SENATE . . . . . . . . . . . . . . No. 2492
The Commonwealth of Massachusetts
_______________
In the One Hundred and Ninety-Third General Court
(2023-2024)
_______________
SENATE, October 30, 2023.
The committee on Health Care Financing, to whom was referred the petitions
(accompanied by bill, Senate, No. 732) of John J. Cronin for legislation to promote
comprehensive transparency in the pharmaceutical industry; (accompanied by bill, Senate, No.
749) of Cindy F. Friedman, Rebecca L. Rausch, Susannah M. Whipps, Joanne M. Comerford
and other members of the General Court for legislation relative to pharmaceutical access, costs
and transparency; (accompanied by bill, Senate, No. 767) of Jason M. Lewis for legislation to
define modest meals and refreshments in prescriber education settings; (accompanied by bill,
Senate, No. 778) of Paul W. Mark for legislation to bring down the cost of prescription drugs;
(accompanied by bill, Senate, No. 783) of Mark C. Montigny and Michael J. Barrett for
legislation to promote transparency and prevent price gouging of pharmaceutical drug prices;
(accompanied by bill, Senate, No. 784) of Mark C. Montigny for legislation relative to coverage
for chronic illness; (accompanied by bill, Senate, No. 797) of Jacob R. Oliveira for legislation to
bring down the cost of prescription drugs; (accompanied by bill, House, No. 619) of Nicholas A.
Boldyga relative to establishing a prescription drug rebate program for seniors; (accompanied by
bill, House, No. 1176) of Edward F. Coppinger and others relative to promoting comprehensive
transparency in the pharmaceutical industry; (accompanied by bill, House, No. 1201) of Kate
Hogan relative to the pricing of prescription drugs; (accompanied by bill, House, No. 1205) of
Bradley H. Jones, Jr., and others that the Health Policy Commission and health insurers create
listings of certain high cost prescription drugs and that the Attorney General require drug
manufacturers to provide information to justify increases in costs; (accompanied by bill, House,
No. 1206) of Bradley H. Jones, Jr., and others for an investigation by a special commission
(including members of the General Court) relative to contracts between the MassHealth program
and pharmaceutical benefit managers; (accompanied by bill, House, No. 1215) of John J. Lawn,
Jr., and others relative to pharmacy benefit managers; (accompanied by bill, House, No. 1246) of
William M. Straus relative to drug prices paid by carriers; and (accompanied by bill, House, No.
1247) of Alyson M. Sullivan-Almeida, Michael J. Soter and David F. DeCoste relative to
pharmacy benefit managers reimbursements to pharmacies in the Commonwealth, reports the
accompanying bill (Senate, No. 2492). For the committee,
Cindy F. Friedman 1 of 77
FILED ON: 10/27/2023
SENATE . . . . . . . . . . . . . . No. 2492
The Commonwealth of Massachusetts
_______________
In the One Hundred and Ninety-Third General Court
(2023-2024)
_______________
An Act relative to pharmaceutical access, costs and transparency.
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. Chapter 6A of the General Laws is hereby amended by adding the
2following section:-
3 Section 16DD. (a) The following terms shall have the following meanings, unless the
4context clearly requires otherwise:
5 “Brand name drug”, a drug that is: (i) produced or distributed pursuant to an original new
6drug application approved under 21 U.S.C. 355(c) except for: (a) any drug approved through an
7application submitted under section 505(b)(2) of the federal Food, Drug, and Cosmetic Act that
8is pharmaceutically equivalent, as that term is defined by the United States Food and Drug
9Administration, to a drug approved under 21 U.S.C. 355(c); (b) an abbreviated new drug
10application that was approved by the United States Secretary of Health and Human Services
11under section 505(c) of the federal Food, Drug, and Cosmetic Act, 21 U.S.C. 355(c), before the 2
12of 53 date of the enactment of the federal Drug Price Competition and Patent Term Restoration
13Act of 1984, Public Law 98-417, 98 Stat. 1585; or (c) an authorized generic drug as defined by 2 of 77
1442 C.F.R. 447.502; (ii) produced or distributed pursuant to a biologics license application
15approved under 42 U.S.C. 262(a)(2)(C); or (iii) identified by the health benefit plan as a brand
16name drug based on available data resources such as Medi-Span.
17 “Generic drug”, a retail drug that is: (i) marketed or distributed pursuant to an
18abbreviated new drug application approved under 21 U.S.C. 355(j); (ii) an authorized generic
19drug as defined by 42 C.F.R. 447.502; (iii) a drug that entered the market before January 1, 1962
20and was not originally marketed under a new drug application; or (iv) identified by the health
21benefit plan as a generic drug based on available data resources such as Medi-Span.
22 (b) Notwithstanding any general or special law to the contrary, there shall be a drug
23access program, administered by the executive office of health and human services, for the
24purpose of enhancing access to targeted high-value medications used to treat certain chronic
25conditions. To implement the drug access program, the secretary of health and human services,
26in consultation with the department of public health, the division of insurance, the health policy
27commission, and the center for health information and analysis, shall identify one generic drug
28and one brand name drug used to treat each of the following chronic conditions: (i) diabetes; (ii)
29asthma; and (iii) heart conditions, including, but not limited to, hypertension and coronary artery
30disease. In determining the one generic drug and one brand name drug used to treat each chronic
31condition, the secretary shall consider whether the drug is:
32 (1) of clear benefit and strongly supported by clinical evidence to be cost-effective;
33 (2) likely to reduce hospitalizations or emergency department visits, or reduce future
34exacerbations of illness progression, or improve quality of life; 3 of 77
35 (3) relatively low cost when compared to the cost of an acute illness or incident prevented
36or delayed by the use of the service, treatment or drug;
37 (4) at low risk for overutilization, abuse, addiction, diversion or fraud; and
38 (5) widely utilized as a treatment for the chronic condition.
39 (c) The secretary of health and human services shall identify insulin as the drug used to
40treat diabetes under the drug access program.
41 (d) Every two years, the secretary of health and human services, in consultation with the
42health policy commission, the center for health information and analysis and the division of
43insurance, shall evaluate the impact of the drug access program established in this section on
44drug treatment adherence, incidence of related acute events, premiums and cost-sharing, overall
45health, long-term health costs, and any other issues that the secretary may deem relevant. The
46secretary may collaborate with an independent research organization to conduct such evaluation.
47The secretary shall file a report of its findings with the clerks of the house of representatives and
48senate, the chairs of the joint committee on public health, the chairs of the joint committee on
49health care financing and the chairs of house and senate committees on ways and means.
50 (e) The secretary, in consultation with the division of insurance, shall promulgate rules
51and regulations necessary to implement this section.
52 SECTION 2. Section 1 of chapter 6D of the General Laws, as appearing in the 2020
53Official Edition, is hereby amended by inserting after the definition of “Alternative payment
54methodologies or methods” the following 2 definitions:- 4 of 77
55 “Biosimilar”, a drug that is produced or distributed pursuant to a biologics license
56application approved under 42 U.S.C. 262(k)(3).
57 “Brand name drug”, a drug that is: (i) produced or distributed pursuant to an original new
58drug application approved under 21 U.S.C. 355(c) except for: (a) any drug approved through an
59application submitted under section 505(b)(2) of the federal Food, Drug, and Cosmetic Act that
60is pharmaceutically equivalent, as that term is defined by the United States Food and Drug
61Administration, to a drug approved under 21 U.S.C. 355(c); (b) an abbreviated new drug
62application that was approved by the United States Secretary of Health and Human Services
63under section 505(c) of the federal Food, Drug, and Cosmetic Act, 21 U.S.C. 355(c), before the
64date of the enactment of the federal Drug Price Competition and Patent Term Restoration Act of
651984, Public Law 98-417, 98 Stat. 1585; or (c) an authorized generic drug as defined by 42
66C.F.R. 447.502; (ii) produced or distributed pursuant to a biologics license application approved
67under 42 U.S.C. 262(a)(2)(C); or (iii) identified by the health benefit plan as a brand name drug
68based on available data resources such as Medi-Span.
69 SECTION 3. Said section 1 of said chapter 6D, as so appearing, is hereby further
70amended by inserting after the definition of “Disproportionate share hospital” the following
71definition:-
72 “Early notice”, advanced notification by a pharmaceutical manufacturing company of a:
73(i) new drug, device or other development coming to market; or (ii) a price increase, as described
74in subsection (b) of section 15A.
75 SECTION 4. Said section 1 of said chapter 6D, as so appearing, is hereby further
76amended by inserting after the definition of “Fiscal year” the following definition:- 5 of 77
77 “Generic drug”, a retail drug that is: (i) marketed or distributed pursuant to an
78abbreviated new drug application approved under 21 U.S.C. 355(j); (ii) an authorized generic
79drug as defined by 42 C.F.R. 447.502; (iii) a drug that entered the market before January 1, 1962
80and was not originally marketed under a new drug application; or (iv) identified by the health
81benefit plan as a generic drug based on available data resources such as Medi-Span.
