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HOUSE DOCKET, NO. 2503 FILED ON: 1/19/2023
HOUSE . . . . . . . . . . . . . . . No. 945
The Commonwealth of Massachusetts
_________________
PRESENTED BY:
Christine P. Barber and Jon Santiago
_________________
To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act to ensure prescription drug cost transparency and affordability.
_______________
PETITION OF:
NAME:DISTRICT/ADDRESS :DATE ADDED:Christine P. Barber34th Middlesex1/19/2023Jon Santiago9th Suffolk1/19/2023Lindsay N. Sabadosa1st Hampshire1/19/2023Mindy Domb3rd Hampshire1/19/2023Carmine Lawrence Gentile13th Middlesex1/25/2023David Paul Linsky5th Middlesex1/26/2023Lenny Mirra2nd Essex1/26/2023Peter Capano11th Essex1/27/2023Susannah M. Whipps2nd Franklin1/27/2023Brian W. Murray10th Worcester1/29/2023Jack Patrick Lewis7th Middlesex2/1/2023Vanna Howard17th Middlesex2/1/2023Patricia A. Duffy5th Hampden2/2/2023Kevin G. Honan17th Suffolk2/3/2023Jennifer Balinsky Armini8th Essex2/4/2023David Henry Argosky LeBoeuf17th Worcester2/6/2023Jason M. LewisFifth Middlesex2/7/2023Patrick M. O'ConnorFirst Plymouth and Norfolk2/8/2023 2 of 2
Colleen M. Garry36th Middlesex2/13/2023James C. Arena-DeRosa8th Middlesex2/13/2023James B. EldridgeMiddlesex and Worcester2/16/2023Kate Lipper-Garabedian32nd Middlesex2/22/2023Natalie M. Higgins4th Worcester2/23/2023Tram T. Nguyen18th Essex2/27/2023 1 of 29
HOUSE DOCKET, NO. 2503 FILED ON: 1/19/2023
HOUSE . . . . . . . . . . . . . . . No. 945
By Representatives Barber of Somerville and Santiago of Boston, a petition (accompanied by
bill, House, No. 945) of Christine P. Barber, Jon Santiago and others for legislation to ensure
prescription drug cost transparency and affordability. Financial Services.
The Commonwealth of Massachusetts
_______________
In the One Hundred and Ninety-Third General Court
(2023-2024)
_______________
An Act to ensure prescription drug cost transparency and affordability.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 SECTION 1. Section 1 of chapter 6D of the General Laws, as appearing so appearing, is
2hereby amended by inserting after the definition of “Alternative payment methodologies or
3methods” the following 2 definitions:-
4 “Biosimilar”, a drug that is produced or distributed pursuant to a biologics license
5application approved under 42 U.S.C. 262(k)(3).
6 “Brand name drug”, a drug that is: (i) produced or distributed pursuant to an original new
7drug application approved under 21 U.S.C. 355(c) except for an authorized generic as defined by
842 C.F.R. 447.502; (ii) produced or distributed pursuant to a biologics license application
9approved under 42 U.S.C. 262(a)(2)(C); or (iii) identified by the health benefit plan as a brand
10name drug based on available data resources such as Medi-Span.
11 SECTION 2. Said section 1 of said chapter 6D, as so appearing, is hereby further
12amended by inserting after the definition of “Fiscal year” the following definition:- 2 of 29
13 “Generic drug”, a retail drug that is: (i) marketed or distributed pursuant to an
14abbreviated new drug application approved under 21 U.S.C. 355(j); (ii) an authorized generic as
15defined by 42 C.F.R. 447.502; (iii) a drug that entered the market before January 1, 1962 and
16was not originally marketed under a new drug application; or (iv) identified by the health benefit
17plan as a generic drug based on available data resources such as Medi-Span.
18 SECTION 3. Said section 1 of said chapter 6D, as so appearing, is hereby further
19amended by striking out, in line 189, the words “not include excludes ERISA plans” and
20inserting in place thereof the following words:- include self-insured plans to the extent allowed
21under the federal Employee Retirement Income Security Act of 1974.
22 SECTION 4. Said section 1 of said chapter 6D, as so appearing, is hereby further
23amended by inserting after the definition of “Performance penalty” the following 2 definitions:-
24 “Pharmaceutical manufacturing company”, an entity engaged in the: (i) production,
25preparation, propagation, compounding, conversion or processing of prescription drugs, directly
26or indirectly, by extraction from substances of natural origin, independently by means of
27chemical synthesis or by a combination of extraction and chemical synthesis; or (ii) packaging,
28repackaging, labeling, relabeling or distribution of prescription drugs; provided, however, that
29“pharmaceutical manufacturing company” shall not include a wholesale drug distributor licensed
30under section 36B of chapter 112 or a retail pharmacist registered under section 39 of said
31chapter 112.
32 “Pharmacy benefit manager”, a person, business or other entity, however organized, that
33directly or through a subsidiary provides pharmacy benefit management services for prescription
34drugs and devices on behalf of a health benefit plan sponsor, including, but not limited to, a self- 3 of 29
35insurance plan, labor union or other third-party payer; provided, however, that pharmacy benefit
36management services shall include, but not be limited to, the processing and payment of claims
37for prescription drugs, the performance of drug utilization review, the processing of drug prior
38authorization requests, pharmacy contracting, the adjudication of appeals or grievances related to
39prescription drug coverage contracts, formulary administration, drug benefit design, mail and
40specialty drug pharmacy services, cost containment, clinical, safety and adherence programs for
41pharmacy services and managing the cost of covered prescription drugs; provided further, that
42“pharmacy benefit manager” shall include a health benefit plan that does not contract with a
43pharmacy benefit manager and manages its own prescription drug benefits unless specifically
44exempted by the commission.
