BIOTECH LOBBY PRESSING FOR CHANGES TO PRICE CONTROL PLAN
By Matt Murphy
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, APRIL 23, 2019.....A concerted lobbying campaign by pharmaceutical makers to soften a proposal that would allow Gov. Charlie Baker's administration to directly negotiate cheaper drug prices is gaining traction this week as House lawmakers debate next year's budget.
House Democratic leaders put a proposal in the budget that would allow MassHealth, the state's Medicaid program, to directly negotiate drug prices, and force a drug manufacturer to justify its pricing to a state watchdog if agreement cannot be reached.
The proposal closely resembles one that Gov. Baker put in his budget, though it removes a provision that would involve the attorney general and possible legal action if the state believed a drug was excessively priced.
Drug manufacturers, however, are lobbying House lawmakers to also relax requirements that would compel manufacturers to share information and appear before state regulators to justify their pricing.
The Massachusetts Biotechnology Council has urged its 1,100 members to write and call lawmakers, and stakeholders on both sides of the debate say that the MassHealth pricing policy has been the subject of conversation for days leading up to this week's floor debate.
"It's a pretty bold statement to be making and it would be fairly precedent setting, so we want to make sure we get it right," said Rep. Jennifer Benson, the new co-chair of the Health Care Financing Committee.
Benson said she's heard from a lot of members and people in the biotechnology industry since the House budget proposal was released, and she said conversations are ongoing about whether and how to adjust the proposal.
"Clearly we need to do something and not one of us wants to eliminate it, but we need to make sure that it works for the long haul for Massachusetts," Benson said.
The cost of pharmaceuticals is a known driver of health care spending in Massachusetts. The administration says drug spending in MassHealth has doubled in five years to $2 billion. But it is also a huge part of the economy.
The Massachusetts Biotechnology Council, which is leading the opposition to drug pricing controls, reports that jobs in the life sciences grew 28 percent from 2008 to 2017, totaling nearly 70,000 and accounting for $10.4 billion in wages.
Zach Stanley, the council's vice president of public affairs, said his organization is interested in "protecting the ongoing growth of the Massachusetts life sciences culture and continuing access to the drugs being developed here and across the country."
"I'm hopeful," Stanley said. "I think it's such an important issue and I hope the House understands what needs to be done to balance the needs of MassHealth and protect one of the leading businesses in Massachusetts."
The industry is rallying around an amendment offered by Rep. Edward Coppinger, a West Roxbury Democrat, that would prohibit the administration from publicly posting what it determines to be a reasonable price for drug.
Drug makers worry that by eliminating the confidentiality around drug pricing, Massachusetts could reset the market not just here but across the country. They have also questioned the expertise of MassHealth and the Health Policy Commission to determine a "reasonable" price for a drug, which takes years of research and development to bring to market, and want guidelines established for how that analysis will be done.
House budget writers projected $28 million in savings to the state from its price-setting reform, while Gov. Baker estimated that it could save MassHealth $80 million next year if coupled with reforms to contracts with pharmacy benefit managers.
The discrepancy, one industry representative said, shows how much uncertainty exists about the impact of the drug pricing proposal.
The Coppinger amendment would also make sure that the Health Policy Commission could not refer a manufacturer to the attorney general for legal action if it refuses to comply with requests for records or to appear at a public hearing and answer questions about its pricing.
Coppinger did not return a call seeking comment.
Insurers and small business groups have asked lawmakers to reject the Coppinger amendment, warning that it would "significantly weaken" a proposal meant to benefit consumers.
"Amendment 1057 weakens provisions in the bill that would provide the state with tools to help control the rising costs of prescription drugs within the Medicaid program, which already represents over 40 percent of the state budget, and would eliminate the incentives for drug manufacturers to come to the table to negotiate fair prices," they wrote in a letter signed by leaders from Retailers Association of Massachusetts, National Federation of Independent Business, the Massachusetts Association of Health Plans and the Massachusetts Association of Health Underwriters.
Benson, Coppinger and House Ways and Means Chairman Aaron Michlewitz are among the legislators looking at the outside section of the budget proposal, and Benson told the News Service Monday that there is "an ongoing conversation about tweaks."
Rep. William Straus, a Mattapoisett Democrat, has filed an amendment to push the dialogue in the opposite direction, proposing to restore the authority of the Health Policy Commission to refer to Attorney General Maura Healey cases of drugs being unreasonably priced for possible action under her consumer protection powers.
"That's what the amendment process is all about," Benson said. "Honestly, I support making sure we're doing it right and if we're getting more information since the budget came out we need to take that into consideration."
The Baker administration asserts its proposed regulatory scheme would only apply to 10 to 20 drugs with no competition among manufacturers. Health and Human Services Secretary Marylou Sudders testified this year that new high-cost drugs are "increasingly the only drugs in their classes." She wrote to the Ways and Means committees, "Without competition to motivate manufacturers to come to the table, MassHealth is in effect left as a price taker. We do not have the tools to manage these drug costs."
MassHealth director Dan Tsai said last month that the administration's proposal was merely an expansion of an existing regulatory process that was formed under a major cost control law. Tsai said prescription drug spending has shot up in a short period, largely due to high-cost drugs that can cost $1 million per person per year.
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