82 SECTION 5. Said section 1 of said chapter 6D, as so appearing, is hereby further
83amended by striking out, in line 189, the words “not include excludes ERISA plans” and
84inserting in place thereof the following words:- include self-insured plans to the extent allowed
85under the federal Employee Retirement Income Security Act of 1974.
86 SECTION 6. Said section 1 of said chapter 6D, as so appearing, is hereby further
87amended by inserting after the definition of “Performance penalty” the following 2 definitions:-
88 “Pharmaceutical manufacturing company”, an entity engaged in the: (i) production,
89preparation, propagation, compounding, conversion or processing of prescription drugs, directly
90or indirectly, by extraction from substances of natural origin, independently by means of
91chemical synthesis or by a combination of extraction and chemical synthesis; or (ii) packaging,
92repackaging, labeling, relabeling or distribution of prescription drugs; provided, however, that
93“pharmaceutical manufacturing company” shall not include a wholesale drug distributor licensed
94under section 36B of chapter 112 or a retail pharmacist registered under section 39 of said
95chapter 112.
96 “Pharmacy benefit manager”, a person, business or other entity, however organized, that
97directly or through a subsidiary provides pharmacy benefit management services for prescription
98drugs and devices on behalf of a health benefit plan sponsor, including, but not limited to, a self- 6 of 77
99insurance plan, labor union or other third-party payer; provided, however, that pharmacy benefit
100management services shall include, but not be limited to: (i) the processing and payment of
101claims for prescription drugs; (ii) the performance of drug utilization review; (iii) the processing
102of drug prior authorization requests; (iv) pharmacy contracting; (v) the adjudication of appeals or
103grievances related to prescription drug coverage contracts; (vi) formulary administration; (vii)
104drug benefit design; (viii) mail and specialty drug pharmacy services; (ix) cost containment; (x)
105clinical, safety and adherence programs for pharmacy services; and (xi) managing the cost of
106covered prescription drugs; provided further, that “pharmacy benefit manager” shall include a
107health benefit plan that does not contract with a pharmacy benefit manager and manages its own
108prescription drug benefits unless specifically exempted by the commission.
109 SECTION 7. Said section 1 of said chapter 6D, as so appearing, is hereby further
110amended by inserting after the definition of “Physician” the following definition:-
111 “Pipeline drug”, a prescription drug product containing a new molecular entity for which
112the sponsor has submitted a new drug application or biologics license application and received an
113action date from the United States Food and Drug Administration.
114 SECTION 8. Said section 1 of said chapter 6D, as so appearing, is hereby further
115amended by adding the following definition:-
116 “Wholesale acquisition cost”, shall have the same meaning as defined in 42 U.S.C.
1171395w-3a(c)(6)(B).
118 SECTION 9. Said chapter 6D is hereby further amended by striking out section 2A, as so
119appearing, and inserting in place thereof the following section:- 7 of 77
120 Section 2A. The commission shall keep confidential all nonpublic clinical, financial,
121strategic or operational documents or information provided or reported to the commission in
122connection with any care delivery, quality improvement process, performance improvement
123plan, early notification or access and affordability improvement plan activities authorized under
124sections 7, 10, 14, 15, 15A, 20 or 21 of this chapter or under section 2GGGG of chapter 29 and
125shall not disclose the information or documents to any person without the consent of the payer,
126provider or pharmaceutical manufacturing company providing or reporting the information or
127documents under said sections 7, 10, 14, 15, 15A, 20 or 21 of this chapter or under said section
1282GGGG of said chapter 29, except in summary form in evaluative reports of such activities or
129when the commission believes that such disclosure should be made in the public interest after
130taking into account any privacy, trade secret or anticompetitive considerations. The confidential
131information and documents shall not be public records and shall be exempt from disclosure
132under clause Twenty-sixth of section 7 of chapter 4 or under chapter 66.
133 SECTION 10. Section 4 of said chapter 6D, as so appearing, is hereby amended by
134striking out, in lines 7 and 8, the word “manufacturers” and inserting in place thereof the
135following words:- manufacturing companies, pharmacy benefit managers,.
136 SECTION 11. Section 6 of said chapter 6D, as so appearing, is hereby amended by
137inserting after the word “center”, in line 1, the following words:- , pharmaceutical and
138biopharmaceutical manufacturing company, pharmacy benefit manager.
139 SECTION 12. Said section 6 of said chapter 6D, as so appearing, is hereby further
140amended by striking out, in lines 5 and 36, the figure “33” and inserting in place thereof, in each
141instance, the following figure:- 25. 8 of 77
142 SECTION 13. Said section 6 of said chapter 6D, as so appearing, is hereby further
143amended by adding the following paragraph:-
144 The assessed amount for pharmaceutical and biopharmaceutical manufacturing
145companies and pharmacy benefit managers shall be not less than 25 per cent of the amount
146appropriated by the general court for the expenses of the commission minus amounts collected
147from: (i) filing fees; (ii) fees and charges generated by the commission's publication or
148dissemination of reports and information; and (iii) federal matching revenues received for these
149expenses or received retroactively for expenses of predecessor agencies. Pharmaceutical and
150biopharmaceutical manufacturing companies and pharmacy benefit managers shall, in a manner
151and distribution determined by the commission, pay to the commonwealth an amount of the
152estimated expenses of the commission attributable to the commission’s activities under sections
1538, 9, 15A, 20 and 21. A pharmacy benefit manager that is a surcharge payor subject to the
154preceding paragraph and manages its own prescription drug benefits shall not be subject to
155additional assessment under this paragraph
156 SECTION 14. Section 8 of said chapter 6D, as so appearing, is hereby amended by
157inserting after the word “organization”, in lines 6 and 7, the following words:- , pharmacy benefit
158manager, pharmaceutical manufacturing company.
159 SECTION 15. Said section 8 of said chapter 6D, as so appearing, is hereby further
160amended by inserting after the word “organizations”, in line 14, the following words:- ,
161pharmacy benefit managers, pharmaceutical manufacturing companies.
162 SECTION 16. Said section 8 of said chapter 6D, as so appearing, is hereby further
163amended by striking out, in line 32, the words “and (xi)” and inserting in place thereof the 9 of 77
164following words:- (xi) not less than 3 representatives of the pharmaceutical industry; (xii) at least
1651 representative of the pharmacy benefit management industry; and (xiii).
166 SECTION 17. Said section 8 of said chapter 6D, as so appearing, is hereby further
167amended by striking out, in line 48, the first time it appears, the word “and”.
168 SECTION 18. Said section 8 of said chapter 6D, as so appearing, is hereby further
169amended by inserting after the word “commission”, in line 59, the first time it appears, the
170following words:- ; and (iii) in the case of pharmacy benefit managers and pharmaceutical
171manufacturing companies, testimony concerning factors underlying prescription drug costs and
172price increases including, but not limited to, the initial prices of drugs coming to market and
173subsequent price increases, changes in industry profit levels, marketing expenses, reverse
174payment patent settlements, the impact of manufacturer rebates, discounts and other price
175concessions on net pricing, the availability of alternative drugs or treatments and any other
176matters as determined by the commission.
177 SECTION 19. Subsection (g) of said section 8 of said chapter 6D, as so appearing, is
178hereby amended by striking out the second sentence and inserting in place thereof the following
1792 sentences:-
180 The report shall be based on the commission’s analysis of information provided at the
181hearings by witnesses, providers, provider organizations, payers, pharmaceutical manufacturing
182companies and pharmacy benefit managers, registration data collected under section 11, data
183collected or analyzed by the center under sections 8, 9, 10 and 10A of chapter 12C and any other
184available information that the commission considers necessary to fulfill its duties under this
185section as defined in regulations promulgated by the commission. To the extent practicable, the 10 of 77
186report shall not contain any data that is likely to compromise the financial, competitive or
187proprietary nature of the information.
188 SECTION 20. Section 9 of said chapter 6D, as so appearing, is hereby amended by
189inserting after the word “organization”, in line 72, the following words:- , pharmacy benefit
190manager, pharmaceutical manufacturing company.
191 SECTION 21. Said chapter 6D is hereby further amended by inserting after section 15
192the following section:-
193 Section 15A. (a) A pharmaceutical manufacturing company shall provide early notice to
194the commission in a manner described in this section for a: (i) pipeline drug; (ii) generic drug; or
195(iii) biosimilar drug. The commission shall provide non-confidential information received under
196this section to the office of Medicaid, the division of insurance and the group insurance
197commission.
198 Early notice under this subsection shall be submitted to the commission in writing not
199later than 30 days after receipt of the United States Food and Drug Administration approval date.
