The Massachusetts Senate unveiled An Act Relative to Pharmaceutical Access, Cost and Transparency (PACT Act 2022), comprehensive pharmaceutical cost control legislation aimed at addressing the rapidly increasing costs of prescription drugs. By connecting the need for greater drug price transparency with policies to improve oversight for the pharmaceutical industry, the legislation puts the Senate at the forefront of the state’s efforts to tackle rapidly increasing prescription drug costs. It will also reduce drug costs for patients and lower health care costs overall.
“The rate in which prices have increased for prescription drugs, especially for those that are life-saving, has simply gotten out of control,” said Senator Michael Moore (D-Millbury). “Too many people in the Commonwealth and the country are forced to decide between their medications and other essential goods and services. These decisions are ones that should not have to be made, as we need to create a healthcare system that works for everyone, regardless of their background or income. I am pleased that this issue has been brought before the Senate, and I am hopeful that we can quickly move this legislation through the process and have it put before the Governor.”
Too often, patients cannot access the medications they need due to high prescription drug prices. The PACT Act 2022 contains enhanced accountability tools to address this and other barriers to care. Currently, Massachusetts cannot effectively identify drugs where burdensome costs prevent patients from being able to afford them. These cost barriers also contribute to unaddressed health issues and often worsen conditions. This legislation directs the Health Policy Commission (HPC), in consultation with stakeholders, to establish a process for identifying drug price thresholds that pose a public health risk. In addition, it allows the HPC to recommend pricing measures to increase patient access to necessary medications. Drug manufacturers that fail to comply with this process will be required to pay a fee that will go into a trust fund for a new drug cost assistance program to support patients with certain chronic health conditions that disproportionately impact communities of color and low-income communities.
In a first for Massachusetts, the legislation offers immediate price relief for insulin—a life-sustaining, daily drug for the one in 10 Massachusetts residents living with diabetes, without which they face substantial health risks and complications. Insulin prices have recently risen sharply, resulting in out-of-pocket costs that can reach $1,000 or more per year for patients in high-deductible plans or who are underinsured. This financial burden often forces patients to engage in the dangerous practice of severely limiting or forgoing the use of insulin. To address this problem, the PACT Act 2022 limits out-of-pocket spending on insulin by eliminating deductibles and coinsurance, and permanently capping co-pays at $25 per 30-day supply. If the PACT Act 2022 is signed into law, Massachusetts would join 21 other states that cap co-payments for insulin.
The bill seeks to bring oversight to pharmacy benefit managers (PBMs), who play a major role in how drugs are tiered and priced on insurance plans. PBMs, who serve as brokers or ‘middle-men’ in the drug transaction process, are not currently subjected to rigorous oversight by the state, making it unclear if PBMs act in the best interest of consumers or health plans when they negotiate the price of drugs with pharmaceutical manufacturers. The PACT Act 2022 authorizes the Division of Insurance (DOI) to provide much-needed oversight by licensing and regulating PBMs—and establishing sanctions for PBMs that fail to meet certain standards.
To make sure patients pay the lowest possible cost at the pharmacy counter, the PACT Act 2022 builds on federal action legislation to ensure that a patient purchasing a prescription drug is not charged a cost-sharing amount, such as a co-pay or deductible, that exceeds the drug’s retail price.
The bill also takes significant steps toward ensuring that patients can get their prescription drugs from the pharmacy that they choose. This bill will allow independent pharmacists the opportunity to become licensed to dispense of specialty drugs and contract with insurance plans to provide specialty medications to patients. In addition, this bill provides patients with greater access to mail order prescriptions by allowing any network pharmacy to contract with carriers to provide mail-order prescriptions, changing the current practice where of carriers determine what pharmacies are available to patients for mail order prescriptions.
To help control costs further, the PACT Act 2022 requires pharmaceutical companies to notify the state in advance of new drugs coming to market, and of significant price increases for existing drugs. With advanced notification, the state’s MassHealth program can better prepare for potential cost increases by exploring ways to mitigate the cost or negotiating improved prices. In addition, advance notification will enable the HPC to focus on these cost drivers at their Cost Trends Hearings, which are held each year to examine the drivers of health care costs, identify challenges and opportunities for improving care and reducing costs in Massachusetts, increase transparency and accountability for health care providers and insurers, and help the state to meet its annual health care cost growth benchmark
In addition, pharmaceutical manufacturing companies and PBMs will be included in the HPC annual Cost Trends Hearings for the first time. By participating in the hearings process, manufacturers and PBMs will be required to provide public testimony on the factors that influence drug costs and provide documentation to back up their claims. The HPC will use this information to analyze how pharmaceutical industry costs impact the state’s health care market—and the ultimate cost of health care for Commonwealth residents.
This bill also empowers the Center for Health Information and Analysis (CHIA), an independent state agency that provides objective analysis of the quality, affordability, utilization, and access to the Massachusetts health care system, to collect a range of drug cost information from pharmaceutical manufacturers and PBMs to include in its annual health care cost report, which does not currently include comprehensive data on drug costs. Collecting this data will allow policymakers and consumers to better understand the role of pharmaceutical companies in driving costs moving forward.
The Senate has been a leader in putting forth policies to address unaffordable drug costs. The HEALTH Act, passed by the Senate in 2017, proposed policies to incorporate pharmaceutical costs into the state’s annual health care cost oversight process and ensure that consumers are offered the lowest available prices at the pharmacy. The Senate also championed the inclusion of provisions in the Fiscal Year 2020 budget to allow MassHealth to directly negotiate supplemental drug rebates to save the state millions of dollars each year. The Senate passed the first iteration of the PACT Act in the 2019-2020 session. The PACT Act 2022 takes several more important steps forward to rein in drug costs and improve patient access throughout the health care system.
The Senate is scheduled to debate the PACT Act 2022 next week.