Amendment 490

Budget Amendment ID: FY2027-S4-490

EHS 490

Prescription Drug Upper Payment Limit

Ms. Friedman moved that the proposed new text be amended by adding after section ___ the following two sections:-

“SECTION ___. Section 1 of chapter 6D of the General Laws, as most recently amended by section 11 of chapter 342 of the acts of 2024, is hereby further amended by inserting after section 23 the following two sections:-

Section 24. (a) As used in this section, the following words shall have the following meanings unless the context clearly requires otherwise:

“Eligible drug”, (i) a brand name drug or biologic, not including a biosimilar, that has a launch wholesale acquisition cost of $25,000 or more for a 1-year supply or full course of treatment; (ii) a biosimilar drug that has a launch wholesale acquisition cost that is less than 15 per cent lower than the referenced brand biologic at the time the biosimilar is launched; (iii) a generic drug that has a wholesale acquisition cost of $100 or more for a 30-day supply or full course of treatment, for which the wholesale acquisition cost increased by 200 per cent or more during the preceding 12 months; (iv) a brand name, generic or biologic drug with a total aggregate annual spend by public and private payors of $25 million or more; or (v) other prescription drug products which, due to their cost or an increase in their cost: (A) may have a significant negative impact on patient access, such as by significantly contributing to high patient out-of-pocket costs compared to other drugs, increased utilization management compared to other drugs, lack of coverage by payers or similar factors as determined by the commission; or (B) may create significant affordability challenges for the commonwealth’s health care system and patients, such as by contributing significantly to increased premiums, costs to the commonwealth or patient out-of-pocket costs compared to other drugs, by having a substantial impact on state programs involved in the provision of health care, by affecting the ability of the state and other entities that contribute to the health care cost growth benchmark to meet said benchmark or similar factors, as determined by the commission; provided, however, that the commission shall promulgate regulations to establish the type of prescription drug products classified under clause (v) prior to classification of any such prescription drug product under said clause (v), and the commission may adjust the dollar amounts in this definition from time to time for good cause including, but not limited to, inflation.

“Manufacturer”, a pharmaceutical manufacturer of an eligible drug.

(b)(1) The commission shall review: (i) the negative impact of eligible drug costs on patient access, such as by significantly contributing to high patient out-of-pocket costs compared to other drugs, increased utilization management compared to other drugs, lack of coverage by payers or similar factors as determined by the commission; and (ii) the extent to which eligible drug costs have created or likely will create affordability challenges for the state’s health care system and patients, such as by contributing significantly to increased premiums, costs to the state, or patient out-of-pocket costs compared to other drugs, by having a substantial impact on state programs involved in the provision of health care, by affecting the ability of the state and other entities that contribute to the health care cost growth benchmark to meet said benchmark or similar factors, as determined by the commission; provided, however, that the commission shall be permitted to review only the eligible drugs that the commission determines may have the most significant impact to patients under clause (i) or may create the most significant affordability challenges under clause (ii).

(2) In conducting a review of eligible drugs, the commission shall consider:

(i) available information about the relevant factors contributing to the price paid and amount spent in the state for the drug, including the wholesale acquisition cost, change in price as compared to the launch price, annual price increases over time, discounts, rebates or other price concessions, utilization and utilization trends, aggregate annual spending in the state on the drug and the impact of the drug’s cost on the state budget;

(ii) the average patient co-pay or other cost-sharing for the drug in the commonwealth;

(iii) whether the cost of the drug contributes to inequities in health care access or outcomes;

(iv) the price and availability of therapeutic alternatives in the commonwealth;

(v) input from patients affected by the condition or disease treated by the drug and individuals with medical or scientific expertise related to the condition or disease treated by the drug;

(vi) input from other stakeholders, which may include, but shall not be limited to, patient advocacy organizations, consumer advocacy organizations, providers, provider organizations and payers; and

(vii) any other factors the commission deems relevant.

(3) In conducting a review of eligible drugs, the commission shall notify the manufacturer that the commission is reviewing the manufacturer’s drug, and shall provide the manufacturer with the opportunity to provide information about the drug’s pricing and other relevant information. The commission may request relevant information from the manufacturer of said eligible drug and from pharmacy benefit managers, payers, wholesalers, pharmacies, clinical experts, providers and other persons or entities. The commission, to the extent feasible, shall collaborate with the center to avoid collecting duplicative information and reduce the administrative burden on all parties.

(c)(1) Using the records and information provided under subsection (b), available information from the center, from an outside third party, from another agency or department within the commonwealth or that is otherwise available to the commission or any of its subdivisions, the commission shall determine whether the drugs the commission has reviewed pursuant to subsection (b) have or likely will have a significant impact on patient access or which have created or likely will create significant affordability challenges for the state’s health care system or patients, as described in clauses (i) and (ii) of paragraph (1) of subsection (b). The commission’s determinations and underlying reasoning shall be public, and the commission shall notify manufacturers in writing of the commission’s determination.