200 For each pipeline drug, early notice shall include a brief description of the: (i) primary
201disease, health condition or therapeutic area being studied and the indication; (ii) route of
202administration being studied; (iii) clinical trial comparators; and (iv) estimated date of market
203entry. To the extent possible, information shall be collected using data fields consistent with
204those used by the federal National Institutes of Health for clinical trials.
205 For each pipeline drug, early notice shall include whether the drug has been designated
206by the United States Food and Drug Administration: (i) as an orphan drug; (ii) for fast track; (iii) 11 of 77
207as a breakthrough therapy; (iv) for accelerated approval; or (v) for priority review for a new
208molecular entity; provided, however, that notwithstanding clause (v), submissions for drugs in
209development that are designated as new molecular entities by the United States Food and Drug
210Administration shall be provided as soon as practical upon receipt of the relevant designations.
211For each generic drug, early notice shall include a copy of the drug label approved by the United
212States Food and Drug Administration.
213 (b) A pharmaceutical manufacturing company shall provide early notice to the
214commission if it plans to increase the wholesale acquisition cost of a: (i) brand-name drug by
215more than 15 per cent per wholesale acquisition cost unit during any 12-month period; or (ii)
216generic drug with a significant price increase as determined by the commission during any 12-
217month period. The commission shall provide non-confidential information received under this
218section to the office of Medicaid, the division of insurance and the group insurance commission.
219 Early notice under this subsection shall be submitted to the commission in writing not
220less than 60 days before the planned effective date of the increase.
221 A pharmaceutical manufacturing company required to notify the commission of a price
222increase under this subsection shall, not less than 30 days before the planned effective date of the
223increase, report to the commission any information regarding the price increase that is relevant to
224the commission including, but not limited to: (i) drug identification information; (ii) drug sales
225volume information; (iii) wholesale price and related information for the drug; (iv) net price and
226related information for the drug; (v) drug acquisition information, if applicable; (vi) revenue
227from the sale of the drug; and (vii) manufacturer costs. 12 of 77
228 (c) The commission shall conduct an annual study of pharmaceutical manufacturing
229companies subject to the requirements in subsections (a) and (b). The commission may contract
230with a third-party entity to implement this section.
231 (d) Notwithstanding any general or special law to the contrary, information provided
232under this section shall be protected as confidential and shall not be a public record under clause
233Twenty-sixth of section 7 of chapter 4 or under chapter 66.
234 (e) If a pharmaceutical manufacturing company fails to timely comply with the
235requirements under subsection (a) or subsection (b), or otherwise knowingly obstructs the
236commission’s ability to receive early notice under this section, including, but not limited to,
237providing incomplete, false or misleading information, the commission may impose appropriate
238sanctions against the manufacturer, including reasonable monetary penalties not to exceed
239$500,000, in each instance. The commission shall seek to promote compliance with this section
240and shall only impose a civil penalty on the manufacturer as a last resort. Amounts collected
241under this section shall be deposited into the Prescription Drug Cost Assistance Trust Fund
242established in section 2RRRRR of chapter 29.
243 SECTION 22. Said chapter 6D is hereby further amended by adding the following 2
244sections:-
245 Section 20. (a) As used in this section, the following words shall have the following
246meanings unless the context clearly requires otherwise:
247 “Eligible drug”, (i) a brand name drug or biologic, not including a biosimilar, that has a
248launch wholesale acquisition cost of $50,000 or more for a 1-year supply or full course of
249treatment; (ii) a biosimilar drug that has a launch wholesale acquisition cost that is not at least 15 13 of 77
250per cent lower than the referenced brand biologic at the time the biosimilar is launched; (iii) a
251public health essential drug, as defined in subsection (f) of section 13 of chapter 17, with a
252significant price increase over a defined period of time as determined by the commission by
253regulation or with a wholesale acquisition cost of $25,000 or more for a 1-year supply or full
254course of treatment; or (iv) other prescription drug products that may have a direct and
255significant impact and create affordability challenges for the state’s health care system and
256patients, as determined by the commission; provided, however, that the commission shall
257promulgate regulations to establish the type of prescription drug products classified under clause
258(iv) prior to classification of any such prescription drug product under said clause (iv).
259 “Manufacturer”, a pharmaceutical manufacturer of an eligible drug.
260 “Public health essential drug”, shall have the same meaning as defined in subsection (f)
261of section 13 of chapter 17.
262 (b) The commission shall review the impact of eligible drug costs on patient access;
263provided, however, that the commission may prioritize the review of eligible drugs based on
264potential impact to consumers.
265 In order to conduct a review of eligible drugs, the commission may require a
266manufacturer to disclose to the commission within a reasonable time period information relating
267to the manufacturer’s pricing of an eligible drug. The disclosed information shall be on a
268standard reporting form developed by the commission with the input of the manufacturers and
269shall include, but not be limited to:
270 (i) a schedule of the drug’s wholesale acquisition cost increases over the previous 5
271calendar years; 14 of 77
272 (ii) the manufacturer’s aggregate, company-level research and development and other
273relevant capital expenditures, including facility construction, for the most recent year for which
274final audited data are available;
275 (iii) a narrative description, absent proprietary information and written in plain language,
276of factors that contributed to reported changes in wholesale acquisition cost during the previous 5
277calendar years; and
278 (iv) any other information that the manufacturer wishes to provide to the commission or
279that the commission requests.
280 (c) Based on the records furnished under subsection (b) and available information from
281the center for health information and analysis or an outside third party, the commission shall
282identify a proposed value for the eligible drug. The commission may request additional relevant
283information that it deems necessary.
284 Any information, analyses or reports regarding an eligible drug review shall be provided
285to the manufacturer. The commission shall consider any clarifications or data provided by the
286manufacturer with respect to the eligible drug. The commission shall not base its determination
287on the proposed value of the eligible drug solely on the analysis or research of an outside third
288party and shall not employ a measure or metric that assigns a reduced value to the life extension
289provided by a treatment based on a pre-existing disability or chronic health condition of the
290individuals whom the treatment would benefit. If the commission relies upon a third party to
291provide cost-effectiveness analysis or research related to the proposed value of the eligible drug,
292such analysis or research shall also include, but not be limited to: (i) a description of the
293methodologies and models used in its analysis; (ii) any assumptions and potential limitations of 15 of 77
294research findings in the context of the results; and (iii) outcomes for affected subpopulations that
295utilize the drug, including, but not limited to, potential impacts on individuals of marginalized
296racial or ethnic groups, and on individuals with specific disabilities or health conditions who
297regularly utilize the eligible drug.
298 (d) If, after review of an eligible drug and after receiving information from the
299manufacturer under subsection (b) or subsection (e), the commission determines that the
300manufacturer’s pricing of the eligible drug does not substantially exceed the proposed value of
301the drug, the commission shall notify the manufacturer, in writing, of its determination and shall
302evaluate other ways to mitigate the eligible drug’s cost in order to improve patient access to the
303eligible drug. The commission may engage with the manufacturer and other relevant
304stakeholders, including, but not limited to, patients, patient advocacy organizations, consumer
305advocacy organizations, providers, provider organizations and payers, to explore options for
306mitigating the cost of the eligible drug. Upon the conclusion of a stakeholder engagement
307process under this subsection, the commission shall issue recommendations on ways to reduce
308the cost of the eligible drug for the purpose of improving patient access to the eligible drug.
309Recommendations may include, but shall not be limited to: (i) an alternative payment plan or
310methodology; (ii) a bulk purchasing program; (iii) co-pay, deductible, coinsurance or other cost-
311sharing restrictions; and (iv) a reinsurance program to subsidize the cost of the eligible drug. The
312recommendations shall be publicly posted on the commission’s website and provided to the
313clerks of the house of representatives and senate, the joint committee on health care financing
314and the house and senate committees on ways and means.
315 (e) If, after review of an eligible drug, the commission determines that the manufacturer’s
316pricing of the eligible drug substantially exceeds the proposed value of the drug, the commission 16 of 77
317shall request that the manufacturer provide further information related to the pricing of the
318eligible drug and the manufacturer’s reasons for the pricing not later than 30 days after receiving
319the request.
320 (f) Not later than 60 days after receiving information from the manufacturer under
321subsection (b) or subsection (e), the commission shall confidentially issue a determination on
322whether the manufacturer’s pricing of an eligible drug substantially exceeds the commission’s
323proposed value of the drug. If the commission determines that the manufacturer’s pricing of an
324eligible drug substantially exceeds the proposed value of the drug, the commission shall
325confidentially notify the manufacturer, in writing, of its determination and request the
326manufacturer to enter into an access and affordability improvement plan under section 21.
