOD AND DRUG

SUBCHAPTER A. PRESCRIPTION DRUG PRICE DISCLOSURE

25 TAC §§229.1 - 229.4

The Executive Commissioner of the Texas Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (DSHS), proposes new §§229.1 - 229.4, concerning Prescription Drug Price Disclosure.

BACKGROUND AND PURPOSE

In 2019, House Bill (H.B.) 2536 created Texas Health and Safety Code Chapter 441 and required drug manufacturers to report the wholesale acquisition cost of all United States Food and Drug Administration-approved drugs sold in or into Texas. Manufacturers were also required to report on price increases exceeding a certain threshold compared to prices at certain time frames, and manufacturers were required to provide reasons for the price increase on the HHSC website. No rules were developed.

The proposed new sections are necessary to comply with H.B. 1033, 87th Legislature, Regular Session, 2021, that amended Texas Health and Safety Code, Chapter 441. H.B. 1033 requires prescription drug manufacturers to report certain cost data and price increases for prescription drugs. The promulgation of rules allows DSHS to administer fines for failure to disclose price increases. The proposed new rules specify the fee of $250 that is required when drug manufacturers submit each report.

SECTION-BY-SECTION SUMMARY

New §229.1, Purpose, provides the purpose of the subchapter that establishes the procedures for Prescription Drug Price Disclosure.

New §229.2, Definitions, adds the following definitions for "Department," "Calendar Year," "Exclusivity," "Patent," and "Patent Exclusivity."

New §229.3, Fee, provides specifics on the amount of fee and time frame for submission. A reporting fee of $250 is submitted with each report.

New §229.4, Administrative Penalties, details the assessment of penalties for failure to follow reporting requirements. Subsection (a) provides that the department shall assess penalties in accordance with Texas Health and Safety Code Chapter 441, this proposed new subchapter, Texas Government Code Chapter 2001, and the department's hearing procedures in §§1.21, 1.23, 1.25, and 1.27 of this title (relating to Formal Hearing Procedures). Subsection (b) provides the criteria for the assessment of administrative penalties that includes the Pharmaceutical Drug Manufacturer's previous violations, the seriousness of the violation, the Pharmaceutical Drug Manufacturer's demonstrated good faith, and any other matters as justice may require. Subsection (c) provides that each day a violation continues may be considered a separate violation.

FISCAL NOTE

Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the rules will be in effect, enforcing and administering the rules does have foreseeable implications relating to additional cost and revenue to state government. DSHS does not anticipate a cost to local governments from the implementation of the rules.

The effect on state government for each year of the first five years the proposed rules are in effect is an estimated cost of $756,670 in fiscal year (FY) 2022; $701,032 in fiscal year FY 2023; $422,020 in FY 2024; $422,563 in FY 2025; and $423,124 in FY 2026; and an estimated increase in revenue of $756,670 in fiscal year (FY) 2022; $701,032 in fiscal year FY 2023; $422,020 in FY 2024; $422,563 in FY 2025; and $423,124 in FY 2026.

GOVERNMENT GROWTH IMPACT STATEMENT

DSHS has determined that during the first five years that the rules will be in effect:

(1) the proposed rules will not create or eliminate a government program;

(2) implementation of the proposed rules will create new DSHS employee positions;

(3) implementation of the proposed rules will result in no assumed change in future legislative appropriations;

(4) the proposed rules will require an increase in fees paid to DSHS;

(5) the proposed rules will create new rules;

(6) the proposed rules will not expand, limit, or repeal existing rules; and

(7) the proposed rules will not change the number of individuals subject to the rules.

DSHS has insufficient information to determine the effect of the proposed rules on the state's economy.

SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COMMUNITY IMPACT ANALYSIS

Donna Sheppard has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. The rules do not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rules.

LOCAL EMPLOYMENT IMPACT

The proposed rules will not affect a local economy.

COSTS TO REGULATED PERSONS

Texas Government Code §2001.0045 does not apply to these rules because the rules are necessary to protect the health, safety, and welfare of the residents of Texas; and are necessary to implement legislation that does not specifically state that §2001.0045 applies to the rules.

PUBLIC BENEFIT AND COSTS

Luis Morales, Interim Associate Commissioner, Consumer Protection Division, has determined that for each year of the first five years the rules are in effect, the public benefit will be transparent and efficient reporting of prescription drug prices and compliance actions resulting from the development of the rules.

Donna Sheppard has also determined that for the first five years the rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules because the collection fee is minimal with prescription drug manufacturers.

TAKINGS IMPACT ASSESSMENT

DSHS has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code §2007.043.

PUBLIC COMMENT

Written comments on the proposal may be submitted to Megan Snyder, Drugs and Medical Devices Branch, P.O. Box 149347, Mail Code 1987, Austin, Texas 78714-9347; or by e-mail to dmd.regulatory@dshs.texas.gov.

To be considered, comments must be submitted no later than 31 days after the date of this issue of the Texas Register. Comments must be (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered at 8407 Wall Street, Austin, Texas 78754 before 5:00 p.m. on the last working day of the comment period; or (3) emailed before midnight on the last day of the comment period. If last day to submit comments falls on a holiday, comments must be postmarked, shipped, or emailed before midnight on the following business day to be accepted. When emailing comments, please indicate "Comments on Proposed Rules 21R130" in the subject line.

STATUTORY AUTHORITY

The proposed new rules are authorized by Texas Health and Safety Code §§441.0003, 441.0055, and 441.0102, and Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human service agencies, by DSHS, and for the enforcement of Texas Health and Safety Code, Chapter 441.

The proposed new rules will implement Texas Health and Safety Code, Chapter 441, and Texas Government Code, Chapter 531.

§229.1.Purpose.

This subchapter provides the minimum standards for submission of prescription drug price data.

§229.2.Definitions.

The following words and terms when used in this subchapter shall have the following meaning unless the context clearly indicates otherwise.

(1) Department--Department of State Health Services.

(2) Calendar year--January 1 through December 31 of each year.

(3) Exclusivity--A Federal Drug Administration (FDA) granted delay on approval of competitor drugs that attaches upon FDA's approval of a drug.

(4) Patent--A property right issued by the United States Patent and Trademark Office to exclude others from making, using, offering for sale, or selling an invention for a limited time.

(5) Patent exclusivity--Rights resulting from a drug manufacturer holding an unexpired patent, or exclusivity, or both.

§229.3.Fee.

This subchapter applies to all prescription drug manufacturers reporting drug price information. A fee of $250 shall be submitted with each submitted annual report and price increase report.

§229.4.Administrative Penalties.

(a) The department shall assess administrative penalties in accordance with the requirements of:

(1) Texas Health and Safety Code Chapter 441;

(2) this subchapter;

(3) Texas Government Code, Chapter 2001; and

(4) the department's formal hearing procedures in §§1.21, 1.23, 1.25, and 1.27 of this title (relating to Formal Hearing Procedures).

(b) The department shall assess administrative penalties based upon one or more of the following criteria:

(1) the Pharmaceutical Drug Manufacturer's previous violations;

(2) the seriousness of the violation;

(3) the Pharmaceutical Drug Manufacturer's demonstrated good faith; and

(4) any other matters as justice may require.

(c) Each day a violation continues may be considered a separate violation.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on October 8, 2021.

TRD-202103989

Scott A. Merchant

Interim General Counsel

Department of State Health Services

Earliest possible date of adoption: November 21, 2021

For further information, please call: (512) 834-6755