On July 31, 2019, Governor Charles Baker signed a law designed to increase supplemental rebates for prescription drugs in the Massachusetts Medicaid program (MassHealth). This law follows on a somewhat similar law enacted in New York in 2017.
Under the new Massachusetts law, the state’s Executive Office of Health and Human Services (EOHHS) can propose and negotiate for supplemental rebates for covered outpatient drugs directly with pharmaceutical manufacturers under an exemption to the Massachusetts public procurement law. If EOHHS is unable to successfully negotiate supplemental rebates for the drug, and its post-rebate cost is expected to either exceed $25,000 per patient annually, or $10,000,000 in the aggregate annually, EOHHS may “identify a proposed value of the drug” based on a number of factors, including prices paid for the drug in other countries and independent third party analyses. EOHHS may hold a public hearing on the drug’s value, testimony at which is under oath, and update the value based on its fact-finding.
If EOHHS is still unable to negotiate a supplemental rebate with the manufacturer after identifying the proposed value, it may refer the manufacturer to the Health Policy Commission (HPC) for additional proceedings. The HPC then can request disclosure of pricing data from the manufacturer, including but not limited to WAC increases over the past 5 years and company-level R&D and other capital expenditures. The HPC then identifies a proposed supplemental rebate, and can request additional information. After reviewing the data provided, the HPC can determine that the price of the drug is potentially unreasonable or excessive, in which case it must request further pricing information from the manufacturer, including justification for the pricing. At the end of the process, the HPC must produce a determination on whether the manufacturer’s pricing is “unreasonable or excessive in relation to the [HPC’s] proposed value of the drug.”
The law puts in place certain confidentiality protections for information submitted by manufacturers. Importantly, it also provides that if EOHHS enters into a supplemental rebate agreement with a manufacturer, it cannot start negotiations for enhanced rebates or refer the drug to the HPC for the life of the rebate.