327 (g) Records disclosed by a manufacturer under this section shall: (i) be accompanied by
328an attestation that all information provided is true and correct; (ii) not be public records under
329clause Twenty-sixth of section 7 of chapter 4 or under chapter 66; and (iii) remain confidential;
330provided, however, that the commission may produce reports summarizing any findings;
331provided further, that any such report shall not be in a form that identifies specific prices charged
332for or rebate amounts associated with drugs by a manufacturer or in a manner that is likely to
333compromise the financial, competitive or proprietary nature of the information.
334 Any request for further information made by the commission under subsection (e) or any
335determination issued or written notification made by the commission under subsection (f) shall
336not be public records under said clause Twenty-sixth of said section 7 of said chapter 4 or under
337said chapter 66. 17 of 77
338 (h) The commission’s proposed value of an eligible and the commission’s underlying
339analysis of the eligible drug is not intended to be used to determine whether any individual
340patient meets prior authorization or utilization management criteria for the eligible drug. The
341proposed value and underlying analysis shall not be the sole factor in determining whether a drug
342is included in a formulary or whether the drug is subject to step therapy.
343 (i) If the manufacturer fails to timely comply with the commission’s request for records
344under subsection (b) or subsection (e), or otherwise knowingly obstructs the commission’s
345ability to issue its determination under subsection (f), including, but not limited to, by providing
346incomplete, false or misleading information, the commission may impose appropriate sanctions
347against the manufacturer, including reasonable monetary penalties not to exceed $500,000, in
348each instance. The commission shall seek to promote compliance with this section and shall only
349impose a civil penalty on the manufacturer as a last resort. Penalties collected under this
350subsection shall be deposited into the Prescription Drug Cost Assistance Trust Fund established
351in section 2RRRRR of chapter 29.
352 (j) The commission shall adopt any written policies, procedures or regulations that the
353commission determines are necessary to implement this section.
354 Section 21. (a) The commission shall establish procedures to assist manufacturers in
355filing and implementing an access and affordability improvement plan.
356 Upon providing written notice provided under subsection (f) of section 20, the
357commission shall request that a manufacturer whose pricing of an eligible drug substantially
358exceeds the commission’s proposed value of the drug file an access and affordability
359improvement plan with the commission. Not later than 45 days after receipt of a notice under 18 of 77
360said subsection (f) of said section 20, a manufacturer shall: (i) file an access and affordability
361improvement plan; or (ii) provide written notice declining the commission’s request.
362 (b) An access and affordability improvement plan shall: (i) be generated by the
363manufacturer; (ii) identify the reasons for the manufacturer’s drug price; and (iii) include, but not
364be limited to, specific strategies, adjustments and action steps the manufacturer proposes to
365implement to address the cost of the eligible drug in order to improve the accessibility and
366affordability of the eligible drug for patients and the state’s health system. The proposed access
367and affordability improvement plan shall include specific identifiable and measurable expected
368outcomes and a timetable for implementation. The timetable for an access and affordability
369improvement plan shall not exceed 18 months.
370 (c) The commission shall approve any access and affordability improvement plan that it
371determines: (i) is reasonably likely to address the cost of an eligible drug in order to substantially
372improve the accessibility and affordability of the eligible drug for patients and the state’s health
373system; and (ii) has a reasonable expectation for successful implementation.
374 (d) If the commission determines that the proposed access and affordability improvement
375plan is unacceptable or incomplete, the commission may provide consultation on the criteria that
376have not been met and may allow an additional time period of not more than 30 calendar days for
377resubmission; provided, however, that all aspects of the access plan shall be proposed by the
378manufacturer and the commission shall not require specific elements for approval.
379 (e) Upon approval of the proposed access and affordability improvement plan, the
380commission shall notify the manufacturer to begin immediate implementation of the access and
381affordability improvement plan. Public notice shall be provided by the commission on its 19 of 77
382website, identifying that the manufacturer is implementing an access and affordability
383improvement plan; provided, however, that upon the successful completion of the access and
384affordability improvement plan, the identity of the manufacturer shall be removed from the
385commission's website. All manufacturers implementing an approved access improvement plan
386shall be subject to additional reporting requirements and compliance monitoring as determined
387by the commission. The commission shall provide assistance to the manufacturer in the
388successful implementation of the access and affordability improvement plan.
389 (f) All manufacturers shall work in good faith to implement the access and affordability
390improvement plan. At any point during the implementation of the access and affordability
391improvement plan, the manufacturer may file amendments to the access improvement plan,
392subject to approval of the commission.
393 (g) At the conclusion of the timetable established in the access and affordability
394improvement plan, the manufacturer shall report to the commission regarding the outcome of the
395access and affordability improvement plan. If the commission determines that the access and
396affordability improvement plan was unsuccessful, the commission shall: (i) extend the
397implementation timetable of the existing access and affordability improvement plan; (ii) approve
398amendments to the access and affordability improvement plan as proposed by the manufacturer;
399(iii) require the manufacturer to submit a new access and affordability improvement plan; or (iv)
400waive or delay the requirement to file any additional access and affordability improvement plans.
401 (h) The commission shall submit a recommendation for proposed legislation to the joint
402committee on health care financing if the commission determines that further legislative 20 of 77
403authority is needed to assist manufacturers with the implementation of access and affordability
404improvement plans or to otherwise ensure compliance with this section.
405 (i) An access and affordability improvement plan under this section shall remain
406confidential in accordance with section 2A.
407 (j) The commission may assess a civil penalty to a manufacturer of not more than
408$500,000, in each instance, if the commission determines that the manufacturer: (i) willfully
409neglected to file an access and affordability improvement plan with the commission under
410subsection (a); (ii) failed to file an acceptable access and affordability improvement plan in good
411faith with the commission; (iii) failed to implement the access and affordability improvement
412plan in good faith; or (iv) knowingly failed to provide information required by this section to the
413commission or knowingly falsified the information. The commission shall seek to promote
414compliance with this section and shall only impose a civil penalty as a last resort. Penalties
415collected under this subsection shall be deposited into the Prescription Drug Cost Assistance
416Trust Fund established in section 2RRRRR of chapter 29.
417 (k) If a manufacturer declines to enter into an access and affordability improvement plan
418under this section, the commission may publicly post the proposed value of the eligible drug,
419hold a public hearing on the proposed value of the eligible drug and solicit public comment. The
420manufacturer shall appear and testify at the public hearing held on the eligible drug’s proposed
421value. Upon the conclusion of a public hearing under this subsection, the commission shall issue
422recommendations on ways to reduce the cost of an eligible drug for the purpose of improving
423patient access to the eligible drug. The recommendations shall be publicly posted on the
424commission’s website and provided to the clerks of the house of representatives and senate, the 21 of 77
425joint committee on health care financing and the house and senate committees on ways and
426means.
427 If a manufacturer is deemed to not be acting in good faith to develop an acceptable or
428complete access and affordability improvement plan, the commission may publicly post the
429proposed value of the eligible drug, hold a public hearing on the proposed value of the eligible
430drug and solicit public comment. The manufacturer shall appear and testify at any hearing held
431on the eligible drug’s proposed value. Upon the conclusion of a public hearing under this
432subsection, the commission shall issue recommendations on ways to reduce the cost of an
433eligible drug for the purpose of improving patient access to the eligible drug. The
434recommendations shall be publicly posted on the commission’s website and provided to the
435clerks of the house of representatives and senate, the joint committee on health care financing
436and the house and senate committees on ways and means.
437 Before making a determination that the manufacturer is not acting in good faith, the
438commission shall send a written notice to the manufacturer that the commission shall deem the
439manufacturer to not be acting in good faith if the manufacturer does not submit an acceptable
440access and affordability improvement plan within 30 days of receipt of notice; provided,
441however, that the commission shall not send a notice under this paragraph within 120 calendar
442days from the date that the commission issued its request that the manufacturer enter into the
443access and affordability improvement plan.
444 (l) The commission shall promulgate regulations necessary to implement this section. 22 of 77
445 SECTION 23. Section 1 of chapter 12C of the General Laws, as appearing in the 2020
446Official Edition, is hereby amended by inserting after the definition of “Ambulatory surgical
447center services” the following 3 definitions:-
448 “Average manufacturer price”, the average price paid to a manufacturer for a drug in the
449commonwealth by a: (i) wholesaler for drugs distributed to pharmacies; and (ii) pharmacy that
450purchases drugs directly from the manufacturer.
451 “Biosimilar”, a drug that is produced or distributed pursuant to a biologics license
452application approved under 42 U.S.C. 262(k)(3).