(2) The commission shall identify proposed values for drugs that the commission has determined have or likely will have a significant impact on patient access or which have created or likely will create significant affordability challenges for the state’s health care system or patients, as described in clauses (i) and (ii) of paragraph (1) of subsection (b). In identifying proposed values for eligible drugs, the commission may prioritize drugs based on the commission’s determination of the significance of the drug cost’s negative impact on patient access or the extent to which the drug’s cost has created or likely will create affordability challenges for the state’s health care system or patients, as described in clauses (i) and (ii) of paragraph (1) of subsection (b) of this section.

(2) The commission shall base the proposed value on:

(i) the cost of delivering and administering the drug and other administrative costs related to the production and delivery of the drug that the commission deems relevant;

(ii) the status of the drug on the drug shortage list published by the United States Food and Drug Administration;

(iii) the drug’s status as an orphan drug;

(iv) information the commission collected pursuant to paragraph (2) of subsection (b) that the commission deems relevant, including, but not limited to input from patients and stakeholders; and

(v) other factors the commission deems relevant in determining a drug’s value.

(3) The commission shall not base its determination on the proposed value of the eligible drug solely on the analysis or research of an outside third party and shall not employ a measure or metric that assigns a reduced value to the life extension provided by a treatment based on a pre-existing disability or chronic health condition of the individuals whom the treatment would benefit. If the commission relies upon a third party to provide cost-effectiveness analysis or research related to the proposed value of the eligible drug, such analysis or research shall also include, but not be limited to: (i) a description of the methodologies and models used in the analysis; (ii) any assumptions and potential limitations of research findings in the context of the results; and (iii) outcomes for affected subpopulations that utilize the drug, including, but not limited to, potential impacts on individuals of marginalized racial or ethnic groups and on individuals with specific disabilities or health conditions who regularly utilize the eligible drug.

(d) The commission shall notify a manufacturer of the commission’s proposed value and provide the manufacturer with an opportunity provide further information related to the pricing of the eligible drug, the manufacturer’s reasons for the pricing, and any actions the manufacturer has taken or will imminently take that have a high likelihood of lowering the cost of the drug for units of the drugs that are dispensed or administered to an individual in the state in person, by mail, or by other means. The commission may revise the proposed value based on the information provided, if any.

(e) The commission shall notify the public and the manufacturer of the proposed value or, if the proposed value has been revised pursuant to subsection (d), the revised proposed value.

(g) Records disclosed by a manufacturer or other person or entity pursuant to this section, if any, shall: (i) be accompanied by an attestation that all information provided is true and correct; (ii) not be public records as defined under clause Twenty-sixth of section 7 of chapter 4 or chapter 66; and (iii) remain confidential; provided, however, that the commission may produce reports summarizing any findings; provided further, that any such report shall not be in a form that identifies specific prices charged for or rebate amounts associated with drugs by a manufacturer or in a manner that is likely to compromise the financial, competitive or proprietary nature of the information.

A request for further information made by the commission under subsection (d) shall not be public records as defined under said clause Twenty-sixth of said section 7 of said chapter 4 or said chapter 66.

The commission shall not publicly identify specific prices charged for, or rebate amounts associated with, drugs by a manufacturer or in a manner that is likely to compromise the financial, competitive or proprietary nature of the information. Such prices or rebates shall not be public records as defined under said clause Twenty-sixth of said section 7 of said chapter 4 or said chapter 66.

(h) The commission’s proposed value of an eligible drug and the commission’s underlying analysis of the eligible drug shall not be used to determine whether any individual patient meets prior authorization or utilization management criteria for the eligible drug. The proposed value and underlying analysis shall not be the sole factor in determining whether a drug is included in a formulary or whether the drug is subject to step therapy.

(i) The commission may request relevant information to implement this section from the manufacturer of eligible drug and from pharmacy benefit managers, payers, wholesalers, pharmacies, clinical experts, providers and other persons or entities; provided, however, that if a manufacturer, pharmacy benefit manager, wholesaler or payer fails to timely comply with the commission’s request for records, or otherwise knowingly obstructs the commission’s ability to implement this section or section 25 by taking actions including, but not limited to, providing false or misleading information, the commission may impose sanctions against the entity, including monetary penalties not to exceed $500,000, per violation. The commission shall promote compliance with this section and shall only impose a civil penalty on the manufacturer as a last resort. The commission, to the extent feasible, shall collaborate with the center to avoid collecting duplicative information and reduce the administrative burden on all parties.

The failure of an entity to provide requested information to the commission or the center pursuant to this section or section 25 shall not impair the commission’s ability to implement this section or section 25.

(j) The commission shall adopt any written policies, procedures or regulations that the commission determines necessary to implement this section.

