Senate budget stirs ire of MassBIO with drug pricing proposal
Coughlin calls Ways and Means approach ‘radical, unproven policy’
SENATE LEADERS are proposing two ways to reduce the ballooning cost of pharmaceuticals used by Medicaid patients, but an industry group claims one of the ideas is “radical” and “unproven.”
“Over the past five years, MassHealth pharmacy spending has doubled from $1.1 billion to $2.2 billion – twice the growth of other MassHealth spending,” Senate Ways and Means Committee Chairman Michael Rodrigues said Tuesday before the committee unanimously approved his spending bill. “In response, this budget recommends a balanced and comprehensive approach to curb the growth of high-cost drugs and produce savings.”
One part of the Senate Ways and Means budget bill would create a process for the secretary of health and human services to negotiate drug prices with manufacturers, and another provision would direct the state auditor to investigate pharmacy benefits managers.
Pharmacy benefits managers work with state Medicaid programs to negotiate prices, and they have come under scrutiny in some states for taking a big cut of the savings. Last year, Axios reported that, through PBMs, Indiana’s Medicaid program paid $300 per pill while Washington’s Medicaid system paid $109 per pill for a generic cancer drug that costs pharmacies about $84 per pill. In Ohio, the state auditor revealed that PBMs made $223.7 million in one year for their services to the state Medicaid program.
The Senate budget doesn’t count on any immediate savings from the auditor’s review. Instead, it mandates that she complete her report due by next March 1. Lawmakers would then be in a position to enact changes in how drug-price negotiations are handled in the future.
Lowering drug prices is a bipartisan goal touted by President Trump as well as most Democrats. Locally, the issue is thorny because the pharmaceutical industry is such a big and important player in the Massachusetts economy.
The budget provision allowing Health and Human Services to negotiate directly with pharmaceutical manufacturers, and undergo a rate-setting process if those negotiations fail, is another area where the Senate Ways and Means budget looks for savings in medication costs.
Gov. Charlie Baker adopted that approach in his budget bill, authorizing public hearings before the Health Policy Commission and referrals to the attorney general under the state’s consumer protection law. The House passed a version of drug price negotiations in its budget, although an amendment sought by the Massachusetts Biotechnology Council was approved that scaled back the Health Policy Commission’s role and barred any referrals to the attorney general’s office.
On Tuesday, Rodrigues indicated he had accepted input from the pharmaceutical industry about the Senate’s approach, which generally follows what the governor proposed and the industry loudly opposed.
Rodrigues claimed the drug price negotiating process included in his committee’s budget bill would create gross savings of $80 million. (MassHealth funding and savings are split 50-50 between the federal government and the state.)
The Senate Ways and Means version gives drug makers a chance to provide input in coming up with the questions that will be asked to determine the suitability of drug prices, and it requires the Health Policy Commission to consider any information the drug makers deem relevant and necessary, Rodrigues said. The Senate Ways and Means bill would also create an appeals process before the matter goes to the attorney general, putting the dispute before an administrative law judge, Rodrigues said.
The overall budget for MassHealth, the state’s Medicaid program, is $16.55 billion in the Senate Ways and Means bill, a huge chunk of the $42.7 billion in total state spending that would be authorized by the legislation.