453 “Brand name drug”, a drug that is: (i) produced or distributed pursuant to an original new
454drug application approved under 21 U.S.C. 355(c) except for: (a) any drug approved through an
455application submitted under section 505(b)(2) of the federal Food, Drug, and Cosmetic Act that
456is pharmaceutically equivalent, as that term is defined by the United States Food and Drug
457Administration, to a drug approved under 21 U.S.C. 355(c); (b) an abbreviated new drug
458application that was approved by the United States Secretary of Health and Human Services
459under section 505(c) of the federal Food, Drug, and Cosmetic Act, 21 U.S.C. 355(c), before the
460date of the enactment of the federal Drug Price Competition and Patent Term Restoration Act of
4611984, Public Law 98-417, 98 Stat. 1585; or (c) an authorized generic as defined by 42 C.F.R.
462447.502; (ii) produced or distributed pursuant to a biologics license application approved under
46342 U.S.C. 262(a)(2)(C); or (iii) identified by the health benefit plan as a brand name drug based
464on available data resources such as Medi-Span. 23 of 77
465 SECTION 24. Said section 1 of said chapter 12C, as so appearing, is hereby further
466amended by inserting after the definition of “General health supplies, care or rehabilitative
467services and accommodations” the following definition:-
468 “Generic drug”, a retail drug that is: (i) marketed or distributed pursuant to an
469abbreviated new drug application approved under 21 U.S.C. 355(j); (ii) an authorized generic as
470defined by 42 C.F.R. 447.502; (iii) a drug that entered the market before January 1, 1962 that
471was not originally marketed under a new drug application; or (iv) identified by the health benefit
472plan as a generic drug based on available data resources such as Medi-Span.
473 SECTION 25. Said section 1 of said chapter 12C, as so appearing, is hereby further
474amended by inserting after the definition of “Patient-centered medical home” the following 2
475definitions:-
476 “Pharmaceutical manufacturing company”, an entity engaged in the: (i) production,
477preparation, propagation, compounding, conversion or processing of prescription drugs, directly
478or indirectly, by extraction from substances of natural origin, independently by means of
479chemical synthesis or by a combination of extraction and chemical synthesis; or (ii) packaging,
480repackaging, labeling, relabeling or distribution of prescription drugs; provided, however, that
481“pharmaceutical manufacturing company” shall not include a wholesale drug distributor licensed
482under section 36B of chapter 112 or a retail pharmacist registered under section 39 of said
483chapter 112.
484 “Pharmacy benefit manager”, a person, business or other entity, however organized, that,
485directly or through a subsidiary, provides pharmacy benefit management services for prescription
486drugs and devices on behalf of a health benefit plan sponsor, including, but not limited to, a self- 24 of 77
487insurance plan, labor union or other third-party payer; provided, however, that pharmacy benefit
488management services shall include, but not be limited to: (i) the processing and payment of
489claims for prescription drugs; (ii) the performance of drug utilization review; (iii) the processing
490of drug prior authorization requests; (iv) pharmacy contracting; (v) the adjudication of appeals or
491grievances related to prescription drug coverage contracts; (vi) formulary administration; (vii)
492drug benefit design; (viii) mail and specialty drug pharmacy services; (ix) cost containment; (x)
493clinical, safety and adherence programs for pharmacy services; and (xi) managing the cost of
494covered prescription drugs; provided further, that “pharmacy benefit manager” shall include a
495health benefit plan that does not contract with a pharmacy benefit manager and manages its own
496prescription drug benefits unless specifically exempted by the commission.
497 SECTION 26. Said section 1 of said chapter 12C, as so appearing, is hereby further
498amended by adding the following definition:-
499 “Wholesale acquisition cost”, shall have the same meaning as defined in 42 U.S.C.
5001395w-3a(c)(6)(B).
501 SECTION 27. Section 3 of said chapter 12C, as so appearing, is hereby amended by
502inserting after the word “organizations”, in lines 13 and 14, the following words:- ,
503pharmaceutical manufacturing companies, pharmacy benefit managers.
504 SECTION 28. Said section 3 of said chapter 12C, as so appearing, is hereby further
505amended by striking out, in line 24, the words “and payer” and inserting in place thereof the
506following words:- , payer, pharmaceutical manufacturing company and pharmacy benefit
507manager. 25 of 77
508 SECTION 29. Section 5 of said chapter 12C, as so appearing, is hereby amended by
509striking out, in lines 11 and 12, the words “and public health care payers” and inserting in place
510thereof the following words:- , public health care payers, pharmaceutical manufacturing
511companies and pharmacy benefit managers.
512 SECTION 30. Said section 5 of said chapter 12C, as so appearing, is hereby further
513amended by striking out, in line 15, the words “and affected payers” and inserting in place
514thereof the following words:- affected payers, affected pharmaceutical manufacturing companies
515and affected pharmacy benefit managers.
516 SECTION 31. The first paragraph of section 7 of said chapter 12C, as so appearing, is
517hereby amended by adding the following sentence:- Each pharmaceutical and biopharmaceutical
518manufacturing company and pharmacy benefit manager shall pay to the commonwealth an
519amount for the estimated expenses of the center and for the other purposes described in this
520chapter.
521 SECTION 32. Said section 7 of said chapter 12C, as so appearing, is hereby further
522amended by striking out, in lines 8 and 42, the figure “33” and inserting in place thereof, in each
523instance, the following figure:- 25.
524 SECTION 33. Said section 7 of said chapter 12C, as so appearing, is hereby further
525amended by adding the following paragraph:-
526 The assessed amount for pharmaceutical and biopharmaceutical manufacturing
527companies and pharmacy benefit managers shall be not less than 25 per cent of the amount
528appropriated by the general court for the expenses of the center minus amounts collected from:
529(i) filing fees; (ii) fees and charges generated by the commission's publication or dissemination 26 of 77
530of reports and information; and (iii) federal matching revenues received for these expenses or
531received retroactively for expenses of predecessor agencies. Pharmaceutical and
532biopharmaceutical manufacturing companies and pharmacy benefit managers shall, in a manner
533and distribution determined by the center, pay to the commonwealth an amount of the estimated
534expenses of the center attributable to the center’s activities under sections 3, 10A, 12 and 16. The
535assessed amount shall be based on business conducted in the commonwealth by the
536pharmaceutical and biopharmaceutical manufacturing company and pharmacy benefit manager.
537A pharmacy benefit manager that is also a surcharge payor subject to the preceding paragraph
538and manages its own prescription drug benefits shall not be subject to additional assessment
539under this paragraph.
540 SECTION 34. Said chapter 12C is hereby further amended by inserting after section 10
541the following section:-
542 Section 10A. (a) The center shall promulgate the regulations necessary to ensure the
543uniform reporting of information from pharmaceutical manufacturing companies to enable the
544center to analyze: (i) year-over-year changes in wholesale acquisition cost and average
545manufacturer price for prescription drug products; (ii) year-over-year trends in net expenditures;
546(iii) net expenditures on subsets of biosimilar, brand name and generic drugs identified by the
547center; (iv) trends in estimated aggregate drug rebates, discounts or other remuneration paid or
548provided by a pharmaceutical manufacturing company to a pharmacy benefit manager,
549wholesaler, distributor, health carrier client, health plan sponsor or pharmacy in connection with
550utilization of the pharmaceutical drug products offered by the pharmaceutical manufacturing
551company; (v) discounts provided by a pharmaceutical manufacturing company to a consumer in
552connection with utilization of the pharmaceutical drug products offered by the pharmaceutical 27 of 77
553manufacturing company, including any discount, rebate, product voucher, coupon or other
554reduction in a consumer’s out-of-pocket expenses including co-payments and deductibles under
555section 3 of chapter 175H; (vi) research and development costs as a percentage of revenue; (vii)
556annual marketing and advertising costs, identifying costs for direct-to-consumer advertising;
557(viii) annual profits over the most recent 5-year period; (ix) disparities between prices charged to
558purchasers in the commonwealth and purchasers outside of the United States; and (x) any other
559information deemed necessary by the center.
560 The center shall require the submission of available data and other information from
561pharmaceutical manufacturing companies including, but not limited to: (i) wholesale acquisition
562costs and average manufacturer prices for prescription drug products as identified by the center;
563(ii) true net typical prices charged to pharmacy benefits managers by payor type for prescription
564drug products identified by the center, net of any rebate or other payments from the manufacturer
565to the pharmacy benefits manager and from the pharmacy benefits manager to the manufacturer;
566(iii) aggregate, company-level research and development costs to the extent attributable to a
567specific product and other relevant capital expenditures for the most recent year for which final
568audited data is available for prescription drug products as identified by the center; (iv) annual
569marketing and advertising expenditures; and (v) a description, absent proprietary information and
570written in plain language, of factors that contributed to reported changes in wholesale acquisition
571costs, net prices and average manufacturer prices for prescription drug products as identified by
572the center.