45 SECTION 5. Said section 1 of said chapter 6D, as so appearing, is hereby further
46amended by adding the following definition:-
47 “Wholesale acquisition cost”, shall have the same meaning as defined in 42 U.S.C.
481395w-3a(c)(6)(B).
49 SECTION 6. Said chapter 6D is hereby further amended by striking out section 2A, as so
50appearing, and inserting in place thereof the following section:-
51 Section 2A. The commission shall keep confidential all nonpublic clinical, financial,
52strategic or operational documents or information provided or reported to the commission in
53connection with any care delivery, quality improvement process, performance improvement plan
54authorized under sections 7, 10, 14, 15 or 20 of this chapter or under section 2GGGG of chapter
5529 and shall not disclose the information or documents to any person without the consent of the
56payer, provider or pharmaceutical manufacturing company providing or reporting the 4 of 29
57information or documents under said sections 7, 10, 14, 15, or 20 of this chapter or under said
58section 2GGGG of said chapter 29, except in summary form in evaluative reports of such
59activities or when the commission believes that such disclosure should be made in the public
60interest after taking into account any privacy, trade secret or anticompetitive considerations. The
61confidential information and documents shall not be public records and shall be exempt from
62disclosure under clause Twenty sixth of section 7 of chapter 4 or section 10 of chapter 66.
63 SECTION 7. Section 6 of said chapter 6D, as so appearing, is hereby amended by
64inserting after the word “center”, in line 1, the following words:- , pharmaceutical and
65biopharmaceutical manufacturing company, pharmacy benefit manager.
66 SECTION 8. Said section 6 of said chapter 6D, as so appearing, is hereby further
67amended by striking out, in lines 5 and 36, the figure “33” and inserting in place thereof, in each
68instance, the following figure:- 25.
69 SECTION 9. Said section 6 of said chapter 6D, as so appearing, is hereby further
70amended by adding the following paragraph:-
71 The assessed amount for pharmaceutical and biopharmaceutical manufacturing
72companies and pharmacy benefit managers shall be not less than 25 per cent of the amount
73appropriated by the general court for the expenses of the commission minus amounts collected
74from: (i) filing fees; (ii) fees and charges generated by the commission's publication or
75dissemination of reports and information; and (iii) federal matching revenues received for these
76expenses or received retroactively for expenses of predecessor agencies. Pharmaceutical and
77biopharmaceutical manufacturing companies and pharmacy benefit managers shall, in a manner
78and distribution determined by the commission, pay to the commonwealth an amount of the 5 of 29
79estimated expenses of the commission attributable to the commission’s activities under sections
808, 9 and 20. A pharmacy benefit manager that is a surcharge payor subject to the preceding
81paragraph and manages its own prescription drug benefits shall not be subject to additional
82assessment under this paragraph.
83 SECTION 10. Section 8 of said chapter 6D, as so appearing, is hereby amended by
84inserting after the word “organization”, in lines 6 and 7, the following words:- , pharmacy benefit
85manager, pharmaceutical manufacturing company.
86 SECTION 11. Said section 8 of said chapter 6D, as so appearing, is hereby further
87amended by inserting after the word “organizations”, in line 14, the following words:- ,
88pharmacy benefit managers, pharmaceutical manufacturing companies.
89 SECTION 12. Said section 8 of said chapter 6D, as so appearing, is hereby further
90amended by striking out, in line 32, the words “and (xi)” and inserting in place thereof the
91following words:- (xi) at least 3 representatives of the pharmaceutical industry; (xii) at least 1
92pharmacy benefit manager; and (xiii).
93 SECTION 13. Said section 8 of said chapter 6D, as so appearing, is hereby further
94amended by inserting after the word “commission”, in line 59, the first time it appears, the
95following words:- ; and (iii) in the case of pharmacy benefit managers and pharmaceutical
96manufacturing companies, testimony concerning factors underlying prescription drug costs and
97price increases including, but not limited to, the initial prices of drugs coming to market and
98subsequent price increases, changes in industry profit levels, marketing expenses, reverse
99payment patent settlements, the impact of manufacturer rebates, discounts and other price 6 of 29
100concessions on net pricing, the availability of alternative drugs or treatments and any other
101matters as determined by the commission.
102 SECTION 14. Subsection (g) of said section 8 of said chapter 6D, as so appearing, is
103hereby amended by striking out the second sentence and inserting in place thereof the following
104sentence:- The report shall be based on the commission’s analysis of information provided at the
105hearings by witnesses, providers, provider organizations, payers, pharmaceutical manufacturing
106companies and pharmacy benefit managers, registration data collected under section 11, data
107collected or analyzed by the center under sections 8, 9, 10, and 10A of chapter 12C and any other
108available information that the commission considers necessary to fulfill its duties under this
109section as defined in regulations promulgated by the commission.
110 SECTION 15. Section 9 of said chapter 6D, as so appearing, is hereby amended by
111inserting after the word “organization”, in line 72, the following words:- , pharmacy benefit
112manager, pharmaceutical manufacturing company.
113 SECTION 16. Said chapter 6D, as so appearing, is hereby further amended by adding the
114following section:
115 Section 20. (a) For the purposes of this section, “Manufacturer” shall mean an entity that
116manufactures a pharmaceutical drug.
