Drug maker assessments eyed to subsidize patient costs

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BOSTON (SHNS) – House and Senate talks on legislation tackling pharmaceutical costs broke down last session, and a Senate leader has rolled onto the 2021 negotiating table a revised plan under which drug manufacturers would be forced to pay into a new state fund to assist Massachusetts residents with the costs of prescription drugs for several chronic health conditions.

After her prescription drug price transparency bill cleared the Senate but died without a vote in the House last session, Sen. Cindy Friedman refiled it with a new section that would impose up to $200 million in assessments on the industry as part of an effort to subsidize drug costs that patients say they can’t afford.

Her bill (S 771) and another proposal from Rep. Christine Barber (H 729), both of which drew opposition from industry leaders, combine the proposed mandatory payments with a range of additional regulations aimed at reining in drug price increases that Friedman said often occur with little explanation.

“We want people to have access to those drugs, and the way to give them access is to make sure they’re not cost prohibitive, so our idea was we’re going to assess the pharma industry — who, by the way, has not been a partner in figuring this out,” Friedman, who co-chairs the Committee, told the News Service after its Tuesday hearing. “We’re saying, ‘Great, you’ve got all this market share, you’ve got all this power, and we’re going to assess you and we’re going to use that money to fund drugs for people that need it.'”

Those bills drew opposition from the Massachusetts Biotechnology Council, forecasting a potentially bruising fight on Beacon Hill as lawmakers weigh action on the perennial issue of addressing prescription drug costs.

Zach Stanley, MassBio’s executive vice president, alleged in a statement that the Friedman and Barber bills “would give the state new authority to ultimately set the price of prescription drugs without a clear connection to improving patient access or affordability.”

“These proposals are a significant overreach when more measured and proven approaches such as the policies in H. 1254/S. 736 can accomplish the goal of creating more transparency across the drug supply chain,” Stanley said. “As policymakers seek to lower out-of-pocket costs, they should be looking at solutions which directly solve these issues such as H. 1224/S. 627, currently in the Joint Committee on Financial Services, which would make the state’s co-pay assistance law permanent and also mandate health insurers share drug rebates directly with consumers at the pharmacy counter.”

Friedman’s bill would require every Massachusetts drug manufacturer to pay an assessment proportionate to its market share, capping the total aggregate amount from all companies at $200 million.

That money would go into a Prescription Drug Cost Assistance Trust fund, which the Department of Public Health would use to offer financial assistance for patients purchasing drugs to treat chronic respiratory or heart conditions, diabetes, and any other condition identified by DPH that disproportionately impacts people of color or increases risks of COVID-19 complications.

Like its predecessor, Friedman’s updated bill would include drug manufacturing companies and pharmacy benefit managers in annual state health care cost trends analyses. Pharmacy benefit managers would face a new licensing process, and companies would need to notify the state in advance about new drugs coming to market and about price increases for existing medications.

The Health Policy Commission would also create a process to determine which drug price changes represent a “public health threat” and would have the authority to create “access improvement plans” with manufacturers to mitigate costs.

While officials have “some data,” Friedman said the pharmaceutical sector remains mostly outside of the regular state-run cost trends process.

“A lot of what we’re asking of the pharmaceutical industry and pharmaceutical benefit managers is exactly what we have asked and expected from all of the other health care sectors,” she said. “We are not asking them many ways to do anything different than we’ve asked the insurers, hospitals, providers, MassHealth.”

Friedman’s bill would also launch a four-year pilot program eliminating deductibles and coinsurance and capping monthly co-pays at $25 per month for insulin, while Barber’s bill would stand up a permanent program capping insulin cost-sharing at $25 for individuals “in urgent need” of the drug.

During a Health Care Financing Committee hearing Tuesday that featured Friedman and Barber’s proposals, several residents with chronic illnesses voiced their support for the legislation, recounting stories of six-figure hospital bills and immense anxiety due to unaffordable medications.

Karolina Chorvath, a journalist and East Boston resident, told lawmakers about her experience living with Crohn’s disease. One medication she takes for that illness and for inflammatory arthritis costs $30,000 to $70,000 per year, she said.

“Something no one tells you when you’re diagnosed with chronic illnesses like Crohn’s is that even if you’re fortunate enough to be able to find a treatment option, you may not be able to pay for it at all,” Chorvath said.

Ameet Sarpatwari, assistant director of Brigham and Women’s Hospital’s Program on Therapeutics and Law, told the committee that greater state involvement in the drug pricing process will not make it more difficult for companies to find new innovations as some opponents have argued.

The bills Barber and Friedman filed, Sarpatwari said, “would not serve as an obstacle to clinically meaningful innovation, but rather as a much-needed catalyst.”

“Knowing that these bills would place a premium on the value offered by drugs, manufacturers will be incentivized to focus on developing more effective and needed drugs,” Sarpatwari said.

While MassBio opposes those proposals, the industry lobbying group threw its support behind several other drug pricing transparency bills before the Health Care Financing committee (H 1254 / S 736) — the Senate version of which was filed by Sen. Joe Boncore, who is in talks to take over as head of MassBIO, an industry trade group with a strong lobbying presence in the Legislature.

Those bills would hold pharmacy benefit managers accountable for significant price increases, require manufacturers and pharmacy benefit managers to testify at HPC’s annual cost trend hearing, and rein in “overreach” on drug pricing review by HPC, Stanley said in his testimony.

“Out-of-pocket costs are set by insurers,” Stanley said. “There’s no way around that, whether it’s co-pays, coinsurance or deductibles. There is certainly more than one party at play here when it comes to drug pricing.”

Friedman also addressed the potential that Boncore, in his new post, might be working against her plans.

“He’s got to represent his people, and I’ve got to represent my people,” she said. “It might make it a little harder to get mad at him, because he’s just such a good person, but I don’t think it’s going to change the dynamic much … I have such a high regard for him. A lot of this for me comes down to just being honest. Let’s have an honest conversation. Let’s be really clear about where we come from. I don’t like games, I don’t like having somebody tell me something they know isn’t true and they know I know isn’t true, and that’s one thing I look forward to with Senator Boncore: we have a relationship and we can be honest.”

Last year, a series of House chair departures and feuds between the branches partially upended work on the Health Care Financing Committee. The House and Senate eventually found common ground and approved a bill updating telehealth reimbursement rates and boosting surprise billing protections, among other changes, but the House never took up the Senate-approved drug pricing plan.

Friedman said Tuesday she is hopeful for a better outcome in the 2021-2022 lawmaking session now that the committee has a new permanent House chair, Rep. John Lawn, who could not be reached immediately after Tuesday’s hearing.

“I feel like now that I have a co-chair who I like a lot — there’s just going to be more opportunity for us to dig into this issue and make some progress on it,” she said. “That’s what I’m banking on, the fact that there’s a new chair. We seem to connect on a lot of things, and we’ll be able to tackle this one.”

Any major policy changes will need to win clearance from House Speaker Ronald Mariano, who over the years has made health care one of his focus areas.

Convincing all of her colleagues to implement major reforms will take work, Friedman said, particularly when the issue involves such an influential sector.

“You have to spend a lot of time because not only is the pharmaceutical industry in Massachusetts incredibly powerful, it’s also important, it employs a lot of people and it has an enormous amount of money,” she said. “Those are hard things to fight.”

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