BOSTON — Senate leaders have come up with an ambitious plan they believe will help drive down the cost of expensive and unfairly priced drugs.
The proposal to improve access to medication arrives three weeks after Gov. Charlie Baker put forward his own sweeping health care bill that seeks to cap the growth of expensive pharmaceuticals.
The Senate plan would instead set up a system to empower a state watchdog agency to review and develop acceptable prices for well-known and expensive medications, and work with drug manufacturers to lower those costs for consumers.
As a test case, the legislation proposes to cap the cost of insulin at $25 a month in out-of-pocket expenses for consumers to see what kind of impact that has on premiums and the rest of the market. For patients who need insulin to survive, the out-of-pocket costs can often exceed $1,000 a year under high-deductible plans, Senate officials said.
Sen. Cindy Friedman, an Arlington Democrat and the co-chair of the Committee on Health Care Financing, plans to unveil the bill at a press conference at the State House on Thursday, and leaders plan to call for a vote on the bill by the full Senate next week, ahead of a planned multi-week recess beginning on Nov. 20.
“We are very, very, very concerned about the cost of medications to consumers,” Friedman said in an interview. “We appreciate that this is a complicated and complex industry, that it is expensive, that there are absolutely real costs. What we’re asking is let’s get some transparency around those costs so we know how we can fix the problem for the consumers.”
The bill would authorize the Health Policy Commission to analyze the price of any drugs that cost more than $50,000 a year per patient or that fall on the World Health Organization’s list of essential medicines – a universe of roughly 433 medications.
The commission, under the bill, would develop a set of criteria to determine a proposed value of the drug. If the value set by the HPC matches the manufacturer’s price, regardless of how expensive, then the two could work together on other remedies, such as bulk purchasing or reinsurance, to lower the cost for patients.
However, if there is a disconnect between the manufacturer’s price and the HPC value, the agency would be empowered to work with the drug maker privately to lower the cost.
If the manufacturer refuses to cooperate, the HPC could make its proposed value public and convene public hearings, Friedman said.
“This is a very prescribed process from beginning to end,” Friedman said.
The drug pricing review process is intended to build off what the Legislature and Baker did in this year’s state budget to try to lower pharmacy costs for MassHealth subscribers.
Comparing the health care system to a ball of yarn, Friedman said Senate leaders are cognizant of how pulling on one thread could unravel the whole system. That’s why, she said, the bill proposes to cap insulin as a type of trial balloon.
Friedman says other states have experimented with capping drug prices, including Minnesota and Colorado, where out-of-pocket insulin costs are limited to $100. She said if it turns out the cap on insulin in Massachusetts has no effect on premiums, the state will know it can go even lower.
A Center for Health Information and Analysis report released Tuesday found that pharmacy spending in Massachusetts of $9.9 billion in 2018 was up 5.8 percent, or 3.6 percent after accounting for rebates.
The industry, however, argued that the rate of growth in spending on drugs has been declining the past couple years, while inpatient and outpatient spending at hospitals was growing at a faster clip.
Past proposals to restrict pharmaceutical prices or create public processes through which drug makers could be shamed into lowering their costs have been met with intense lobbying campaigns on Beacon Hill from the pharmaceutical industry, which is a major employer in Massachusetts.
Friedman said drug makers should not fear the Senate bill unless they are attempting to make excessive profits off their drugs on the backs of patients.
“I believe that this is not going to do anything to harm pharmaceutical manufacturers or the pharmaceutical industry,” Friedman said.
The bill would also require pharmacists to notify patients if the retail cost of a medication is less than their co-pay or deductible through their insurance. The change would piggyback off the federal rollback in 2018 of a “gag rule” that had previously allowed pharmacy benefit managers to prevent pharmacists from telling patients about lower retail prices.
Pharmacy benefit managers, under the Senate bill, would be subjected to new licensure requirements, and PBMs and the pharmaceutical industry would be required to participate in the Health Policy Commission’s annual cost trends hearings, which take place each year in October.
And pharmaceutical companies would be required to notify the state before new drugs are brought to market or if the price of an existing drug is going to increase significantly.
The notification requirements, Friedman said, are meant to mitigate against the ripple effects that one costly drug can have on the entire system, like those seen with the hepatitis C drug Sovaldi.
The Senate bill overlaps in some key areas with what the Republican governor and former health insurance executive proposed last month, including state oversight of pharmacy benefit managers and an HPC review process of expensive new drugs.
Friedman also called Baker’s proposal to cap the growth of drug prices to 2 percent above inflation a “really interesting idea” that she wants to explore further, but she said the Senate bill aims not just to control growth, but to lower existing prices.
“We are not going to solve this problem by doing one thing,” Friedman said.