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State Legislation You Need to Know: Massachusetts’ Proposed Legislation Regarding Pharmaceutical Access

Maxine Morgan

State Legislation You Need to Know: Massachusetts’ Proposed Legislation Regarding Pharmaceutical Access
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In 2023, the Massachusetts Senate introduced comprehensive legislation to address concerns about pharmaceutical costs, consumer access to medication, and transparency in drug pricing. The bill proposes various changes to the Commonwealth’s regulation of pharmaceutical costs in order to facilitate consumer access to certain drugs. The bill also proposes reporting requirements to facilitate increased transparency in pharmaceutical pricing.

Access & Cost

The bill tasks the Massachusetts Public Health Commission with reviewing the effect of the cost of designated “eligible drugs” on patient access, based in part on information that drug manufacturers would be required to report to facilitate the Commission’s review. The Commission then must determine (i) a “proposed value” for the drugs and (ii) whether the manufacturer’s pricing “substantially exceeds” that proposed value. The bill does not define how much higher a price needs to be above the proposed value in order to be considered to “substantially exceed” the proposed value. If the Commission determines that the price substantially exceeds the proposed value, it can require that the manufacturer enter into an “access and affordability improvement plan”. Even with respect to eligible drugs with prices that do not substantially exceed their proposed value, the Commission may still explore options for mitigating their cost.

The proposed legislation also seeks to address issues of cost and access directly by establishing a prescription drug cost assistance program, funded by a newly established Prescription Drug Cost Assistance Trust Fund, to cover the cost of drugs for certain chronic conditions for eligible Massachusetts residents. The Fund would be financed through penalties collected from failures to comply with other portions of the legislation, including the reporting obligations discussed below. Relatedly, pharmacies will be required to charge consumers the lesser of the pharmacy retail price, defined as “the amount an individual would pay for a prescription drug at a pharmacy if the individual purchased that prescription drug at that pharmacy without using a health benefit plan or any other prescription drug benefit or discount,” and the cost-sharing amount, which is defined as “an amount owed by an individual under the terms of the individual's health benefit plan.”

Transparency

The bill seeks to increase transparency in multiple ways. Specifically, the Act would require:

  • Pharmaceutical manufacturers and pharmacy benefit managers (PBMs) to report certain information to the Center for Health Information and Analysis;
  • PBMs to obtain a license to operate in the Commonwealth and to submit to audits and examinations by the Commissioner of Insurance; and
  • The creation of an early notice system, where drug manufacturers must notify the Commission when the manufacturer plans to make qualifying increases in the wholesale acquisition cost or price of drugs (for branded drugs, a 15% or greater increase in the cost per unit over any 12 month period, and for generics and biosimilars, any “significant” increase in price, as determined by the Commission).

Legislative History & Current Status

The bill’s legislative history is noteworthy, as the original bill, S2492, was substituted for by a new draft, S2499, with significant revisions. The revised bill:

  • Eliminated provisions granting the Massachusetts Secretary of Health and Human Services the power to administer a drug access program designed to enhance access to high value drugs for certain chronic conditions, including diabetes, asthma, and chronic heart conditions by requiring insurance carriers to provide coverage for drugs identified by the Secretary;
  • Removed provisions outlining the penalties that persons manufacturing and selling drugs at an “excessive price” would have faced under S2492, such as reasonable monetary penalties up to $500,000 for failure to timely comply with the Commission’s request for records;
  • Added provisions replacing the above drug assistance program with a system allowing carriers, the Commission, and the Division of Insurance to designate which brand name drug and which generic drug insurance carriers must cover; and
  • Added provisions creating a “specialty pharmacy” licensure category for pharmacies that “ship, mail, sell, or dispense specialty drugs into, within, or from” Massachusetts.

As of November 2023, SB2499 was on its third read.

Bonus: Massachusetts Noncompete Legislation

Also during 2023, another bill was introduced in the Massachusetts legislature that would ban noncompetition agreements in the Commonwealth. Today, noncompetition agreements are governed by the Massachusetts Noncompetition Agreement Act, which defines the bounds of acceptable noncompetition agreements and allows courts to revise agreements as necessary. The Act currently defines noncompetition agreements as agreements “between an employer and an employee, or otherwise arising out of an existing or anticipated employment relationship, under which the employee or expected employee agrees that he or she will not engage in certain specified activities competitive with his or her employer after the employment relationship has ended.” The proposed bill would declare noncompetition agreements “void and unenforceable.” The prospects for this bill being adopted by the Massachusetts legislature remains unclear.

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