573 (b) The center shall promulgate the regulations necessary to ensure the uniform reporting
574of information from pharmacy benefit managers to enable the center to analyze: (i) trends in
575estimated aggregate drug rebates and other drug price reductions, if any, provided by a pharmacy 28 of 77
576benefit manager to a health carrier client or health plan sponsor or passed through from a
577pharmacy benefit manager to a health carrier client or health plan sponsor in connection with
578utilization of drugs in the commonwealth offered through the pharmacy benefit manager and a
579measure of lives covered by each health carrier client or health plan sponsor in the
580commonwealth; (ii) pharmacy benefit manager practices with regard to drug rebates and other
581drug price reductions, if any, provided by a pharmacy benefit manager to a health carrier client
582or health plan sponsor or to consumers in the commonwealth or passed through from a pharmacy
583benefit manager to a health carrier client or health plan sponsor or to consumers in the
584commonwealth; and (iii) any other information deemed necessary by the center.
585 The center shall require the submission of available data and other information from
586pharmacy benefit managers including, but not limited to: (i) true net typical prices charged by
587pharmacy benefits managers for prescription drug products identified by the center, net of any
588rebate or other payments from the manufacturer to the pharmacy benefits manager and from the
589pharmacy benefits manager to the manufacturer; (ii) the amount of all rebates that the pharmacy
590benefit manager received from all pharmaceutical manufacturing companies for all health carrier
591clients in the aggregate and for each health carrier client or health plan sponsor individually,
592attributable to patient utilization in the commonwealth; (iii) the administrative fees that the
593pharmacy benefit manager received from all health carrier clients or health plan sponsors in the
594aggregate and for each health carrier client or health plans sponsors individually; (iv) the
595aggregate amount of all retained rebates that the pharmacy benefit manager received from all
596pharmaceutical manufacturing companies and did not pass through to each pharmacy benefit
597manager’s health carrier client or health plan sponsor individually; (v) the aggregate amount of
598rebates a pharmacy benefit manager: (A) retains based on its contractual arrangement with each 29 of 77
599health plan client or health plan sponsor individually; and (B) passes through to each health care
600client individually; (vi) the percentage of contracts that a pharmacy benefit manager holds where
601the pharmacy benefit manager: (A) retains all rebates; (B) passes all rebates through to the client;
602and (C) shares rebates with the client; and (vii) other information as determined by the center,
603including, but not limited to, pharmacy benefit manager practices related to spread pricing,
604administrative fees, claw backs and formulary placement.
605 (c) Except as specifically provided otherwise by the center or under this chapter, data
606collected by the center pursuant to this section from pharmaceutical manufacturing companies
607and pharmacy benefit managers shall not be a public record under clause Twenty-sixth of section
6087 of chapter 4 or under chapter 66.
609 SECTION 35. Said chapter 12C is hereby further amended by striking out section 11, as
610so appearing, and inserting in place thereof the following section:-
611 Section 11. The center shall ensure the timely reporting of information required under
612sections 8, 9, 10 and 10A. The center shall notify private health care payers, providers, provider
613organizations, pharmacy benefit managers, pharmaceutical manufacturing companies and their
614parent organization and other affiliates of any applicable reporting deadlines. The center shall
615notify, in writing, a private health care payer, provider, provider organization, pharmacy benefit
616manager or pharmaceutical manufacturing company, and their parent organization and other
617affiliates, that has failed to meet a reporting deadline of such failure and that failure to respond
618within 2 weeks of the receipt of the notice may result in penalties. The center may assess a
619penalty against a private health care payer, provider, provider organization, pharmacy benefit
620manager or pharmaceutical manufacturing company, and their parent organization and other 30 of 77
621affiliates, that fails, without just cause, to provide the requested information, including subsets of
622the requested information, within 2 weeks following receipt of the written notice required under
623this section, of not more than $2,000 per week for each week of delay after the 2-week period
624following receipt of the notice. Amounts collected under this section shall be deposited in the
625Healthcare Payment Reform Fund established in section 100 of chapter 194 of the acts of 2011.
626 SECTION 36. Section 12 of said chapter 12C, as so appearing, is hereby amended by
627striking out, in line 2, the words “and 10” and inserting in place thereof the following words:- ,
62810 and 10A.
629 SECTION 37. Subsection (a) of section 16 of said chapter 12C, as so appearing, is hereby
630amended by striking out the first sentence and inserting in place thereof the following sentence:-
631The center shall publish an annual report based on the information submitted under: (i) sections
6328, 9, 10 and 10A concerning health care provider, provider organization, private and public
633health care payer, pharmaceutical manufacturing company and pharmacy benefit manager costs
634and cost and price trends; (ii) section 13 of chapter 6D relative to market power reviews; and (iii)
635section 15 of said chapter 6D relative to quality data.
636 SECTION 38. Said section 16 of said chapter 12C, as so appearing, is hereby further
637amended by striking out, in line 18, the words “in the aggregate”.
638 SECTION 39. Said section 16 of said chapter 12C, as so appearing, is hereby further
639amended by inserting after the second paragraph the following paragraph:-
640 As part of its annual report, the center shall report on prescription drug utilization and
641spending for pharmaceutical drugs provided in an outpatient setting or sold in a retail setting for
642private and public health care payers, including, but not limited to, information sufficient to 31 of 77
643show (i) highest utilization drugs; (ii) drugs with the greatest increases in utilization; (iii) drugs
644that are most impactful on plan spending, net of rebates; and (iv) drugs with the highest year-
645over-year price increases, net of rebates.
646 SECTION 40. Section 13 of chapter 17 of the General Laws, as so appearing, is hereby
647amended by adding the following subsection:-
648 (f) As used in this subsection, the following words shall have the following meanings
649unless the context clearly requires otherwise:
650 “Public health essential drug”, a prescription drug, biologic or biosimilar approved by the
651United States Food and Drug Administration that: (i) appears on the Model List of Essential
652Medicines most recently adopted by the World Health Organization; or (ii) is deemed an
653essential medicine by the commission due to its efficacy in treating a life-threatening health
654condition or a chronic health condition that substantially impairs an individual’s ability to engage
655in activities of daily living or because limited access to a certain population would pose a public
656health challenge.
657 The commission shall identify and publish a list of public health essential prescription
658drugs. The list shall be updated not less than annually and be made publicly available on the
659department’s website; provided, however, that the commission may provide an interim listing of
660a public health essential drug prior to an annual update. The commission shall notify and forward
661a copy of the list to the health policy commission established under chapter 6D.
662 SECTION 41. Chapter 29 of the General Laws is hereby amending by inserting after
663section 2QQQQQ the following section:- 32 of 77
664 2RRRRR. (a) There shall be a Prescription Drug Cost Assistance Trust Fund. The
665secretary of health and human services shall administer the fund and shall make expenditures
666from the fund, without further appropriation, to provide financial assistance to state residents for
667the cost of prescription drugs through the prescription drug costs assistance program established
668under section 244 of chapter 111. For the purpose of this section “prescription drug” shall
669include the prescription drug and any drug delivery device needed to administer the drug that is
670not included as part of the underlying drug prescription.
671 The fund shall consist of: (i) revenue generated from the penalty established under
672chapter 63E; (ii) revenue from appropriations or other money authorized by the general court and
673specifically designated to be credited to the fund; and (iii) funds from public or private sources,
674including, but not limited to, gifts, grants, donations, rebates and settlements received by the
675commonwealth that are specifically designated to be credited to the fund. An amount equal to the
676total receipts deposited each quarter from the penalty on drug manufacturers for excessive price
677increases established under chapter 63E shall be transferred from the General Fund to the
678Prescription Drug Costs Assistance Trust Fund before the end of each fiscal year. Money
679remaining in the fund at the close of a fiscal year shall not revert to the General Fund and shall
680be available for expenditure in the following fiscal year.
681 (b) Annually, not later than March 1, the secretary shall report on the activities detailing
682the funds expenditures from the previous calendar year. The report shall include: (i) the number
683of individuals who received financial assistance from the fund; (ii) the breakdown of fund
684recipients by race, gender, age range, geographic region and income level; (iii) a list of all
685prescription drugs that were covered by money from the fund; and (iv) the total cost savings
686received by all fund recipients and the cost savings broken down by race, gender, age range and 33 of 77
687income level. The report shall be submitted to the clerks of the senate and house of
688representatives, senate and house committees on ways and means and the joint committee on
689health care financing.
690 (c) The secretary shall promulgate regulations or issue other guidance for the expenditure
691of the funds under this section.
692 SECTION 42. Section 17G of chapter 32A of the General Laws, as appearing in the 2020
693Official Edition, is hereby amended by adding the following sentence:-
694 Coverage for insulin under this section shall not be subject to any deductible or co-
695insurance and any co-payment shall not exceed $25 per 30-day supply, regardless of the amount
696or type of insulin needed to fill an insured’s prescription; provided, however, that nothing in this
697section shall prevent the commission and its contracted health benefit plans from reducing the
698co-payment for insulin for a 30-day supply below the amount specified in this section.