117 (b) The commission may require a manufacturer specified in subsection (c) to disclose to
118the commission within a reasonable time information relating to the manufacturer’s pricing of
119that drug, on a standard reporting form developed by the commission with the input of the
120manufacturers, which includes, but shall not be limited to, the following: 7 of 29
121 (1) A schedule of the drug’s wholesale acquisition cost increases over the previous 5
122calendar years;
123 (2) The manufacturer’s aggregate, company-level research and development and other
124relevant capital expenditures, including facility construction, for the most recent year for which
125final audited data are available;
126 (3) A written, narrative description, suitable for public release, of factors that contributed
127to reported changes in wholesale acquisition cost during the previous 5 calendar years; and
128 (4) Any other information that the manufacturer wishes to provide to the commission.
129 Based on the records furnished, the commission may identify a proposed value for a
130prescribed drug specified in subsection (c). The Commission may request additional relevant
131information that it deems necessary.
132 (c) A manufacturer of a drug for which the commission has received a referral from the
133center under subsection (b) of section 25 of chapter 12C shall comply with the requirements set
134forth in this section; provided that the commission may select or prioritize a subset of the
135referred drugs for the commission’s review.
136 (d) Records disclosed by a manufacturer under this section shall: (i) be accompanied by
137an attestation that all information provided is true and correct; (ii) not be public records under
138section 7 of chapter 4 or chapter 66; and (iii) remain confidential; provided, however, that the
139commission may produce reports summarizing any findings; provided that any such report shall
140not be in a form that identifies specific prices charged for or rebate amounts associated with 8 of 29
141drugs by a manufacturer, or in a manner that is likely to compromise the financial, competitive or
142proprietary nature of the information.
143 (e) If, after review of any records furnished to the commission under subsection (b), the
144commission determines that the manufacturer’s pricing of the drug is potentially unreasonable or
145excessive in relation to the commission’s proposed value under subsection (b), the commission
146shall require that the manufacturer provide within 30 days further information related to the
147pricing of the prescribed drug and the manufacturer’s justification for the pricing. In addition to
148the manufacturer, the commission may identify other relevant parties including but not limited to
149patients, providers, provider organizations and payers who may provide information to the
150commission.
151 (f) The commission shall provide to the manufacturer for review and input any
152information, analyses or reports regarding a particular drug reviewed or relied on by the
153commission in assessing the proposed value of the drug shall be provided to the manufacturer.
154The commission shall consider any clarifications or data provided by the manufacturer with
155respect to its drug. The commission may not rely solely on the analysis or research of an outside
156third party in reaching its determination regarding the proposed value or the reasonableness of
157the drug pricing.
158 (g) If the commission relies upon a third party to provide cost-effectiveness analysis or
159research related to the proposed value, such analysis or research shall also provide, without
160limitation (i) a description of the methodologies and models used by the third party in its
161analysis; (ii) any assumptions and potential limitations of research findings in the context of the
162results; and (iii) outcomes for affected subpopulations that utilize the drug, including but not 9 of 29
163limited to potential impacts on individuals of minority racial or ethnic groups, and on individuals
164with specific disabilities or health conditions who regularly utilize the eligible drug.
165 (h) Not later than 60 days after receiving information from the manufacturer, as required
166under subsections (b) or (e), the commission shall issue a determination on whether the
167manufacturer’s pricing of a drug is unreasonable or excessive in relation to the commission’s
168proposed value of the drug. Following the determination, the commission shall issue
169recommendations on measures to reduce the cost of the drug and to improve the affordability of
170the drug for patients. Recommendations may include, but not be limited to: (i) an alternative
171purchasing plan or value-based payment methodology; (ii) a bulk purchasing program; (iii)
172changes to co-pay, deductibles, coinsurance or other cost-sharing requirements; or (iv) a
173reinsurance program to subsidize the cost of the eligible drug. The commission shall make its
174determination and recommendations public and shall post them on its website and shall provide
175them to private and public health care payers.
176 (i) If the manufacturer fails to timely comply with the commission’s request for records
177under subsections (b) or (e), or otherwise knowingly obstructs the commission’s ability to issue
178its determination under subsection (h), including, but not limited to, providing incomplete, false
179or misleading information, the commission may assess a civil penalty to a manufacturer of not
180more than $500,000. A civil penalty assessed under this subsection shall be deposited into the
181Payment Reform Fund established pursuant to section 100 of chapter 194 of the acts of 2011.
182The commission shall seek to promote compliance with this section and shall only impose a civil
183penalty on the manufacturer as a last resort. 10 of 29
184 (j) Neither the proposed value, nor the analysis produced via the process to determine a
185proposed value, is intended to be used by MassHealth, health insurance carriers, managed care
186organizations, accountable care organizations, hospitals or pharmacies to determine whether a
187treatment should be approved for an individual patient, whether any individual patient should be
188subjected to step therapy or other utilization management methodology,
189 (k) The commission shall adopt any written policies, procedures or regulations that the
190commission determines necessary to implement this section.
191 SECTION 17. Section 11N of chapter 12 of the General Laws, as so appearing, is hereby
192amended by striking out subsection (a) and inserting in place thereof the following subsection:-
193 (a) The attorney general shall monitor trends in the health care market including, but not
194limited to, trends in provider organization size and composition, consolidation in the provider
195market, payer contracting trends, patient access and quality issues in the health care market and
196prescription drug cost trends. The attorney general may obtain the following information from a
197private health care payer, public health care payer, pharmaceutical manufacturing company,
198pharmacy benefit manager, provider or provider organization as any of those terms may be
199defined in section 1 of chapter 6D: (i) any information that is required to be submitted under
200sections 8, 9 10 and 10A of chapter 12C; (ii) filings, applications and supporting documentation
201related to any cost and market impact review under section 13 of said chapter 6D; (iii) filings,
202applications and supporting documentation related to a determination of need application filed
203under section 25C of chapter 111; and (iv) filings, applications and supporting documentation
204submitted to the federal Centers for Medicare and Medicaid Services or the Office of the
205Inspector General for any demonstration project. Under section 17 of said chapter 12C and 11 of 29
206section 8 of said chapter 6D and subject to the limitations stated in those sections, the attorney
207general may require that any provider, provider organization, pharmaceutical manufacturing
208company, pharmacy benefit manager, private health care payer or public health care payer
209produce documents, answer interrogatories and provide testimony under oath related to health
210care costs and cost trends, pharmaceutical costs, pharmaceutical cost trends, the factors that
211contribute to cost growth within the commonwealth's health care system and the relationship
212between provider costs and payer premium rates and the relationship between pharmaceutical
213drug costs and payer premium rates.
