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 budget that senators will debate starting May 21 directs Auditor Suzanne Bump to investigate pharmacy benefits managers, or PBMs, that work with MassHealth’s managed care organizations and accountable care organizations. Among the topics for review are potential conflicts of interest and pricing.

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.

Those provisions were not satisfactory to MassBio.

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Andy Metzger

Reporter, CommonWealth magazine

About Andy Metzger

Andy Metzger joined CommonWealth Magazine as a reporter in January 2019. He has covered news in Massachusetts since 2007. For more than six years starting in May 2012 he wrote about state politics and government for the State House News Service.  At the News Service, he followed three criminal trials from opening statements to verdicts, tracked bills through the flumes and eddies of the Legislature, and sounded out the governor’s point of view on a host of issues – from the proposed Olympics bid to federal politics.

Before that, Metzger worked at the Chelmsford Independent, The Arlington Advocate, the Somerville Journal and the Cambridge Chronicle, weekly community newspapers that cover an array of local topics. Metzger graduated from UMass Boston in 2006. In addition to his written journalism, Metzger produced a work of illustrated journalism about Gov. Charlie Baker’s record regarding the MBTA. He lives in Somerville and commutes mainly by bicycle.

About Andy Metzger

Andy Metzger joined CommonWealth Magazine as a reporter in January 2019. He has covered news in Massachusetts since 2007. For more than six years starting in May 2012 he wrote about state politics and government for the State House News Service.  At the News Service, he followed three criminal trials from opening statements to verdicts, tracked bills through the flumes and eddies of the Legislature, and sounded out the governor’s point of view on a host of issues – from the proposed Olympics bid to federal politics.

Before that, Metzger worked at the Chelmsford Independent, The Arlington Advocate, the Somerville Journal and the Cambridge Chronicle, weekly community newspapers that cover an array of local topics. Metzger graduated from UMass Boston in 2006. In addition to his written journalism, Metzger produced a work of illustrated journalism about Gov. Charlie Baker’s record regarding the MBTA. He lives in Somerville and commutes mainly by bicycle.

“By retreating to the same framework as Governor Baker’s initial proposal, the Senate Committee on Ways and Means is supporting a radical, unproven policy with unrealistic cost saving estimates despite the significant risks it poses to sick patients who are waiting for a disease-changing therapy that works for them,” said MassBio president Robert Coughlin a couple hours after the budget was reported out of committee. “Advancing this policy would ruin Massachusetts’ image as the best place in the world for the life sciences and immediately threaten the continued success of one of our state’s fastest growing sectors.“

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.