699 SECTION 43. Said chapter 32A, as so appearing, is hereby further amended by inserting
700after section 17R the following section:-
701 Section 17S. Any carrier offering a policy, contract or certificate of health insurance
702under this chapter shall provide coverage for the brand name drugs and generic drugs identified
703by the drug access program established in section 16DD in chapter 6A. Coverage for identified
704generic drugs shall not be subject to any cost-sharing, including co-payments and co-insurance,
705and shall not be subject to any deductible. Coverage for identified brand name drugs shall not be
706subject to any deductible or co-insurance and any co-payment shall not exceed $25 per 30-day
707supply. 34 of 77
708 Notwithstanding this section or any other general or special law to the contrary, coverage
709for insulin shall be provided under section 17G of this chapter.
710 SECTION 44. The General Laws are hereby amended by inserting after chapter 63D the
711following chapter:-
712 Chapter 63E. PENALTY ON DRUG MANUFACTURERS FOR EXCESSIVE PRICE
713INCREASES
714 Section 1. As used in this chapter, the following words shall, unless the context clearly
715requires otherwise, have the following meanings:
716 “Commissioner”, the commissioner of revenue.
717 “Core consumer price index”, the consumer price index for all urban consumers (CPI-U):
718U.S. city average, for all Items less food and energy, as reported by the U.S. Bureau of Labor
719Statistics.
720 “Drug”, any medication, as identified by a National Drug Code, approved for sale by the
721U.S. Food and Drug Administration.
722 “Excessive price,” the price of a drug that exceeds the sum of the reference price of that
723drug plus the three -year average of the core consumer price index, as measured on January 1 of
724the current calendar year.
725 “Excessive price increase”, the amount by which the price of a drug exceeds the sum of
726the reference price of that drug plus the three-year average of the core consumer price index, as
727measured on January 1 of the current calendar year. 35 of 77
728 “Person”, any natural person or legal entity.
729 “Price”, the wholesale acquisition cost of a drug, per unit, as reported to the First Data
730Bank or other appropriate price compendium designated by the commissioner.
731 “Reference date”, January 1 of the calendar year prior to the current calendar year.
732 “Reference price”, the price of a drug on the reference date, or in the case of any drug
733first commercially marketed in the United States after the reference date, the price of the drug on
734the date when first marketed in the United States.
735 “Related party”, an entity is a related party with respect to a person if that entity (i)
736belongs to the same affiliated group as that person under section 1504 of the Internal Revenue
737Code provided that the term 50 per cent shall be substituted for the term 80 per cent each time it
738appears in said section 1504, (ii) has a relationship with that person that is specified in
739subsections (b) and (c) of section 267 of the Internal Revenue Code, or (iii) is otherwise under
740common ownership and control with regard to that person; provided, that all references to the
741Internal Revenue Code in this definition refer to the Internal Revenue Code as amended and in
742effect for the taxable year.
743 “Unit”, the lowest dispensable amount of a drug.
744 Section 2. (a) Any person who manufactures and sells drugs, directly or through another
745person, for distribution in the commonwealth and who establishes an excessive price for any
746such drug directly or in cooperation with a related party, shall pay a per unit penalty on all units
747of the drug ultimately dispensed or administered in the commonwealth. The penalty for each unit
748shall be 80 per cent of the excessive price increase for each unit. 36 of 77
749 (b) A person who establishes an excessive price for a drug as described in subsection (a)
750shall file a return as provided in section 4 declaring all units of excessively priced drug sold for
751distribution in the commonwealth during each calendar quarter. In the event that a person filing
752such a return pays a penalty with regard to one or more units of drug that are ultimately
753dispensed or administered outside of the commonwealth, the person may claim a credit for such
754penalty amounts on the return for the tax period during which such units are ultimately dispensed
755or administered.
756 Section 3. The penalty under section 2 shall apply for any calendar quarter only to a
757person who maintains a place of business in the commonwealth or whose total sales of all
758products, directly or through another person, for distribution in the commonwealth were more
759than $100,000 in the calendar year beginning with the reference date. The penalty shall not apply
760more than once to any unit of drug sold.
761 Section 4. Any person subject to the penalty under section 2 shall file a return with the
762commissioner and shall pay the penalty by the fifteenth day of the third month following the end
763of each calendar quarter, subject to such reasonable extensions of time for filing as the
764commissioner may allow. The return shall set out the person’s total sales subject to penalty in the
765immediately preceding calendar quarter and shall provide such other information as the
766commissioner may require.
767 Section 5. The penalty imposed under this chapter shall be in addition to, and not a
768substitute for or credit against, any other penalty, tax or excise imposed under the General Laws.
769 Section 6. The commissioner may disclose information contained in returns filed under
770this chapter to the department of public health, the executive office of health and human services, 37 of 77
771or other appropriate agency for purposes of verifying that a filer’s sales subject to penalty are
772properly declared and that all reporting is otherwise correct. Return information so disclosed
773shall remain confidential and shall not be public record.
774 Section 7. To the extent that a person subject to penalty under section 2 fails to pay
775amounts due under this chapter, a related party of such person that directly or indirectly
776distributes in the commonwealth any drug whose sales are subject to this chapter shall be jointly
777and severally liable for the penalty due.
778 Section 8. The commissioner may promulgate regulations for the implementation of this
779chapter.
780 SECTION 45. Chapter 94C of the General Laws is hereby amended by inserting after
781section 21B the following section:-
782 Section 21C. (a) For the purposes of this section, the following words shall, unless the
783context clearly requires otherwise, have the following meanings:-
784 “Cost sharing”, amounts owed by a consumer under the terms of the consumer’s health
785benefit plan as defined in section 1 of chapter 176O or as required by a pharmacy benefit
786manager as defined in section 1 of chapter 6D.
787 “Pharmacy retail price”, the amount an individual would pay for a prescription
788medication at a pharmacy if the individual purchased that prescription medication at that
789pharmacy without using a health benefit plan as defined in section 1 of chapter 176O or any
790other prescription medication benefit or discount. 38 of 77
791 “Registered pharmacist”, a pharmacist who holds a valid certificate of registration issued
792by the board of registration in pharmacy pursuant to section 24 of chapter 112.
793 (b) A pharmacy shall post a notice informing consumers that a consumer may request, at
794the point of sale, the current pharmacy retail price for each prescription medication the consumer
795intends to purchase. If the consumer’s cost-sharing amount for a prescription medication exceeds
796the current pharmacy retail price, the pharmacist, or an authorized individual at the direction of a
797pharmacist, shall notify the consumer that the pharmacy retail price is less than the patient’s cost-
798sharing amount. The pharmacist shall charge the consumer the applicable cost-sharing amount or
799the current pharmacy retail price for that prescription medication, as directed by the consumer.
800 A pharmacist shall not be subject to a penalty by the board of registration in pharmacy or
801a third party for failure to comply with this section.
802 (c) A contractual obligation shall not prohibit a pharmacist from complying with this
803section; provided however, that a pharmacist shall submit a claim to the consumer’s health
804benefit plan or its pharmacy benefit manager if the pharmacist has knowledge that the
805prescription medication is covered under the consumer’s health benefit plan.
806 (d) Failure to post notice pursuant to subsection (b) shall be an unfair or deceptive act of
807practice under chapter 93A.
808 SECTION 46. Chapter 111 of the General Laws is hereby amended by adding the
809following section:-
810 Section 244. (a) The department shall establish and administer a prescription drug cost
811assistance program, which shall be funded by the Prescription Drug Cost Assistance Trust Fund 39 of 77
812established in section 2RRRRR of chapter 29. The program shall provide financial assistance for
813prescription drugs used to treat: (1) chronic respiratory conditions, including, but not limited to,
814chronic obstructive pulmonary disease and asthma; (2) chronic heart conditions, including, but
815not limited to, heart failure, coronary artery disease, hypertension and high blood pressure; (3)
816diabetes; and (4) any other chronic condition identified by the department that disproportionally
817impacts people of color or is a risk factor for increased COVID-19 complications; provided, that
818for paragraphs (1) and (3), “prescription drug” shall include the prescription drug and any drug
819delivery device needed to administer the drug that is not included as part of the underlying drug
820prescription. Such financial assistance shall cover the full cost of any co-payment, co-insurance
821or deductible for the prescription drug for an individual who is eligible for the program.
822 (b) An individual shall be eligible for the program if the individual: (1) is a resident of
823Massachusetts; (2) has a current prescription from a health care provider for a drug that is used to
824treat a chronic condition listed in subsection (a); (3) has a family income equal to or less than
825500 per cent of the federal poverty level; and (4) is not enrolled in MassHealth.