214 SECTION 18. Section 1 of chapter 12C of the General Laws, as so appearing, is hereby
215amended by inserting after the definition of “Ambulatory surgical center services” the following
2163 definitions:-
217 “Average manufacturer price”, the average price paid to a manufacturer for a drug in the
218commonwealth by a wholesaler for drugs distributed to pharmacies and by a pharmacy that
219purchases drugs directly from the manufacturer.
220 “Biosimilar”, a drug that is produced or distributed pursuant to a biologics license
221application approved under 42 U.S.C. 262(k)(3).
222 “Brand name drug”, a drug that is: (i) produced or distributed pursuant to an original new
223drug application approved under 21 U.S.C. §355(c) except for an authorized generic as defined
224by 42 C.F.R. § 447.502; (ii) produced or distributed pursuant to a biologics license application
225approved under 42 U.S.C. § 262(a)(2)(C); or (iii) identified by the health benefit plan as a brand
226name drug based on available data resources such as Medi-Span. 12 of 29
227 SECTION 19. Said section 1 of said chapter 12C, as so appearing, is hereby further
228amended by inserting after the definition of “General health supplies, care or rehabilitative
229services and accommodations” the following definition:-
230 “Generic drug”, a retail drug that is: (i) marketed or distributed pursuant to an
231abbreviated new drug application approved under 21 U.S.C. 355(j); (ii) an authorized generic as
232defined by 42 C.F.R. 447.502; (iii) a drug that entered the market before January 1, 1962 that
233was not originally marketed under a new drug application; or (iv) identified by the health benefit
234plan as a generic drug based on available data resources such as Medi-Span.
235 SECTION 20. Said section 1 of said chapter 12C, as so appearing, is hereby further
236amended by inserting after the definition of “Patient-centered medical home” the following 2
237definitions:-
238 “Pharmaceutical manufacturing company”, an entity engaged in the: (i) production,
239preparation, propagation, compounding, conversion or processing of prescription drugs, directly
240or indirectly, by extraction from substances of natural origin, independently by means of
241chemical synthesis or by a combination of extraction and chemical synthesis; or (ii) packaging,
242repackaging, labeling, relabeling or distribution of prescription drugs; provided, however, that
243“pharmaceutical manufacturing company” shall not include a wholesale drug distributor licensed
244under section 36B of chapter 112 or a retail pharmacist registered under section 39 of said
245chapter 112.
246 “Pharmacy benefit manager”, a person, business or other entity, however organized, that,
247directly or through a subsidiary, provides pharmacy benefit management services for prescription
248drugs and devices on behalf of a health benefit plan sponsor, including, but not limited to, a self- 13 of 29
249insurance plan, labor union or other third-party payer; provided, however, that pharmacy benefit
250management services shall include, but not be limited to, the processing and payment of claims
251for prescription drugs, the performance of drug utilization review, the processing of drug prior
252authorization requests, pharmacy contracting, the adjudication of appeals or grievances related to
253prescription drug coverage contracts, formulary administration, drug benefit design, mail and
254specialty drug pharmacy services, cost containment, clinical, safety and adherence programs for
255pharmacy services and managing the cost of covered prescription drugs; provided further, that
256“pharmacy benefit manager” shall include a health benefit plan that does not contract with a
257pharmacy benefit manager and manages its own prescription drug benefits unless specifically
258exempted by the commission.
259 SECTION 21. Said section 1 of said chapter 12C, as so appearing, is hereby further
260amended by adding the following definition:-
261 “Wholesale acquisition cost”, shall have the same meaning as defined in 42 U.S.C.
2621395w-3a(c)(6)(B).
263 SECTION 22. Section 3 of said chapter 12C, as so appearing, is hereby amended by
264inserting after the word “organizations”, in lines 13 and 14, the following words:- ,
265pharmaceutical manufacturing companies, pharmacy benefit managers.
266 SECTION 23. Said section 3 of said chapter 12C, as so appearing, is hereby further
267amended by striking out, in line 24, the words “and payer” and inserting in place thereof the
268following words:- , payer, pharmaceutical manufacturing company and pharmacy benefit
269manager. 14 of 29
270 SECTION 24. Section 5 of said chapter 12C, as so appearing, is hereby amended by
271striking out, in lines 11 and 12, the words “and public health care payers” and inserting in place
272thereof the following words:- , public health care payers, pharmaceutical manufacturing
273companies and pharmacy benefit managers.
274 SECTION 25. Said section 5 of said chapter 12C, as so appearing, is hereby further
275amended by striking out, in line 15, the words “and affected payers” and inserting in place
276thereof the following words:- affected payers, affected pharmaceutical manufacturing companies
277and affected pharmacy benefit managers.
