Coalition Argues Drug Payment Caps Are Best Solution To Excessive Prices

The latest plan to control rising drug prices in Massachusetts is also the most controversial. It would set so-called upper payment limits on drugs that state regulators deem unreasonably expensive. No one — including doctors, pharmacies, hospitals, health insurers and patients — could be required to pay more than that cap.

Union, faith and consumer leaders who testified in favor of the idea during a State House hearing say payment limits are the most effective step Massachusetts could take to make sure patients can afford prescribed medicine.

"We want the consumers of Massachusetts to have relief from high pharmaceutical costs," said Michael Rubenstein, who co-chairs the Greater Boston Interfaith Organization's health care action team. "Directly constraining the price of pharmaceutical drugs will provide that relief."

The Pharmaceutical Research and Manufactures of America, or PhRMA, and representatives of the Massachusetts biotech industry launched a list of reasons price caps would do "severe and consequential" harm to companies developing new treatments and the patients who may benefit from those drugs.

"This is high risk, risky investment," said Robert Coughlin, president and CEO of MassBio, a trade group with more than 1,100 members. "If you're going to limit what a company can make, obviously, investment will be stifled."

Patients who support a payment cap say they know pharmaceutical firms need a return on their investment, but ask: could it be more modest?

"I love the pharmaceutical industry for what it's brought to market. I am only here because of the drugs I've taken," said Rosalind Joffe, who spends $15,000 to $20,000 a year, out of pocket, on medicine to treat her multiple sclerosis, gastroenteritis and ulcerative colitis. "There must be another way. It's just not right that patients have to bear such a huge financial burden."

Only one state legislature has passed something similar: Maryland. PhrMA reps have suggested the proposal there and in Massachusetts would violate patent laws and federal commerce laws that protect against discrimination in interstate commerce.

Amy Rosenthal, executive director at Health Care for All, says she's confident that upper payment limits are legal. So far, a dozen health care groups, including the Massachusetts Medical Society, Atrius Health and 1199 SEIU, have signed onto the payment caps legislation. A few groups say they are reserving support until they determine if the payment limits would stand up in court.

The bill also includes a MassHealth drug price negotiation process first proposed by Gov. Charlie Baker, restrictions on pharmacy benefit managers, real-time prices at the pharmacy counter, science-based drug education for doctors and drug price transparency requirements.

PhRMA and MassBio say they support the physician education pieces and more transparency about how prices are set.

"We want to be part of the solution," Coughlin said.

But state Sen. Cindy Friedman, co-chair of the Joint Committee on Health Care Financing, told representatives of the biotech industry she's not convinced.

"We want you at the table, but you've had a long time to come and say 'let's be transparent' and you haven't done it," Friedman said.

Many who testified in favor of tighter controls on the pharmaceutical pricing said it's time for the drug industry to be held accountable for their share of rising health care costs. Hospitals, physician groups and health plans all submit financial records to state regulators, testify at an annual hearing and trigger state scrutiny if their costs consistently rise above the state's health care cost benchmark. Biotech companies are not subject to any of these requirements.

"This bill just builds on the structure of what we've done in the past on health care reform and asks the pharmaceutical industry to come to the table," said Tim Foley, executive vice president for 1199 SEIU.