Section 25. (a) Upon providing notice under subsection (e) of section 24, the commission shall set an upper payment limit for an eligible drug. The upper payment limit shall be the maximum amount that may be paid or billed for a prescription drug purchased or reimbursed in any financial transaction under subsection (c) of this section.

(b) The upper payment limit shall be the proposed value for the eligible drug; provided, however, that if the commission revised the proposed value pursuant to subsection (d) of section 24, the upper payment limit shall be the drug’s revised proposed value. The commission may annually raise a drug’s upper payment limit to account for inflation. An upper payment limit shall not include a pharmacy dispensing fee and nothing in this section shall be interpreted to prevent a retail pharmacy from receiving a payment that includes a dispensing fee above the upper payment limit.

(i) when an individual purchases a prescription drug from a provider located in the commonwealth or a pharmacy licensed by the commonwealth and the drug is dispensed or administered to an individual in the commonwealth in person, by mail or by other means; provided, however, that if the person is insured, the amount the person pays, plus the amount the person’s carrier, the commonwealth or entity acting on behalf of the commonwealth, including, but not limited to the medical assistance program established under chapter 118E, or the participating self-insured plan pays, shall not exceed the upper payment limit plus applicable dispensing fees; and provided further, that a person shall be considered to have purchased a drug if they are not required to pay any cost-sharing amount;

(ii) when a provider located in the commonwealth or a pharmacy licensed by the commonwealth purchases from a wholesaler or other entity a prescription drug that is dispensed or administered to a person in the commonwealth in person, by mail or by other means;

(iii) when a carrier, a pharmacy benefits manager, the commonwealth or entity acting on behalf of the commonwealth, including, but not limited to, the medical assistance program established under chapter 118E, or a participating self-insured plan pays or reimburses a pharmacy, provider or other entity for a prescription drug that is dispensed or administered to a person in the commonwealth in person, by mail or by other means; provided, however, that the amount the person pays for the drug, plus the amount the carrier, the commonwealth or entity acting on behalf of the commonwealth, or the participating self-insured plan pays shall not exceed the upper payment limit plus applicable dispensing fees; and

(iv) to any other transaction within the commonwealth’s jurisdiction to which the commission determines is necessary to apply the upper payment limit to effectuate the purposes of this section.

(d) Upper payment limits shall become effective 6 months after the commission has issued a public determination pursuant to subsection (e) of section 24.

(e) A self-insured plan governed by the Employee Retirement Income Security Act of 1974 may elect to be subject to the upper payment limits.

(f) The commission may suspend an upper payment limit if the commission determines that there is a shortage of the drug in the commonwealth, unless the commission determines that the shortage was caused by a manufacturer or the manufacturer’s agent due to the commission establishing an upper payment limit for the drug.

(g) Any manufacturer or wholesaler that intends to withdraw from sale or distribution within the commonwealth a drug for which the commission has established an upper payment limit shall provide a notice of withdrawal in writing not less than 6 months before the withdrawal to the commission, the commissioner of the division of insurance, the attorney general and any entity in the commonwealth with which the manufacturer or wholesaler has a contract for the sale or distribution of the drug. The commission shall assess a penalty not more than 1 year’s worth of the manufacturer’s revenue attributable to use of the drug in the commonwealth, as determined by the commission, if the commission determines that a manufacturer or wholesaler failed to provide said notice. This subsection shall not apply in instances where the drug is being withdrawn due to a recall or revocation of the drug’s approval by the United States Food and Drug Administration or similar reasons as determined by the commission.

(h) Any savings that a carrier, a participating self-insured plan or the group insurance commission generates due to the implementation of an upper payment limit shall be used to reduce costs to consumers, prioritizing the reduction of premiums or out-of-pocket costs for prescription drugs. Annually, each carrier, participating self-insured plan, the group insurance commission and the division of medical assistance shall submit to the commission a report describing the savings achieved as a result of implementing upper payment limits and how those savings were used to reduce costs to consumers.

(i) The attorney general may enforce this section.

(j) The commission shall promulgate regulations, including, but not limited to, civil penalties, as necessary to implement this section.”; and by inserting after section ___ the following section:-

“SECTION ___. The health policy commission shall consult with relevant stakeholders, including, but not limited to, consumers, consumer advocacy organizations, organizations representing people with disabilities and chronic health conditions, providers, provider organizations, payers, pharmaceutical manufacturers, pharmacy benefit managers and health care economists and other academics, to assist in the development and periodic review of regulations to implement section 24 of chapter 6D of the General Laws, including, but not limited to: (i) identifying which drugs are eligible drugs pursuant to said section 24; and (ii) establishing the criteria and processes for identifying the proposed value of an eligible drug as defined in said section 24 of said chapter 6D.

The commission shall hold its first public outreach pursuant to this section not more than 45 days after the effective date of this act and shall, to the extent possible, ensure fair representation and input from a diverse array of stakeholders."