As Health Care Costs Soar, State Legislators Focus On Price-Control Techniques

The Massachusetts State House on Beacon Hill. (Jesse Costa/WBUR)
The Massachusetts State House on Beacon Hill. (Jesse Costa/WBUR)

State Rep. Jon Santiago, an emergency room doctor in Boston, recalled an elderly patient named Mike who recently came to the hospital with life-threatening complications from diabetes. Conversations with the man's family revealed he had not been keeping up with his insulin — it was too expensive.

Mike pulled through, Santiago said. But the freshman Democrat told his colleagues on the Legislature's Health Care Financing Committee that the anecdote illustrates the urgency needed to pass legislation reining in costs of the most expensive prescription medications.

"It will save money and, more importantly, save lives," said Santiago at a standing-room-only hearing this week on drug pricing.

Lawmakers and top state officials are zeroing in on prescription drug pricing as part of their latest attempt to moderate health care expenses that are vexing consumers, employers, insurers, providers and the state government itself.

But representatives of Massachusetts' flourishing biopharmaceutical sector are pushing back hard on proposals to facilitate price controls on the most expensive medications. Such policies, they say, will stifle innovation and threaten jobs.

"Patients need bold reforms, not more of the same failed policies like price controls that do nothing to address the challenges patients face affording their medicines, all the while putting patient access and the industry's ability to find new and better treatments at risk," said Tiffany Haverly, a spokeswoman for the industry group PhRMA, in a written statement.

Biopharmaceutical companies support more than 300,000 jobs and contribute nearly $80 billion to the state's economy, according to the organization.

Supporters of the legislation say they recognize the industry's importance to the state but question claims that price curbs would thwart development of breakthrough drugs or make it harder for patients to access life-saving treatments.

"This is fundamentally a consumer protection [bill]," said Justin Lowe, legal director of Health Law Advocates, a Boston-based organization that assists low-income people secure needed medical services.

The state's Health Policy Commission found that total prescription drug spending rose 4.1 percent in Massachusetts in 2017, a slightly lower increase than in the previous year but still more than double the overall growth in health care expenditures.

The U.S. has the highest drug prices in the world, according to the Organization for Economic Cooperation and Development, having spent $1,162 per person on prescription drugs in 2015.

The bill offers several strategies to force drug-makers to better explain how they set prices and provide more options for those paying the freight. Provisions include regulating pharmacy benefit managers who administer prescription drug plans for private insurers; requiring pharmacists to tell patients if they can save money by buying a drug at retail price rather than through their insurance plans; and better educating doctors on prescribing cheaper, generic versions of name-brand drugs.

Yet the section of the bill likely to be lobbied against most aggressively by the pharmaceutical industry would allow the Health Policy Commission to set ceilings, officially known as "upper payment limits," if a state review finds the cost of a prescription drug to be "unreasonable or excessive."

The payment limits would not, technically, set the price for a drug but instead cap what Massachusetts consumers or insurers pay for it.

Maryland lawmakers debated upper payment limits during this year's legislative session, ultimately approving a scaled-back version that applies only to health insurance for state and local government employees.

While it's unclear if price controls will advance in Massachusetts, bipartisan support appears to be growing for a provision that would allow MassHealth, the state's Medicaid program, to negotiate prices of the most expensive drugs directly with manufacturers. If negotiations fail, the state could then submit the drug to a rate-setting process, including public hearings.

Republican Gov. Charlie Baker offered the Medicaid plan as part of his state budget proposal for the coming fiscal year and House Democratic leaders have included a similar version in their spending blueprint.

Robert Coughlin, president and chief executive of MassBio, blasted the measure as "the most severe and consequential piece of legislation for the Massachusetts biotech industry imaginable."

The House estimated the proposal would save the state about $28 million. Medicaid is by far the largest expenditure in the state budget and officials say prescription drug spending by MassHealth nearly doubled over a recent five-year period.



More from WBUR

Listen Live