Baker planning pharmacy pricing legislation
Sudders calls manufacturer drug rebates ‘smoke and mirrors’
THE BAKER ADMINISTRATION is developing a legislative proposal to rein in pharmacy prices or at least shed more light on what’s fueling the rising cost.
Marylou Sudders, the governor’s secretary of health and human services, said her agency is crafting legislation that would allow the state to negotiate prices directly with drug manufacturers, call them in for hearings when warranted, and increase overall transparency in the pricing process.
Federal regulators in June shot down a waiver request from the Baker administration that would have allowed the state to set its own policies about which drugs would be covered. Normally, Medicaid drug programs cover all medications with only minor restrictions.
At cost-trend hearings before the Health Policy Commission on Wednesday, many of the commission members expressed frustration at the convoluted system for drug pricing, which features a host of middlemen, including wholesalers and pharmacy benefit managers, operating between manufacturers and patients.
Sudders, who is a member of the commission, was skeptical of the entire rebate process. She said if pharmacy prices were fair and adequate, there would be no need for rebates. “It’s smoke and mirrors,” she said.
Stuart Altman, the chairman of the commission, said the rebate process needs to be reviewed. “We have no idea what’s going on and neither does anybody else,” he said.
Daniel Tsai, the assistant secretary of MassHealth, said his agency has been aggressive in pursuing rebates (he cited savings of $320 million annually) and found success where there is competition among drug makers.
He noted a drug with the potential to cure hepatitis C cost $70,000 when it was first introduced by Gilead Sciences, but the price started dropping when competition developed. He said the price fell from $70,000 in 2014 to $51,000 in 2015, $46,000 in 2016, $38,000 in 2017, and $18,000 this year.
Tsai said a significant number of drugs have been developed since 2014 and have little competition. He said the cost of those drugs, after rebate, had increased $202 million during a recent year, which represented a 1.25 percent increase in overall MassHealth spending. That percentage increase is nearly half of the state’s overall cost increase benchmark.
Gov. Charlie Baker, in remarks on Tuesday to the commission, said 30 drugs account for $600 million, or 30 percent, of total pharmacy spending at MassHealth. He said some drugs cost more than $1 million per year per MassHealth member.
Both Sudders and Baker said they are looking to the experience of other states as they craft pharmacy legislation. Trish Riley, executive director of the National Academy for State Health Policy, offered some insight to the commission on what other states are doing. She said 20 states have passed 31 laws dealing with pharmacy benefit managers and seven states (including Connecticut, Maine, New Hampshire, and Vermont in New England) have passed laws requiring increased transparency in pharmacy pricing. Maryland passed a law barring price gouging on generic drugs and Vermont has approved legislation allowing the state to seek federal approval to import drugs from Canada, where prices tend to be lower.
That comment prompted objections from the other panelists and many members of the commission. “You obviously don’t know what public servants get paid,” Sudders said.