278 SECTION 26. The first paragraph of section 7 of said chapter 12C, as so appearing, is
279hereby amended by adding the following sentence:-
280 Each pharmaceutical and biopharmaceutical manufacturing company and pharmacy
281benefit manager shall pay to the commonwealth an amount for the estimated expenses of the
282center and for the other purposes described in this chapter.
283 SECTION 27. Said section 7 of said chapter 12C, as so appearing, is hereby further
284amended by striking out, in lines 8 and 42, the figure “33” and inserting in place thereof, in each
285instance, the following figure:- 25.
286 SECTION 28. Said section 7 of said chapter 12C, as so appearing, is hereby further
287amended by adding the following paragraph:-
288 The assessed amount for pharmaceutical and biopharmaceutical manufacturing
289companies and pharmacy benefit managers shall be not less than 25 per cent of the amount
290appropriated by the general court for the expenses of the center minus amounts collected from: 15 of 29
291(i) filing fees; (ii) fees and charges generated by the commission's publication or dissemination
292of reports and information; and (iii) federal matching revenues received for these expenses or
293received retroactively for expenses of predecessor agencies. Pharmaceutical and
294biopharmaceutical manufacturing companies and pharmacy benefit managers shall, in a manner
295and distribution determined by the center, pay to the commonwealth an amount of the estimated
296expenses of the center attributable to the center’s activities under sections 3, 10A, 12 and 16. A
297pharmacy benefit manager that is a surcharge payor subject to the preceding paragraph and
298manages its own prescription drug benefits shall not be subject to additional assessment under
299this paragraph.
300 SECTION 29. Subsection (b) of section 10 of chapter 12C of the General Laws, as so
301appearing, is hereby amended by striking out, in line 55, the word “and”.
302 SECTION 30. Said subsection (b) of said section 10 of said chapter 12C is hereby further
303amended by adding the following words:- ; (12) information about prescription drug utilization
304and spending for all covered drugs, including for generic drugs, brand-name drugs, and specialty
305drugs provided in an outpatient setting or sold in a retail setting, including but not limited to
306information sufficient to show (i) highest utilization drugs, (ii) drugs with the greatest increases
307in utilization, (iii) drugs that are most impactful on plan spending, net of rebates, and (iv) drugs
308with the highest year-over-year price increases, net of rebates; and (13) information on claims
309and non-claims based payments to providers for the provision of primary care and behavioral
310health, including mental health and substance use disorder, services, as defined by the center. 16 of 29
311 SECTION 31. Subsection (c) of said section 10 of said chapter 12C, as so appearing, is
312hereby amended by striking out, in line 91, the words “()” and inserting in place thereof the
313following words:- (10).
314 SECTION 32. Said subsection (c) of said section 10 of said chapter 12C, as so appearing,
315is hereby further amended by striking out, in line 99, the word “and”.
316 SECTION 33. Said subsection (c) of said section 10 of said chapter 12C, as so appearing,
317is hereby further amended by adding the following words:- ; (12) information, to the extent
318permissible under 42 U.S.C. 1396r-8(b)(3)(D), about prescription drug utilization and spending
319for all covered drugs, including for generic drugs, brand-name drugs, and specialty drugs
320provided in an outpatient setting or sold in a retail setting, including but not limited to
321information sufficient to show (i) highest utilization drugs, (ii) drugs with the greatest increases
322in utilization, (iii) drugs that are most impactful on plan spending, net of rebates, and (iv) drugs
323with the highest year-over-year price increases, net of rebates; and (13) information on claims
324and non-claims based payments to providers for the provision of primary care and behavioral
325health, including mental health and substance use disorder services, as defined by the center.
326 SECTION 34. Said chapter 12C is hereby further amended by inserting after section 10
327the following section:-
328 Section 10A. (a) The center shall promulgate regulations necessary to ensure the uniform
329annual reporting of information from pharmacy benefit managers certified under chapter 175N,
330including but not limited to information on: (1) prices charged to payers on average by pharmacy
331benefits managers for select prescription drug products, net of any rebate, discounts, fees or other
332payments from the manufacturer to the pharmacy benefits manager and from the pharmacy 17 of 29
333benefits manager to the manufacturer; (2) payments received by pharmacy benefit managers by
334payers related to drugs provided to Massachusetts residents; (3) payments made by pharmacy
335benefit managers to pharmacies related to drugs provided to Massachusetts residents; (4) rebates
336received by pharmacy benefit managers from drug manufacturers related to drugs provided to
337Massachusetts residents; (5) rebates paid by pharmacy benefit managers to payers related to
338drugs provided to Massachusetts residents; (6) other payments made or received by pharmacy
339benefit managers by payers or pharmacies, including but not limited to administrative or
340performance-based payments, related to doing business in Massachusetts; (7) other rebates paid
341to or received by pharmacy benefit managers by drug manufacturers or payers related to doing
342business in Massachusetts; (8) information about prescription drug utilization and spending for
343all covered drugs, including for generic drugs, brand-name drugs, and specialty drugs provided
344in an outpatient setting or sold in a retail setting, including but not limited to information
345sufficient to show: (i) highest utilization drugs; (ii) drugs with the greatest increases in
346utilization; (iii) drugs that are most impactful on plan spending, net of rebates; and (iv) drugs
347with the highest year-over-year price increases, net of rebates; (9) the Medicare Maximum Fair
348Price (42USC Sec 1191(c)) for a prescription drug; and (10) any other information deemed
349necessary by the center.
