HB 970

relating to the application of prescription drug price reductions;
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Chapter 1369, Insurance Code, is amended by
adding Subchapter B-3 to read as follows:
SUBCHAPTER B-3.  PRESCRIPTION DRUG PRICE REDUCTIONS
Sec. 1369.095.  DEFINITIONS.  In this subchapter:
(1)  "Manufacturer" means a person who is engaged in
making, preparing, propagating, fabricating, compounding,
processing, packaging, repackaging, labeling or relabeling of a
prescription drug or biological product.
(2)  "Pharmacy benefit manager" and "prescription
drug" have the meanings assigned by Section 1369.501.
Sec. 1369.096.  APPLICABILITY OF SUBCHAPTER.  (a)  This
subchapter applies only to a health benefit plan that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or an individual or
group evidence of coverage or similar coverage document that is
(2)  a group hospital service corporation operating
(3)  a health maintenance organization operating under
(4)  an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844;
(5)  a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846;
(6)  a stipulated premium company operating under
(7)  a fraternal benefit society operating under
(8)  a Lloyd's plan operating under Chapter 941; or
(9)  an exchange operating under Chapter 942.
(b)  Notwithstanding any other law, this subchapter applies
(1)  a small employer health benefit plan subject to
Chapter 1501, including coverage provided through a health group
cooperative under Subchapter B of that chapter;
(2)  a standard health benefit plan issued under
(3)  a basic coverage plan under Chapter 1551;
(4)  a basic plan under Chapter 1575;
(5)  a primary care coverage plan under Chapter 1579;
(6)  a plan providing basic coverage under Chapter
(7)  group health coverage made available by a school
district in accordance with Section 22.004, Education Code;
(8)  a regional or local health care program operated
under Section 75.104, Health and Safety Code;
(9)  a self-funded health benefit plan sponsored by a
professional employer organization under Chapter 91, Labor Code;
(10)  county employee group health benefits provided
under Chapter 157, Local Government Code; and
(11)  health and accident coverage provided by a risk
pool created under Chapter 172, Local Government Code.
Sec. 1369.097.  EXCEPTIONS TO APPLICABILITY OF SUBCHAPTER.
This subchapter does not apply to an issuer or provider of health
benefits under or a pharmacy benefit manager administering pharmacy
(1)  the state Medicaid program, including the Medicaid
managed care program under Chapter 540, Government Code;
(2)  the child health plan program under Chapter 62,
(3)  the TRICARE military health system; or
(4)  a workers' compensation insurance policy or other
form of providing medical benefits under Title 5, Labor Code.
Sec. 1369.098.  APPLICATION OF PRICE REDUCTIONS.  (a)  A
pharmacy benefit manager that obtains, directly or indirectly, from
a manufacturer a reduction in price, whether by discount, rebate,
or otherwise, on a prescription drug, on behalf of a health benefit
plan issuer or on its own behalf, shall ensure through contracts
with the health benefit plan issuer, manufacturer, pharmacy, or any
other necessary party that the reduction in price is reflected
completely in the price of the prescription drug when it is
dispensed to a health benefit plan enrollee at a pharmacy.
(b)  Charging the patient a fixed dollar copayment less than
the net price negotiated by the pharmacy benefit manager or health
plan satisfies the intent of this section.
(c)  Any coinsurance charged by the pharmacy benefit manager
or health plan shall be calculated off the net price that reflects
the reduction in price by discount, rebate, or otherwise negotiated
(d)  The pharmacy benefit manager or health plan may provide
the full price reduction provided by the manufacturer directly to
the dispensing pharmacy or require the manufacturer to provide the
full price reduction, directly or indirectly, through a
point-of-sale chargeback or series of point-of-sale chargebacks or
Sec. 1369.099.  CIVIL PENALTY; INJUNCTIVE RELIEF.  (a)  A
pharmacy benefit manager that violates Section 1369.098 is liable
to the state for a civil penalty of three times the total amount of
the price reduction that was not reflected in the price of the
prescription drug at the time it was dispensed plus $5,000 for each
(b)  The attorney general may bring an action in the name of
the state against a person that violates Section 1369.098 for:
(2)  recovery of a civil penalty imposed under this
(3)  both injunctive relief and a civil penalty.
(c)  An action under this section may be brought in a
(2)  a county in which any part of the violation occurs.
SECTION 2.  Subchapter B-3, Chapter 1369, Insurance Code, as
added by this Act, applies only to a health benefit plan delivered,
issued for delivery, or renewed on or after January 1, 2026.
SECTION 3.  This Act takes effect September 1, 2025.