Senate Rolling Out Plan To Tame Drug Prices

With the high cost of prescription drugs frequently flagged as an untenable driver of health care spending and an impediment to quality care, Senate leaders have come up with an ambitious plan they believe will help drive down the cost of expensive and unfairly priced drugs.

The proposal to improve access to medication arrives three weeks after Gov. Charlie Baker put forward his own sweeping health care bill that seeks to cap the growth of expensive pharmaceuticals.

The Senate plan would instead set up a system to empower a state watchdog agency to review and develop acceptable prices for well-known and expensive medications, and work with drug manufacturers to lower those costs for consumers.

As a test case, the legislation proposes to cap the cost of insulin at $25 a month in out-of-pocket expenses for consumers to see what kind of impact that has on premiums and the rest of the market. For patients who need insulin to survive, the out-of-pocket costs can often exceed $1,000 a year under high-deductible plans, Senate officials said.

The bill is set to be unveiled at a press conference at the State House on Thursday, and leaders plan to call for a vote on the bill by the full Senate next week, ahead of a planned multi-week recess beginning on Nov. 20.

The bill would authorize the Health Policy Commission to analyze the price of any drugs that cost more than $50,000 a year per patient or that fall on the World Health Organization's list of essential medicines — a universe of roughly 433 medications.

The commission, under the bill, would develop a set of criteria to determine a proposed value of the drug. If the value set by the HPC matches the manufacturer's price, regardless of how expensive, then the two could work together on other remedies, such as bulk purchasing or reinsurance, to lower the cost for patients.

However, if there is a disconnect between the manufacturer's price and the HPC value, the agency would be empowered to work with the drug maker privately to lower the cost.

If the manufacturer refuses to cooperate, the HPC could make its proposed value public and convene public hearings.

The drug pricing review process is intended to build off what the Legislature and Baker did in this year's state budget to try to lower pharmacy costs for MassHealth subscribers.

The bill would also require pharmacists to notify patients if the retail cost of a medication is less than their co-pay or deductible through their insurance. The change would piggyback off the federal rollback in 2018 of a "gag rule" that had previously allowed pharmacy benefit managers to prevent pharmacists from telling patients about lower retail prices.

Pharmacy benefit managers, under the Senate bill, would be subjected to new licensure requirements, and PBMs and the pharmaceutical industry would be required to participate in the Health Policy Commission's annual cost trends hearings, which take place each year in October.

And pharmaceutical companies would be required to notify the state before new drugs are brought to market or if the price of an existing drug is going to increase significantly.

The Senate bill overlaps in some key areas with what the Republican governor and former health insurance executive proposed last month, including state oversight of pharmacy benefit managers and an HPC review process of expensive new drugs.