Friedman, Senate push transparency in pharmaceutical drug costs

Massachusetts has taken lots of steps to rein in runaway spending on healthcare, but one area has largely avoided state regulation: prescription drugs.

“If we’re really going to have a complete picture of what affects health care costs and we are committed, which we are, to our cost growth benchmarks, we have to look at pharmaceuticals and pharmacy benefit managers as part of that picture,” Sen. Cindy Friedman, Senate Chair of the Committee on Health Care Financing, said on this week’s Codcast.

The Massachusetts Senate on Thursday passed a bill aimed at slowing the growth in spending on prescription drugs and reducing costs for consumers. A similar bill passed the Senate last session, but not the House.

Friedman said the COVID pandemic derailed lots of bills last year, but she is hopeful the House will consider the prescription drug issue this time around. “There are certainly people from the House side that care a lot about this,” she said.

The most recent data from the Center for Health Information and Analysis pegged 2019 pharmacy spending in Massachusetts at $10.7 billion, an increase of 7.2 percent over the prior year. But counting the rebates that drug companies provide, spending on pharmaceuticals was up 3 percent. The pharmaceutical industry has pointed to the 3 percent figure to suggest that their spending is within the range that state officials want to see.

But Friedman said the discussion of rebates just highlights the larger problem: no one knows how drug prices get set. “While we require insurers and hospitals and providers to show us what their costs are and how money is spent, we don’t require that of the pharmaceutical companies. So we have no idea,” Friedman said.What are the rebates? What happens to the rebates? Why are there rebates? Show us what the true cost of the medication is.”

Friedman said she hears concerns that controlling drug prices will stifle innovation in new drugs, but there also needs to be a balance in making sure people can afford the cost of insurance – a cost that is influenced by the price of drugs.

The Senate bill, referred to as the PACT Act, which stands for An Act relative to Pharmaceutical Access, Cost, and Transparency, would create a process through the Health Policy Commission whereby drug companies would have to submit information about pricing. The commission would identify drug prices it deems too high and make recommendations. The commission would work with drugmakers, similar to how it now works with hospitals, to agree on steps to bring prices down.

The bill also caps copays for insulin at $25 for a 30-day supply. Insulin is a daily, life-saving medication taken by diabetics that has seen prices rise over the years because of market forces, even though it is not a new medication.

The bill would provide state oversight of pharmacy benefit managers, who act as middlemen between drug manufacturers and insurers, determining prices and formularies. PBMs are not currently subject to state regulation. “They’re setting not only the prices, but the access to those drugs, and that is a black hole,” Friedman said.

There are other provisions involving topics including mail-order pharmacies and specialty pharmacies.

Friedman said she believes the state has a responsibility to control overall health care costs and the costs to consumers. “I think more and more, it’s the role of the state to try to come up with measures and ways to control some of these costs based on real data and real information,” Friedman said.




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