This post marks the first in a planned series of updates from Health Policy News on prescription drug cost control measures. In this month’s installment, we highlight ongoing efforts through legislative action and budget proposals in Massachusetts to implement prescription drug cost reforms. In the past, Health Policy News has produced large scale legislative tracking pieces related to drug pricing controls[1]. For 2021, our focus is on the details of a few specific approaches to this policy issue. Next month, we will feature another spotlight piece on efforts underway in California, so stay tuned for this follow-up article!
The Massachusetts Approach
In Massachusetts (MA), drug pricing innovation continues as Governor Charlie Baker and the legislature build upon previously enacted efforts to control drug costs in the Commonwealth. Massachusetts previously petitioned the Centers for Medicare and Medicaid Services (CMS) for drug cost flexibility via an 1115 waiver that was denied in October 2018 due to its dual request for a closed formulary, as well as additional drug rebate flexibility. In 2020, however, MassHealth (Massachusetts’s Medicaid program) was granted authority to negotiate drug prices directly with drug manufacturers. The final process manufacturers and states are required to follow to reach an agreed upon price includes referring the price negotiations to the Massachusetts Health Policy Commission (HPC) if a price cannot be agreed upon. the HPC has not yet had to intervene. As of early February 2021, MassHealth has finalized 36 drug pricing agreements. The Baker administration seeks to build upon the success of this approach by expanding its purview to include non-pharmaceutical supplies in addition to prescription drugs.
In all these proposals, increased transparency, and regulation of prescription drug costs, as well as the imposition of similar standards for providers and insurers in the Commonwealth remain the goals. For example, drug manufacturers could be required to testify and appear before the Health Policy Commission, included in the Senate bill outlined below, much like insurers and hospitals do for the annual cost trends hearing. The manner through which the state enacts these reforms is still pending, with separate proposals underway: one from Governor Baker via his annual budget, and the other, Senate-sponsored legislation.
Below, we have outlined notable pending reforms that are under discussion or review by the Massachusetts legislature.
- In 2019, the MA Senate passed An Act Relative to Pharmaceutical Access, Costs and Transparency (PACT Act). The PACT Act includes drug price transparency requirements and increased regulatory oversight of the Massachusetts pharmaceutical industry. Much of the bill is aimed at providing insights into what will impact health insurance rates and drug prices in the future, such as early notice requirements for drugs coming to market, limitations on the cost of insulin through imposition of a co-pay, elimination of coinsurance or deductibles, and provisions aimed at lowering prices of high-cost drugs. The PACT Act is now with the MA House of Representatives and was referred to the Ways and Means Committee. Some highlights of the bill include:
- Allowing HPC to review the cost and value of certain drugs – If HPC finds that a drug exceeds the proposed value, it is permitted to request that the manufacturer file a cost improvement plan. This would specifically target drugs or biologics with high initial launch prices, or with annual cost increases that meet certain thresholds for a one-year or course of treatment total cost amount.
- Requiring manufacturers and pharmacy benefit managers to participate in the HPC annual cost trends hearing process, including testifying and providing supporting documentation on pharmaceutical cost increases.
- In 2019, Governor Baker filed 4135: An Act to Improve Health Care by Investing in Value, which is currently with the Health Care Finance Committee. Some highlights of this proposal include:
- Requiring drug manufacturers to provide cost transparency data to the HPC, such as:
- A schedule of wholesale cost increases over the past 5 years and factors that contributed to the increases.
- Disclosure of any economic benefits to healthcare providers, including the recipients of any payments or benefits that have a value of at least $50.
- Authorizing HPC to determine the proposed value for a drug reimbursed by both private and public payors, as well as and the “reasonableness” of a drug manufacturer’s proposed pricing.
- Imposing a penalty of up to $500K on manufacturers who do not comply with HPC’s request in a timely manner.
- Requiring drug manufacturers to provide cost transparency data to the HPC, such as:
For a more expansive view of prescription drug cost control efforts across the country, we refer readers to the National Academy of State Health Policy (NASHP) legislative tracker. Although Massachusetts does not show any new bills for 2021, the legislation mentioned above can be found in NASHP’s full 2020 legislative tracker here. We look forward to providing a deep dive on California and its drug cost control efforts in our March edition.
Footnotes
[1]2019 HPN Overview of Progress on Cost Control Efforts: https://pcghealthpolicy.com/2019/02/20/2019-brings-progress-on-prescription-drug-cost-control-efforts-at-state-and-federal-level/
2018 White Paper- https://pcghealthpolicy.com/2018/05/29/movement-on-drug-cost-containment-at-both-the-state-and-federal-level/