BOSTON (SHNS) – With Gov. Charlie Baker and legislative leaders weighing another pass at health care reform this session, lawmakers and independent pharmacists called Tuesday for Beacon Hill to impose stricter state regulations on the benefit managers who help negotiate between health plans, manufacturers and pharmacies.
A group of bills before the Financial Services Committee would impose new regulations on pharmacy benefit managers, or PBMs, in Massachusetts, ranging from limits on their ability to steer consumers toward aligned corporate chains to new reporting requirements that could provide greater insight into how the managers affect health care costs.
Pharmacy benefit managers, who have faced growing scrutiny in recent years, could find themselves folded into broader debate about reining in medication costs, particularly if the Legislature opts to pursue a wide-ranging package as it has in past cycles.
“I am not testifying to save my future,” David Morgan, a Weymouth registered pharmacist who previously owned several independent pharmacies in the Boston area, told the committee as he advocated in support of several bills. “My days in pharmacy are long past. But I’m trying to save the future of my profession, which is being massacred by PBMs.”
The costs of prescription drugs have been continually rising in Massachusetts, increasing the strain on patients who need to access medications for chronic conditions and flummoxing elected officials who hear from frustrated constituents and are charged with keeping health care costs under control.
Between 2006 and 2020, prices for “widely used brand-name prescription drugs” increased at a 2.9 percent rate, more than twice the 1.3 percent inflation rate, according to a new report the Massachusetts Association of Health Plans published Tuesday.
Pharmacy spending totaled $10.7 billion in 2019 across the Bay State, a 7.2 percent increase from 2018, according to MAHP.
Previous analysis from the Health Policy Commission found that MassHealth spending on prescription drugs grew twice as fast as all other MassHealth spending, jumping from $1.1 billion in 2012 to $1.9 billion in 2017.
While pharmacy benefit managers are just one point in the pricing constellation, several patient-focused groups and independent pharmacists urged the Financial Services Committee to advance bills aimed at PBMs.
One bill from Sen. Cynthia Creem (S 639) would prohibit pharmacy benefit managers from requiring patients to purchase their drugs from pharmacies affiliated with the PBMs. It would also ban health plans or PBMs from creating financial incentives or penalties designed to direct patients toward specific pharmacies.
“There’s a clear conflict of interest when a pharmacy benefit manager steers consumers toward a pharmacy that it owns or that owns it,” Creem said. “It can lead to fewer options and higher prices for the consumer. I don’t know where the benefit is. I don’t know who’s saving the money.”
Dennis Lyons, a representative for the Massachusetts Independent Pharmacists Association, also backed a Sen. Patricia Jehlen bill (S 684) offering new regulations on PBMs, saying it would “finally begin to rein in these very influential and, to date, unregulated middlemen operating behind the scenes in our health care system.”
“Independent pharmacies are small businesses that are struggling for survival not because of their size or management prowess,” Lyons said. “They are being forced out of practice by predatory practices of PBMs and their insurance partners who are profiting from unfair competitive practices, ultimately to the detriment of Massachusetts consumers.”
Industry leaders contend that pharmacy benefit managers play an important intermediary role through the negotiations they undertake.
“Any assertion that pharmacy benefit managers, PBMs are raising drug costs is completely false. The primary mission of PBMs is to reduce prescription costs for patients. In fact, PBMs are the only member of the prescription drug supply and payment chain working to reduce drug costs for patients,” the Pharmaceutical Care Management Association, which represents PBMs, said in a statement to the News Service. “In Massachusetts, PBMs will reduce prescription drug costs for health plan sponsors and Massachusetts patients by over $22 billion.”
Policymakers and experts have been increasingly calling for more regulations on pharmacy benefit managers in Massachusetts. In its 2018 cost trends report, the HPC recommended the state boost its oversight of how PBMs set prices and limit a practice known as “spread pricing,” in which a manager charges the payer more for a drug than it reimburses a pharmacy and pockets the difference.
That technique grew quickly: the HPC found that spread pricing covered 22 percent of compensation pharmacy benefit managers earned in 2014 and 54 percent of PBM compensation in 2016.
“PBM payments to pharmacies are sometimes even below the pharmacyâ€™s acquisition costs of the drugs, which can affect the financial viability of pharmacies and potentially impact access to care,” the commission wrote in a June 2019 report. “Yet the extent to which PBMs profit from this practice, and on which drugs, remains largely hidden from payers and the public.”
The Massachusetts Biotechnology Council, which has criticized some other legislative attempts to curb prescription drug price increases and urged lawmakers to focus on out-of-pocket costs, voiced support Tuesday for other bills (H 1224 / S 627) that would require health plans to pass at least 80 percent of manufacturer rebates along to patients by lowering pharmacy costs.
Citing the Center for Health Information and Analysis’s most recent annual report, MassBio Executive Vice President Zach Stanley said Tuesday that manufacturers paid a total of $2.3 billion in rebates to payers.
“What is clear to us is that patients should be the first to benefit from these rebate dollars, and this bill is an important step in making that happen,” Stanley said.
Other bills before the Health Care Financing Committee that MassBio supports would hold pharmacy benefit managers accountable for substantial price increases and require manufacturers and PBMs to testify at the Health Policy Commission’s annual cost trend hearing.
Speakers also urged the Financial Services Committee to back legislation that would ban the use of co-pay accumulator programs, in which only the patient’s out-of-pocket payment counts toward their deductible and not any manufacturer discount applied.
Richard Pezzillo, executive director of the New England Hemophilia Association, told lawmakers that about 80 percent of commercial health plans have co-pay accumulators.
“Their impact is unmistakable,” Pezzillo said. “We’ve heard story upon story of how patients with hemophilia experience and suffer through these harmful tactics.”
Interest appears to be growing among elected officials in making another charge at health care reform. Gov. Charlie Baker, who two years ago filed a bill aimed at boosting spending on primary and behavioral health care, said last week that he plans to make another push for legislation, and House and Senate leaders have also hinted a bill could be in play this session.
But drug pricing reforms, which are always the subject of heavy lobbying, have proved tricky to achieve on Beacon Hill. Last session, the Senate unanimously approved a bill imposing new oversight on the pharmaceutical industry and limiting consumer costs for insulin, but the proposal never emerged for a vote in the House.