350 (b) The center shall analyze the information and data collected under subsection (a) and
351shall publish an annual report summarizing, at minimum, the information collected under
352subsection (a) and comparing the information as it relates to each pharmacy benefit manager
353certified under chapter 175N with respect to drugs provided to Massachusetts residents. The
354center may also consult with other states collecting similar data to inform their analysis and
355annual report. 18 of 29
356 (c) Except as provided otherwise by the center or under this chapter, pharmacy benefit
357manager data collected by the center under this section shall not be a public record under clause
358Twenty-sixth of section 7 of chapter 4 or under chapter 66. The center may confidentially
359provide pharmacy benefit manager data collected by the center under this section to the health
360policy commission.
361 SECTION 35. Said chapter 12C is hereby further amended by striking out section 11, as
362so appearing, and inserting in place thereof the following section:-
363 Section 11. The center shall ensure the timely reporting of information required under
364sections 8, 9, 10 and 10A. The center shall notify payers, providers, provider organizations,
365pharmacy benefit managers and pharmaceutical manufacturing companies of any applicable
366reporting deadlines. The center shall notify, in writing, a private health care payer, provider,
367provider organization, pharmacy benefit manager or pharmaceutical manufacturing company that
368it has failed to meet a reporting deadline and that failure to respond within 2 weeks of the receipt
369of the notice may result in penalties. The center may assess a penalty against a private health care
370payer, provider, provider organization, pharmacy benefit manager or pharmaceutical
371manufacturing company that fails, without just cause, to provide the requested information
372within 2 weeks following receipt of the written notice required under this section of not more
373than $2,000 per week for each week of delay after the 2-week period following receipt of the
374written notice. Amounts collected under this section shall be deposited in the Healthcare
375Payment Reform Fund established in section 100 of chapter 194 of the acts of 2011. 19 of 29
376 SECTION 36. Section 12 of said chapter 12C, as so appearing, is hereby amended by
377striking out, in line 2, the words “and 10” and inserting in place thereof the following words:- ,
37810 and 10A.
379 SECTION 37. Subsection (a) of section 16 of said chapter 12C, as so appearing, is hereby
380amended by striking out the first sentence and inserting in place thereof the following sentence:-
381 The center shall publish an annual report based on the information submitted under: (i)
382sections 8, 9, 10 and 10A concerning health care provider, provider organization, private and
383public health care payer, pharmaceutical manufacturing company and pharmacy benefit manager
384costs and cost and price trends; (ii) section 13 of chapter 6D relative to market power reviews;
385and (iii) section 15 of said chapter 6D relative to quality data.
386 SECTION 38. Said chapter 12C is hereby further amended by striking out section 17, as
387so appearing, and inserting in place thereof the following section:-
388 Section 17. The attorney general may review and analyze any information submitted to
389the center under sections 8, 9, 10 and 10A and the health policy commission under section 8 of
390chapter 6D. The attorney general may require that any provider, provider organization,
391pharmaceutical manufacturing company, pharmacy benefit manager or payer produce
392documents, answer interrogatories and provide testimony under oath related to health care costs
393and cost trends, pharmaceutical cost trends, factors that contribute to cost growth within the
394commonwealth's health care system and the relationship between provider costs and payer
395premium rates. The attorney general shall keep confidential all nonpublic information and
396documents obtained under this section and shall not disclose the information or documents to any
397person without the consent of the provider, pharmaceutical manufacturing company, pharmacy 20 of 29
398benefit manager or payer that produced the information or documents except in a public hearing
399under said section 8 of said chapter 6D, a rate hearing before the division of insurance or in a
400case brought by the attorney general, if the attorney general believes that such disclosure will
401promote the health care cost containment goals of the commonwealth and that the disclosure
402shall be made in the public interest after taking into account any privacy, trade secret or
403anticompetitive considerations. The confidential information and documents shall not be public
404records and shall be exempt from disclosure under clause Twenty-sixth of section 7 of chapter 4
405or section 10 of chapter 66.
406 SECTION 39. Said chapter 12C is hereby further amended by adding the following
407section:-
408 Section 25. (a) The center shall analyze data on Massachusetts drug utilization and
409spending, including but not limited to data reported under Sections 10 and 10A. Annually, the
410center shall refer drugs to the health policy commission for review under section 8B of chapter
4116D that meet any of the following criteria: (i) a current average annual gross cost per utilizer for
412public and private health care payers in Massachusetts of greater than $50,000; (ii) a biosimilar
413drug that has a launch wholesale acquisition cost that is not at least 15 per cent lower than the
414referenced brand biologic at the time the biosimilar is launched; or (iii) among the 25 drugs
415determined by the center to have the most impact on health care spending in the most recent year
416of available data, based upon utilization, price, utilization and price growth, patient cost sharing
417amounts, net spending and other factors as determined by the center. The center shall provide
418notice of the referral to the manufacturer of the drug. 21 of 29
419 (b) Not later than May 1, the center shall publish an annual report detailing, at minimum,
420each drug referred to the health policy commission under subsection (a).
421 (c) The center shall adopt any written policies, procedures or regulations necessary to
422implement this section.
423 SECTION 40. Chapter 94C of the General Laws is hereby amended by inserting after
424section 21B the following section:-
425 Section 21C. (a) For the purposes of this section, the following words shall, unless the
426context clearly requires otherwise, have the following meanings:-
427 “Cost-sharing”, the amount owed by an insured under the terms of the insured’s health
428benefit plan or as required by a pharmacy benefit manager, including any copayment,
429coinsurance or deductible.
430 “Pharmacy retail price”, the amount a pharmacy bills for a prescription medication
431regardless of whether the individual purchases that prescription medication at that pharmacy
432using a health benefit plan or any other prescription medication benefit or discount.
433 “Registered pharmacist”, a pharmacist who holds a valid certificate of registration issued
434by the board of registration in pharmacy pursuant to section 24 of chapter 112.
