SECTION 1. Chapter 6A of the General Laws is hereby amended by inserting after section 16Y the following section:-

Section 16Z. (a) Notwithstanding any general or special law to the contrary, and insofar as may be permissible under federal law, neither the commonwealth, nor any state administrative agency or other state entity, including, but not limited to, the group insurance commission and the office of Medicaid shall enter into any agreement with the manufacturer of any drug for the purchase of a prescribed drug unless the net cost of the drug, inclusive of cash discounts, free goods, volume discounts, rebates, or any other discounts or credits, as determined by the group insurance commission, is the same as or less than the lowest price paid for the same drug by the United States Department of Veterans Affairs.

(b) The price ceiling described in subsection (a) shall apply to all programs where the commonwealth or any state administrative agency or other state entity is the ultimate payer for the drug, even if it did not purchase the drug directly. The responsible state agency shall enter into additional agreements with drug manufacturers for further price reductions so that the net cost of the drug, as determined by the group insurance commission, is the same as or less than the lowest price paid for the same drug by the United States Department of Veterans Affairs.

(c) All state departments, agencies and other state entities that enter into 1 or more agreements with the manufacturer of any drug for the purchase of prescribed drugs or agreement to pay directly or indirectly for prescribed drugs shall implement this section no later than July 1, 2018.

(d) Each such department agency or other state entity, may adopt administrative rules to implement this section and may seek any waivers of federal law, rule, or regulation necessary to implement this section.