June 9, 2021

The Honorable Greg Abbott
Office of the Governor
State Insurance Building
1100 San Jacinto
Austin, Texas 78701

Dear Governor Abbott,

HB 1919, which has been passed by the Texas Legislature and is currently before you to sign or veto, has been described by supporters as increasing the ability of pharmacy patients to use the pharmacy of their choice, but instead it would destroy the ability of pharmacy benefit managers (PBMs) to use successful, longstanding procedures, including pharmacy networks, specialty pharmacies, and mail order, to reduce drug costs.  The Council for Citizens Against Government Waste (CCAGW) assumed that Republicans in Texas believe that the private sector was better in managing healthcare benefits and costs.  That is why we were surprised to see that a majority of Republican legislators supported this legislation, which uses the heavy hand of government intervention and regulation to determine winners and losers in healthcare drug benefit plans, and also interfere with private contracts.  Therefore, on behalf of the 148,380 CCAGW members and supporters in Texas, I ask that you veto HB 1919.

PBMs are utilized by insurers, self-insured employer health benefit plans, union health plans, Medicare Part D plans, state government plans, Medicaid managed care plans, and other entities to manage pharmaceutical benefits for their employees or members.  PBMs administer prescription drug plans for more than 266 million Americans.  They have played a significant role in lowering drug prices for patients.

But HB 1919 will interfere with the private contracts that have been negotiated among insurers, PBMs, pharmacies, and the sponsors they serve like businesses and unions.  HB 1919 essentially terminates the use of pharmacy networks by forbidding health plans or PBMs to require a patient to use the insurer’s or PBM’s affiliated pharmaceutical provider to receive the maximum discount for the product provided.  By negating the use of networks, which are created to drive down costs based on increased volume, patients and consumers of these plans will see their drug prices increase.  PBMs provide a variety of services through these networks, including the use of specialty and mail order pharmacies, helping with patient adherence, reducing dispensing errors, and conducting audits to prevent fraud to provide the substantial savings the sponsors of the drug benefit plans offer for their employees or members.

This legislation would be particularly harmful for the use of specialty pharmacies as the drugs that are dispensed at these locations are for rare conditions and usually very expensive.  These drugs require special handling, specific services, and are not high-volume pharmaceuticals.  Most traditional pharmacies are not set up to handle these unique products, but HB 1919 would essentially allow any pharmacy to market itself as a specialty pharmacy.

Clearly the legislators understood that when insurers and PBMs utilize networks, they keep prices down and therefore the bill’s requirements do not apply to certain government-financed plans like Medicaid managed care plans, TRICARE plans, Texas employee group plans, and Texas school employee plans.  The fact that these exceptions were included in the bill demonstrates its faults.  What is good for public health plans should be good for private health plans.  Instead, private businesses, labor unions, and other private entities will see their drug prices increase and services for their employees decline or disappear

This legislation supports one special interest while ignoring the needs of businesses, unions, and others that use PBMs to provide a pharmaceutical benefit and keep drug prices down.  Again, on behalf of the CCAGW members in Texas, I ask that you veto this legislation.

Sincerely,

Tom Schatz 

President, CCAGW

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cc:

Mr. Luis Saenz, Chief of Staff
Ms. Suzanne Johnson, Director, Office of Administration
Mr. Greg Davidson, Director, Constituent Communications
Ms. Heather Fleming, Advisor, Health and Human Services