435 (b) A health benefit plan shall (1) not restrict, directly or indirectly, any pharmacy that
436dispenses a prescription drug to an insured in the plan from informing, or penalize such
437pharmacy for informing, an insured of any differential between the insured’s cost-sharing
438amount under the plan with respect to acquisition of the drug and the amount an individual
439would pay for acquisition of the drug without using any health plan or health insurance coverage; 22 of 29
440and (2) ensure that any pharmacy benefit manager under a contract with any such health benefit
441plan does not, with respect to such plan, restrict, directly or indirectly, a pharmacy that dispenses
442a prescription drug from informing, or penalize such pharmacy for informing, an insured of any
443differential between the insured's cost-sharing amount under the plan with respect to acquisition
444of the drug and the amount an individual would pay for acquisition of the drug without using any
445health plan or health insurance coverage.
446 (c) A health benefit plan or a pharmacy benefit manager may not require an insured to
447make a payment at the point of sale for a covered prescription medication in an amount greater
448than the lesser of: (i) the applicable copayment for the prescription medication; (ii) the allowable
449claim amount for the prescription medication; (iii) the amount an insured would pay for the
450prescription medication if the insured purchased the prescription medication without using a
451health benefit plan or any other source of prescription medication benefits or discounts, to the
452extent this information is available to the health benefit plan; or (iv) the amount the pharmacy
453will be reimbursed for the drug from pharmacy benefit manager or health benefit plan.
454 (d) A pharmacy shall affirmatively inform consumers that a consumer may request, at the
455point of sale, the current pharmacy retail price for each prescription medication the consumer
456intends to purchase. The pharmacy shall provide the information through verbal indication,
457posting of a notice, or other methods. If the consumer’s cost-sharing amount for a prescription
458medication exceeds the current pharmacy retail price, the pharmacist, or an authorized individual
459at the direction of a pharmacist, shall notify the consumer that the pharmacy retail price is less
460than the patient’s cost-sharing amount. The pharmacist shall charge the consumer the applicable
461cost-sharing amount or the current pharmacy retail price for that prescription medication, as
462directed by the consumer. 23 of 29
463 (e) A contractual obligation shall not prohibit a pharmacist from complying with this
464section; provided, however, that a pharmacist shall submit a claim to the insured’s health benefit
465plan or its pharmacy benefit manager if the pharmacist has knowledge that the prescription
466medication is covered under the insured’s health benefit plan.
467 (f) A health benefit plan or pharmacy benefit manager shall not penalize, require, or
468provide financial incentives, including variations in premiums, deductibles, copayments, or
469coinsurance, to insureds as incentives to use specific retail, mail order pharmacy, or other
470network pharmacy provider in which a pharmacy benefit manager has an ownership interest or
471that has an ownership interest in a pharmacy benefit manager.
472 (g) A violation of this section shall be an unfair or deceptive act or practice under chapter
47393A.
474 SECTION 41. Section 226 of chapter 175 of the General Laws, as appearing in the 2018
475Official Edition, is hereby amended by striking out subsection (a) and inserting in place thereof
476the following subsection:-
477 (a) For the purposes of this section, the term “pharmacy benefit manager” shall mean a
478person, business or other entity, however organized, that, directly or through a subsidiary,
479provides pharmacy benefit management services for prescription drugs and devices on behalf of
480a health benefit plan sponsor, including, but not limited to, a self-insurance plan, labor union or
481other third-party payer; provided, however, that pharmacy benefit management services shall
482include, but not be limited to, the processing and payment of claims for prescription drugs, the
483performance of drug utilization review, the processing of drug prior authorization requests,
484pharmacy contracting, the adjudication of appeals or grievances related to prescription drug 24 of 29
485coverage contracts, formulary administration, drug benefit design, mail and specialty drug
486pharmacy services, cost containment, clinical, safety and adherence programs for pharmacy
487services and managing the cost of covered prescription drugs; provided further, that “pharmacy
488benefit manager” shall include a health benefit plan that does not contract with a pharmacy
489benefit manager and manages its own prescription drug benefits unless specifically exempted.
490 SECTION 42. Section 2 of Chapter 176O of the General Laws, as so appearing, is hereby
491amended by adding the following subsection:-
492 (i) At least annually, a carrier that contracts with a pharmacy benefit manager shall
493coordinate an audit of the operations of the pharmacy benefit manager to ensure compliance with
494this chapter and to examine the pricing and rebates applicable to prescription drugs that are
495provided to the carrier’s covered persons.
496 SECTION 43. Said chapter 176O of the General Laws is hereby further amended by
497inserting after section 22 the following section:-
498 Section 22A. Notwithstanding any other general or special law to the contrary, each
499carrier shall require that a pharmacy benefit manager receive a license from the division under
500chapter 176X as a condition of contracting with that carrier.
501 SECTION 44. The General Laws are hereby amended by inserting after chapter 176W
502the following chapter:-
503 Chapter 176X.
504 LICENSING AND REGULATION OF PHARMACY BENEFIT MANAGERS. 25 of 29
505 Section 1. As used in this chapter, the following words shall have the following meanings
506unless the context clearly requires otherwise:
507 “Carrier”, an insurer licensed or otherwise authorized to transact accident or health
508insurance under chapter 175, a nonprofit hospital service corporation organized under chapter
509176A, a non-profit medical service corporation organized under chapter 176B, a health
510maintenance organization organized under chapter 176G and an organization entering into a
511preferred provider arrangement under chapter 176I; provided, however, that the term “carrier”
512shall not include an employer purchasing coverage or acting on behalf of its employees or the
513employees of any subsidiary or affiliated corporation of the employer; provided further, that
514unless otherwise noted the term “carrier” shall not include any entity to the extent it offers a
515policy, certificate or contract that provides coverage solely for dental care services or vision care
516services.
