Today, the Massachusetts Senate unveiled An Act relative to Pharmaceutical Access, Cost and Transparency (PACT Act), comprehensive pharmaceutical cost control legislation aimed at addressing the high and rapidly increasing costs of prescription drugs. By connecting the need for greater drug price transparency with policies to improve oversight over the pharmaceutical industry, the legislation will put Massachusetts at the forefront of state’s efforts to tackle increasing drug costs. It will also reduce drug costs to patients and lower health care costs overall.
BOSTON – Today, the Massachusetts Senate unveiled An Act relative to Pharmaceutical Access, Cost and Transparency (PACT Act), comprehensive pharmaceutical cost control legislation aimed at addressing the high and rapidly increasing costs of prescription drugs. By connecting the need for greater drug price transparency with policies to improve oversight over the pharmaceutical industry, the legislation will put Massachusetts at the forefront of state’s efforts to tackle increasing drug costs. It will also reduce drug costs to patients and lower health care costs overall.
“This legislation has been a long time coming as pharmaceutical costs are one of the most important issues in health care affordability,” said Senator James T. Welch (D-West Springfield). “There is finally some accountability for pharmaceutical companies to adhere to, and a new layer of protection for consumers as they tend to their health.”
High drug prices act as barriers to patients, who often cannot access the medications they need due to prohibitive costs. The PACT Act contains enhanced accountability tools to address these barriers. Currently, Massachusetts cannot effectively identify high-cost drugs that substantially impact patient access, resulting in fiscal challenges and public health risks for consumers who cannot afford the rapidly rising costs of prescription drugs. 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.
The legislation offers immediate price relief for insulin—a life sustaining drug for the one in 10 Massachusetts residents living with diabetes who must take it daily or else face substantial health risks and complications. Consumers have recently been experiencing sharp insulin price increases, resulting in out-of-pocket costs that can easily reach $1,000 or more per year for someone who is in a high-deductible plan or underinsured. This financial burden often forces a person to engage in the dangerous practice of severely limiting or forgoing altogether the use of insulin. To address this problem, the PACT Act limits out-of-pocket spending by eliminating deductibles and coinsurance for insulin and capping co-pays at $25 per month.
The bill seeks to bring oversight to pharmacy benefit managers (PBMs), who serve as brokers or “middle-men” in the drug transaction process and play a major role in how drugs are tiered and priced on insurance plans. PBMs are not currently subjected to rigorous oversight by the state, making it unclear if PBMs act in the best interest of the consumer or health plans when they negotiate with pharmaceutical manufacturers on drug prices. The PACT Act authorizes the Division of Insurance to license and regulate PBMs and establish sanctions for PBMs that fail to meet certain standards.
Under current law, pharmacists are not required to disclose to consumers when a lower price is available for a prescription drug. As a result, consumers sometimes pay more using their insurance plan than they would if they paid the pharmacy’s retail price for a prescription. The PACT Act addresses this by requiring pharmacists to notify patients if the retail cost of a medication is less than their cost-sharing amount, such as the co-pay, deductible or other amount required through an insurance plan, thereby increasing transparency and immediately impacting consumers by allowing them to access medications at a lower price.
The PACT Act 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 annual Cost Trends Hearings.
This bill also empowers the Center for Health Information and Analysis (CHIA) to collect a range of drug cost information from pharmaceutical manufacturers and PBMs and include its findings as part of its annual health care cost report. The report 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.
Under the PACT Act, pharmaceutical manufacturing companies and PBMs will be included in the HPC annual Health Care Cost Trends hearing process, which has been instrumental in increasing transparency and accountability for health care providers and insurers, and in helping the state to meet its annual health care cost growth benchmark. By participating in this process, the pharmaceutical industry—both manufacturers and PBMs—will testify publicly on the factors that influence drug costs and provide supporting documents. The HPC will use this information to analyze how pharmaceutical costs impact the state’s health care market.
This bill requires the HPC to create an academic detailing program to educate prescribers and other medical professionals on best practices to improve patient outcomes and reduce costs through better prescribing practices. Academic detailing programs have a long history of success in using ongoing prescriber education to ensure that treatment plans for costly conditions align with the most up-to-date impartial, evidence-based research.
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 to ensure that consumers are offered the lowest available prices at the pharmacy. The Senate also championed the inclusion of provisions in the FY2020 budget to allow MassHealth to directly negotiate supplemental drug rebates to save the state millions of dollars each year. The PACT Act 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 next week.