Drug manufacturers complete the Texas Drug Code Index (TDCI) Certification of Information (COI) to request the addition of the drug on the Medicaid and CHIP formularies. HHSC uses the COI when a drug is new to the market or when an existing drug on the TDCI has a new formulation or labeler changes. We will also review the COI to ensure drugs meet federal and state requirements.

The Legislative Budget Board (LBB) and Office of the Governor must approve any drug estimated to meet or exceed $500,000 in annual general revenue in fee-for-service per state fiscal year or result in a managed care capitation rate adjustment.

The exception to this is orphan drugs, per the 2024-25 General Appropriations Act, House Bill (H.B.) 1, 88th Legislature, Regular Session, 2023 (Article II, Special Provisions Relating to All Health and Human Services Agencies, Section 12(b)). There is no LBB or Governor’s approval requirement for the addition of orphan drugs to the TDCI. Notification of a new or increased rate for an orphan drug must be submitted to the LBB and Governor within 60 days following expenditures for the purpose.

HHSC will complete the initial analysis of new drugs no later than 30 days after receiving the completed COI. Our timely review ensures HHSC Forecasting and HHSC Executive Leadership have at least 60 days to complete the fiscal impacts and obtain LBB approval. We will alert HHSC Forecasting as quickly as possible (approximately on day 15 of the process) about drugs potentially requiring the need for LBB approval. This will allow HHSC Forecasting staff more time to complete a fiscal impact.

HHSC identifies orphan drugs qualifying for coverage and adds them to the TDCI. Notification regarding a new or increased rate for orphan drugs is submitted to the LBB and Governor within 60 days.

Refer questions or comments regarding this process to vdp_formulary@hhsc.state.tx.us.