Massachusetts bill allows patients to pay no more than $25 for certain name-brand medications, no cost for similar generic options

Sam Drysdale

DEC. 30, 2024……Patients would pay no more than $25 for certain name-brand medications to treat chronic illnesses, including insulin for diabetes, and face no costs whatsoever for similar generic options under a compromise bill that the House and Senate whisked to Gov. Maura Healey’s desk on Monday.

The bill (S 3012) that popped out of months of private talks late Friday would also add scrutiny to pharmacy benefit managers, and eliminate or cap out-of-pocket costs for drugs that treat certain chronic conditions.

The branches sent the bill to Healey with just one day remaining in the two-year term, leaving only hours to iron out any potential differences and likely giving Healey just two options – sign it or let it die by pocket veto. 

The bill requires MassHealth, the Group Insurance Commission — which covers state employees, retirees, and their dependents — and other insurers to provide coverage for one generic drug and one name brand drug for each of the following: diabetes, asthma, and the two most prevalent heart conditions.

Patients being treated for those conditions would not have to share any of the cost of a generic drug, including through co-payments, co-insurances or a deductible. The selected name brand drug won’t be subject to any deductible or co-insurance, and co-pays would be capped at $25, according to a bill summary.

“Last time we looked, it’s about 180,000 people that will be affected by that change, meaning they will have access to those drugs,” said Sen. Cindy Friedman, a lead negotiator on the bill, said during Monday’s session.

Friedman, who in her time as Health Care Financing Committee co-chair has called on industry power players to embrace reforms, previously said she does not “assume that these are going to be greater costs for the insurers” by limiting cost-sharing for chronic illness treatments.

Language in the Senate bill to cap what patients pay for “delivery mechanisms” to manage chronic illnesses, like needles, inhalers and monitors, was not included in the final compromise, a Friedman aide said.

The Senate passed its version of the bill in November 2023. The House approved its bill in late July of 2024.

The bill would also create a licensure process for pharmacy benefit managers, who have come under scrutiny for the role they play brokering drug transactions.

PBMs broker transactions between insurers, manufacturers and pharmacies, and they argue that their work drives down consumer costs. Critics say PBMs function with little oversight and are responsible for rising costs.

Under the compromise, the Division of Insurance would license and regulate PBMs operating in Massachusetts. It would also prohibit a PBM from making payments to a pharmacy benefit consultant or broker if it’s a conflict of interest.

The Center for Health Information and Analysis would be authorized to collect data on PBMs and issue regulations to better collect information from them and to help the state understand cost growth drivers for prescription drugs, according to the bill summary.

“It takes the first step in understanding the role that pharmacy benefit managers play in the delivery of the health care system, and the effect that it has on cost, and again, on access,” Friedman said.

Rich Pezzillo, executive director of the New England Hemophilia Association and co-leader of the Patients for Prescription Access coalition, said PBMs have “been allowed to operate under the radar for far too long.”

“Through their insurance tactics, and because of their hidden position as middlemen, PBMs have directly compromised patient care and access to much-needed treatments,” Pezzillo said. “It’s our hope that with oversight and transparency mandates included in the bill, PBMs will be forced to show their cards and patients will have greater access to, and be able to better afford, the medicines they rely on.  We look forward to working with lawmakers in 2025 to build upon this legislation and protect patients further by passing a ban on copay accumulators and ensuring PBM rebates get passed through to consumers.”

The bill also attempts to ensure patients purchasing prescription drugs at a pharmacy are not charged more via cost-sharing, by using a co-pay or deductible, if it’s cheaper for them to buy it directly, Friedman said.

The new cost share caps for drugs used to treat diabetes, asthma and heart conditions would go into effect on July 1, 2025. The bill gives the insurance commissioner until Oct. 1, 2025 to release regulations for PBMs, which they would have to begin complying with on Jan. 1, 2026.

The bill would create an Office for Pharmaceutical Policy and Analysis within the Health Policy Commission to analyze trends related to pharmaceutical access, affordability and spending. It also authorizes the HPC to assess pharmaceutical manufacturing companies and PBMs.

Pharmaceutical manufacturers and PBMs would be required to attend the HPC’s annual cost growth benchmark hearing, where the commission sets a statutory growth rate for health care costs based on experts testimony, though the HPC lacks the power to enforce consequences for exceeding that cost growth.

“We appreciate efforts to bring real transparency to drug pricing,” said a statement from Save Our Benefits MA, a coalition of labor unions and business groups trying to keep insurance prices down. “Big Pharma has spent heavily at consumers expense by blaming others for rising drug prices, while padding their own pockets. Allowing the HPC to take the time to truly study where pharmaceutical costs originate is a victory for Massachusetts consumers.”

Sen. Bruce Tarr of Gloucester, who was on the conference committee that negotiated the final bill, said during Monday’s session that Senate-approved protections for independent pharmacists were left out of the bill.

“My hope would be that we would continue to consider in the future, the expanded role that pharmacists are playing in the delivery of health care to make sure that it’s properly recognized and properly compensated. And this bill does not include provisions to that end. I intend to file them in the new session,” Tarr said.

Friedman thanked him for bringing up the topic.

“We were unable to move that, it is very important. It’s especially important that we maintain the solvency and stability of our independent pharmacists who provide such critical care, especially around packaging and compounding for many of our group homes and people in rural communities, etcetera,” Friedman said. “I, too, want to make some real movement on that.”

Senate-passed prescription drug pricing bills died in each of the past two sessions without votes in the House, where Democrats instead set their sights on trying to overhaul the process for reviewing hospital expansions.

The drug reform bill was negotiated this year as a side-by-side “package,” Friedman said, with a hospital oversight bill, that was also released from committee on Friday and passed by the branches on Monday.