Massachusetts drug cost bill caps insulin at $25 a month, has oversite for drug companies

By Katie Lannan

FEB. 3, 2022….A bill targeting drug costs that the Senate plans to take up next week would cap the cost of insulin at $25 a month for consumers, one of a series of measures that a senator behind the legislation said are aimed at boosting access and accountability in the pharmaceutical system.

Sen. Cindy Friedman said the bill (S 2651), scheduled for debate next Thursday, would also require state licensure of pharmacy benefit managers, impose new oversight on drug companies and take steps to help independent pharmacies withstand competitive pressure from larger operations.

“The overall goal is to ensure that medication that people need is accessible and affordable, and these are really important steps to getting there,” Friedman, the Senate chair of the Health Care Financing Committee, said. “Our goal is to support our pharmaceutical industry, which is incredibly important in Massachusetts, and to make sure that consumers get what they need in a way that they can afford, and right now those two things are very much out of balance. What we’re trying to do is balance that.”

As consumers continue to pay more for various aspects of health care, consensus around how to tackle the costs of prescription drugs has been elusive on Beacon Hill in recent years.

This session, the State House’s major players have all expressed interest in health care legislation but with different priorities. The House passed a bill putting new checks on hospital expansions, the Senate has approved mental health legislation, and Gov. Charlie Baker, who has talked about the urgent need for more investment in fields like primary care, has also said he plans to file a health care bill.

Past efforts to address drug prices and impose new transparency have been amplified by calls for action from consumer advocacy groups, but have met pushback from the pharmaceutical industry and its lobbyists.

Friedman said this year’s bill is an updated version of one the Senate passed unanimously in fall 2019. When senators deliberated last session’s bill, they said many of its provisions built on measures they had approved in 2017.

Total health care spending in Massachusetts rose to $64.1 billion in 2019, or $9,294 per capita, according to the state’s Center for Health Care Information and Analysis. Gross pharmacy spending totaled $10.7 billion, up 7.2 percent from 2018, and after accounting for prescription drug rebates, the pharmacy spending of $8.3 billion represented an increase of 3 percent from the previous year.

Net of rebates, pharmacy spending growth landed below the state’s annual cost-control target for health care, while other categories, like hospital outpatient spending, exceeded that benchmark.

When CHIA released its annual report last March, Massachusetts Biotechnology Council Executive Vice President Zach Stanley said the analysis “refutes the growing calls for government to regulate drug prices.” MassBio now has a former senator, Joe Boncore, as its CEO.

Boncore, who resigned in September 2021, was among the 40 senators who voted in favor of the Senate’s last volley on drug pricing in 2019.

The 2019 bill also proposed a price cap on insulin. Friedman said Thursday that while the older version of the plan would have instituted the cap as a pilot program, this year’s seeks to make it permanent.

“It’s time,” she said. “It is a life-saving medication that you cannot do without. Twenty-one other states have something in their legislation that caps it at this point.”

Pharmaceutical companies and pharmacy benefit managers would be subject to oversight of the state’s Health Policy Commission, under the bill. They would join hospitals and insurers as participants in the commission’s annual cost trends hearings and would have to report information on their business and costs, with confidentiality protections, to CHIA, Friedman said.

Friedman said the bill would also give the Health Policy Commission the authority to examine certain drug costs, and if it finds that a medication’s cost is not in line with its value, it could impose an affordability and access improvement plan on the drug company.

Such a plan would be an “exact corollary” to the performance improvement plan the HPC can implement for providers and payers it deems to post excessive cost growth, an authority the agency recently exercised for the first time with Mass General Brigham.

“One thing I feel very strongly about is that this bill is not unreasonable,” Friedman told the News Service. “There’s nothing here that would treat the pharmaceuticals or the PBMs any differently than we treat the other parts of health care, and we really are asking them to seriously come to the table and help us bring these costs down.”

The Senate’s bill would have the Division of Insurance license pharmacy benefit managers, or PBMs, the entities that help negotiate between health plans, manufacturers and pharmacies.

According to a summary, the bill would allow independent pharmacists to become licensed to dispense specialty drugs and includes measures designed to provide patients with greater access to mail-order prescriptions. Friedman said those steps aim to create more consumer choice, “which we believe will expand competition.”

The legislation would also create a trust fund to help people pay for medications for chronic conditions that disproportionately impact low-income communities and communities of color. Penalties assessed on drug companies and PBMs that do not comply with the bill’s provisions would be deposited into the fund.

The Senate is also proposing to create a commission to study the drug supply chain and its implications for patient access.

Amendments to the bill are due by 3 p.m. Monday, under an order adopted by the Senate on Thursday.