517 “Center”, the center for health information and analysis established in chapter 12C.
518 “Commissioner”, the commissioner of insurance.
519 “Division”, the division of insurance.
520 “Health benefit plan”, a contract, certificate or agreement entered into, offered or issued
521by a carrier to provide, deliver, arrange for, pay for or reimburse any of the costs of health care
522services; provided, however, that the commissioner may by regulation define other health
523coverage as a health benefit plan for the purposes of this chapter. 26 of 29
524 “Pharmacy”, a physical or electronic facility under the direction or supervision of a
525registered pharmacist that is authorized to dispense prescription drugs and has entered into a
526network contract with a pharmacy benefit manager or a carrier.
527 “Pharmacy benefit manager”, a person, business or other entity, however organized, that,
528directly or through a subsidiary, provides pharmacy benefit management services for prescription
529drugs and devices on behalf of a health benefit plan sponsor, including, but not limited to, a self-
530insurance plan, labor union or other third-party payer; provided, however, that pharmacy benefit
531management services shall include, but not be limited to, the processing and payment of claims
532for prescription drugs, the performance of drug utilization review, the processing of drug prior
533authorization requests, pharmacy contracting, the adjudication of appeals or grievances related to
534prescription drug coverage contracts, formulary administration, drug benefit design, mail and
535specialty drug pharmacy services, cost containment, clinical, safety and adherence programs for
536pharmacy services and managing the cost of covered prescription drugs; provided further, that
537“pharmacy benefit manager” shall not include a health benefit plan unless otherwise specified by
538the division.
539 Section 2. (a) A person, business or other entity shall not establish or operate as a
540pharmacy benefit manager in the commonwealth without obtaining a license from the division
541pursuant to this section. The division shall issue a pharmacy benefit manager license to a person,
542business or other entity that demonstrates to the division that it has the necessary organization,
543background expertise and financial integrity to maintain such a license. A pharmacy benefit
544manager license shall be valid for a period of 3 years and shall be renewable for additional 3-
545year periods. Initial application and renewal fees for the license shall be established pursuant to
546section 3B of chapter 7. 27 of 29
547 (b) A license granted pursuant to this section and any rights or interests therein shall not
548be transferable.
549 (c) A person, business or other entity licensed as a pharmacy benefit manager shall
550submit data and reporting information to the center according to the standards and methods
551specified by the center pursuant to section 10A of chapter 12C.
552 (d) The division may issue or renew a license subject to restrictions in order to protect the
553interests of consumers. Such restrictions may include limiting the type of services that a license
554holder may provide, limiting the activities in which the license holder may be engaged or
555addressing conflicts of interest between pharmacy benefit managers and health plan sponsors.
556 (e) The division shall develop an application for licensure that shall include, but not be
557limited to: (1) the name of the pharmacy benefit manager; (2) the address and contact telephone
558number for the pharmacy benefit manager; (3) the name and address of the pharmacy benefit
559manager’s agent for service of process in the commonwealth; (4) the name and address of each
560person with management or control over the pharmacy benefit manager; and (5) any audited
561financial statements specific to the pharmacy benefit manager. A pharmacy benefit manager
562shall report to the division any material change to the information contained in its application,
563certified by an officer of the pharmacy benefit manager, within 30 days of such a change.
564 (f) The division may suspend, revoke, refuse to issue or renew or place on probation a
565pharmacy benefit manager license for cause, which shall include, but not be limited to: (1) the
566pharmacy benefit manager engaging in fraudulent activity that constitutes a violation of state or
567federal law; (2) the division receiving consumer complaints that justify an action under this
568chapter to protect the health, safety and interests of consumers; (3) the pharmacy benefit 28 of 29
569manager failing to pay an application or renewal fee for a license; (4) the pharmacy benefit
570manager failing to comply with reporting requirements of the center under section 10A of
571chapter 12C; or (5) the pharmacy benefit manager failing to comply with a requirement of this
572chapter.
573 The division shall provide written notice to the pharmacy benefit manager and advise in
574writing of the reason for any suspension, revocation, refusal to issue or renew or placement on
575probation of a pharmacy benefit manager license under this chapter. A copy of the notice shall be
576forwarded to the center. The applicant or pharmacy benefit manager may make written demand
577upon the division within 30 days of receipt of such notification for a hearing before the division
578to determine the reasonableness of the division’s action. The hearing shall be held pursuant to
579chapter 30A.
580 The division shall not suspend or cancel a license unless the division has first afforded
581the pharmacy benefit manager an opportunity for a hearing pursuant to said chapter 30A.
582 (g) If a person, business or other entity performs the functions of a pharmacy benefit
583manager in violation of this chapter, the person, business or other entity shall be subject to a fine
584of $5,000 per day for each day that the person, business or other entity is found to be in violation.
585 (h) A pharmacy benefit manager shall be required to submit to periodic audits by a carrier
586licensed under chapters 175, 176A, 176B or 176G if the pharmacy benefit manager has entered
587into a contract with the carrier to provide pharmacy benefit services to the carrier or its members.
588The division may direct or provide specifications for such audits.
589 (i) A pharmacy benefit manager licensed under this section shall notify a health carrier
590client in writing of any activity, policy, practice contract or arrangement of the pharmacy benefit 29 of 29
591manager that directly or indirectly presents any conflict of interest with the pharmacy benefit
592manager’s relationship with or obligation to the health carrier client.