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Business groups oppose SB 1122 as pharmacy, physician groups support PBM regulation
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Summary
The Senate Health and Human Services Committee heard competing testimony on SB 1122, a bill that would extend certain state requirements to additional health benefit plans and tighten prohibitions on PBM steering practices.
The Senate Health and Human Services Committee heard extensive testimony on Senate Bill 1122, which would extend certain state requirements to a broader set of health benefit plans and tighten prohibitions on pharmacy benefit manager (PBM) ‘‘steerage’’ practices, according to witnesses. Testimony included sharply divided views from business groups, health plans, physician organizations and pharmacy associations.
Glenn Hammer, president and CEO of the Texas Association of Business, opposed SB 1122 and said the bill would increase costs for employers and disrupt the ERISA framework that governs many employer‑sponsored plans. “We respectfully believe that SB 1122 threatens this goal by significantly increasing costs for businesses,” Hammer said, and argued that added state mandates would reduce affordability and flexibility for employer plans.
Dr. Deborah Pat, representing Texas Oncology, supported the bill and described cases in which vertically integrated PBM arrangements and specialty pharmacies created delays or waste for cancer patients. “Senate Bill 11 22 closes this loophole by clarifying that Texas law applies to all health benefit plans provided to Texas residents regardless of the plan's location,” Dr. Pat said, and she referenced an Attorney General opinion (KP0480 as cited in testimony) that she said confirms Texas authority to regulate PBMs.
Blake Hudson of the Texas Association of Health Plans and Carl Isett of the Texas Association of Benefit Administrators testified in opposition, warning the committee that applying mandates to self‑funded plans would increase costs and push smaller employers toward ERISA arrangements to avoid state mandates. Hudson said a past fiscal note estimated $70 million for certain state plans (TRS/ERS) when similar mandates were contemplated in a prior session.
Dwayne Gallagher of the Texas Pharmacy Association supported SB 1122 and argued the current pricing arrangements can allow PBMs to pay affiliated pharmacies more than independent community pharmacies; he gave a specific example testified to in which a PBM’s mail order pharmacy was paid $2,041 for a 90‑day supply while a local pharmacy charged $60 for the same prescription, a difference he said the bill would address by preventing affiliated entities from being paid more than other providers.
Annie Spellman of Texans for Affordable Health Care opposed adding more mandates, arguing employers face rising costs and that the state already has a high number of health‑care mandates. Testimony also referenced past legislatively imposed mandates and differing fiscal analyses; witnesses repeatedly asked which provisions are not currently enforced against self‑funded plans if an Attorney General opinion already states current law.
Committee members asked witnesses about fiscal notes, past versions of related bills, and the practical effects on employer plans and state employee plans (TRS and ERS). Several witnesses noted the bill was left pending after testimony.
Ending: Public testimony was closed and the committee left SB 1122 pending for further action; no committee vote was recorded during the hearing.
