Massachusetts Senator Introduces Drug Transparency Bill Vesting CHIA and Attorney General with Oversight Authority

On January 19, 2017, Senator Mark C. Montigny introduced S.652 – “An Act to promote transparency and cost control of pharmaceutical drug prices.”  The bill currently sits in the Senate Committee on Health Care Financing, and covers the following categories of drugs: 1) the 10 costliest drugs to private payers in a given year; 2) the 10 drugs causing the highest annual increase in private payer spending; 3) drugs introduced into the US market in the past 10 years with a WAC of $10,000 or more annually or per course of treatment; and 4) drugs with a WAC increase of 50% over the past 5 years, or 15% within the past year.

Manufacturers of any covered drug must report to the Center for Health Information and Analysis (“CHIA”) on factors contributing to the drug’s cost or cost increase, including: 1) annual total cost of production; 2) R&D costs (including which entity paid them); 3) price paid by the manufacturer to acquire the drug if not developed in house; 4) annual marketing and advertising costs; and 5) average profit margin of the drug over the most recent 5-year period and the projected profit margin anticipated in the coming year.  CHIA must publish an annual report on this, and can fine manufacturers for non-reporting.  CHIA may also promulgate regulations requiring similar reporting from payers, providers, provider organizations, and PBMs and may fine those entities for non-reporting.

In terms of drug pricing oversight and enforcement, the bill empowers the Health Policy Commission, in consultation with CHIA and the data it collects, to annually identify drugs with costs that are “excessively higher than justified.”  In turn, the bill would empower the MA AG to review and analyze the aggregated drug price information, and to demand that any provider, provider organization, payer, PBM or manufacturer produce documents, answer interrogatories and provide testimony under oath.  Finally, the bill authorizes the MA AG to promulgate consumer protection regulations defining “excessively higher than justified” drug prices as an “unfair practice” subject to a consumer protection action.

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