826 (c) The department shall create an application process, which shall be available
827electronically and in hard copy form, to determine whether an individual meets the program
828eligibility requirements under subsection (b). Upon receipt of such application, the department
829shall determine an applicant’s eligibility and notify the applicant of the department’s
830determination within 10 business days. If necessary for its determination, the department may
831request additional information from the applicant; provided, that the department shall notify the
832applicant within 5 business days of receipt of the original application as to what specific
833additional information is being requested. If additional information is being requested, the
834department shall, within 3 business days of receipt of the additional information, determine 40 of 77
835whether the applicant is eligible for the program and notify the applicant of the department’s
836determination.
837 If the department determines that an applicant is not eligible for the program, the
838department shall notify the applicant and shall include in the department’s notification the
839specific reasons why the applicant is not eligible. The applicant may appeal this determination to
840the department within 30 days of receiving such notification.
841 If the department determines that an applicant is eligible for the program, the department
842shall provide the applicant with a prescription drug cost assistance program identification card,
843which shall clearly indicate that the department has determined that the applicant is eligible for
844the program; provided, that the program identification card shall include, at a minimum: (1) the
845applicant’s full name, and (2) the full name of the prescription drug that the applicant is eligible
846to receive under the program without having to pay a co-payment, co-insurance or deductible.
847An applicant’s program identification card shall be valid for 12 months and shall be renewable
848upon a redetermination of program eligibility.
849 (d) An individual with a valid program identification card issued under subsection (c)
850may present such card at any pharmacy in the commonwealth and, upon presentation of such
851card, the pharmacy shall fill the individual’s prescription and provide the prescribed drug to the
852individual without requiring the individual to pay a co-payment, co-insurance or deductible;
853provided, that the pharmacy shall be reimbursed for its costs by the Prescription Drug Cost
854Assistance Trust Fund established in section 2RRRRR of chapter 29, in a manner determined by
855the department, in an amount equal to what the pharmacy would have received had the individual
856been required to pay a co-payment, co-insurance or deductible. 41 of 77
857 (e) The department, in collaboration with the division of insurance and board of
858registration in pharmacy, shall develop and implement a plan to educate consumers, pharmacists,
859providers, hospitals and insurers regarding eligibility for and enrollment in the program under
860this section. The plan shall include, but not be limited to, appropriate staff training, notices
861provided to consumers at the pharmacy, and a designated website with information for
862consumers, pharmacists and other health care professionals. The plan shall be developed in
863consultation with groups representing consumers, pharmacists, providers, hospitals and insurers.
864 (f) The department shall compile a report detailing information about the program from
865the previous calendar year. The report shall include: (1) the number of applications received,
866approved, denied and appealed; (2) the total number of applicants approved, and the number of
867applicants approved broken down by race, gender, age range and income level; (3) a list of all
868prescription drugs that qualify for the program under subsection (b) and a list of prescription
869drugs that applicants actually received financial assistance for; and (4) the total cost savings
870received by all approved applicants, and the cost savings broken down by race, gender, age range
871and income level. The report shall be submitted annually, by March 1, to the clerks of the senate
872and house of representatives, the chairs of the joint committee on ways and means and the chairs
873of the joint committee on health care financing.
874 (g) The department shall promulgate regulations or issue other guidance for the
875implementation and enforcement of this section.
876 SECTION 47. Section 10C of chapter 118E of the General Laws, as appearing in the
8772020 Official Edition, is hereby amended by adding the following sentence:- 42 of 77
878 Coverage for insulin under this section shall not be subject to any deductible or co-
879insurance and any co-payment shall not exceed $25 per 30-day supply, regardless of the amount
880or type of insulin needed to fill an insured’s prescription; provided, however, that nothing in this
881section shall prevent the division and its contracted health insurers, health plans, health
882maintenance organizations, behavioral health management firms and third-party administrators
883under contract with the division, a Medicaid managed care organization or a primary care
884clinician plan, from reducing the co-payments for insulin for a 30-day supply below the amount
885specified in this section.
886 SECTION 48. Said chapter 118E, as so appearing, is hereby amended by inserting after
887section 10N the following section:-
888 Section 10O. Any carrier offering a policy, contract or certificate of health insurance
889under this chapter shall provide coverage for the brand name drugs and generic drugs identified
890by the drug access program established in section 16DD in chapter 6A. Coverage for identified
891generic drugs shall not be subject to any cost-sharing, including co-payments and co-insurance,
892and shall not be subject to any deductible. Coverage for identified brand name drugs shall not be
893subject to any deductible or co-insurance and any co-payment shall not exceed $25 per 30-day
894supply.
895 Notwithstanding this section or any other general or special law to the contrary, coverage
896for insulin shall be provided under section 10C of this chapter.
897 SECTION 49. Section 47N of chapter 175 of the General Laws, as so appearing, is
898hereby amended by adding the following paragraph:- 43 of 77
899 Coverage for insulin under this section shall not be subject to any deductible or co-
900insurance and any co-payment shall not exceed $25 per 30-day supply, regardless of the amount
901or type of insulin needed to fill an insured’s insulin prescription; provided, however, that nothing
902in this section shall prevent an individual policy of accident and sickness insurance issued under
903section 108 that provides hospital expense and surgical expense insurance or a group blanket or
904general policy of accident and sickness insurance issued under section 110 that provides hospital
905expense and surgical expense insurance that is issued or renewed within or without the
906commonwealth, from reducing the co-payment for insulin for a 30-day supply below the amount
907specified in this section.
908 SECTION 50. Said chapter 175, as so appearing, is hereby further amended by inserting
909after section 47PP the following new section:-
910 Section 47QQ. Any carrier offering a policy, contract or certificate of health insurance
911under this chapter shall provide coverage for the brand name drugs and generic drugs identified
912by the drug access program established in section 16DD in chapter 6A. Coverage for identified
913generic drugs shall not be subject to any cost-sharing, including co-payments and co-insurance,
914and shall not be subject to any deductible. Coverage for identified brand name drugs shall not be
915subject to any deductible or co-insurance and any co-payment shall not exceed $25 per 30-day
916supply.
917 Notwithstanding this section or any other general or special law to the contrary, coverage
918for insulin shall be provided under section 47N of this chapter.
919 SECTION 51. Section 226 of said chapter 175 is hereby repealed. 44 of 77
920 SECTION 52. Section 8P of chapter 176A of the General Laws, as so appearing, is
921hereby amended by adding the following paragraph:-
922 Coverage for insulin under this section shall not be subject to any deductible or co-
923insurance and any co-payment shall not exceed $25 per 30-day supply, regardless of the amount
924or type of insulin needed to fill an insured’s insulin prescription; provided, however, that nothing
925in this section shall prevent a contract between a subscriber and the corporation under an
926individual or group hospital service plan that is delivered, issued or renewed within or without
927the commonwealth, from reducing the co-payment for insulin for a 30-day supply below the
928amount specified in this section.
929 SECTION 53. Said chapter 176A, as so appearing, is hereby further amended by
930inserting after section 8QQ the following new section:-
931 Section 8RR. Any carrier offering a policy, contract or certificate of health insurance
932under this chapter shall provide coverage for the brand name drugs and generic drugs identified
933by the drug access program established in section 16DD in chapter 6A. Coverage for identified
934generic drugs shall not be subject to any cost-sharing, including co-payments and co-insurance,
935and shall not be subject to any deductible. Coverage for identified brand name drugs shall not be
936subject to any deductible or co-insurance and any co-payment shall not exceed $25 per 30-day
937supply.
938 Notwithstanding this section or any other general or special law to the contrary, coverage
939for insulin shall be provided under section 8P of this chapter.
940 SECTION 54. Section 4S of chapter 176B of the General Laws, as so appearing, is
941hereby amended by adding the following sentence:- 45 of 77
942 Coverage for insulin under this section shall not be subject to any deductible or co-
943insurance and any co-payment shall not exceed $25 per 30-day supply, regardless of the amount
944or type of insulin needed to fill an insured’s insulin prescription; provided, however, that nothing
945in this section shall prevents a subscription certificate under an individual or group medical
946service agreement that is issued or renewed within or without the commonwealth, from reducing
947the co-payment for insulin for a 30-day supply below the amount specified in this section.
948 SECTION 55. Said chapter 176B, as so appearing, is hereby further amended by inserting
949after section 4QQ the following new section:-
950 Section 4RR. Any carrier offering a policy, contract or certificate of health insurance
951under this chapter shall provide coverage for the brand name drugs and generic drugs identified
952by the drug access program established in section 16DD in chapter 6A. Coverage for identified
953generic drugs shall not be subject to any cost-sharing, including co-payments and co-insurance,
954and shall not be subject to any deductible. Coverage for identified brand name drugs shall not be
955subject to any deductible or co-insurance and any co-payment shall not exceed $25 per 30-day
956supply.
957 Notwithstanding this section or any other general or special law to the contrary, coverage
958for insulin shall be provided under section 4S of this chapter.
959 SECTION 56. Section 4H of chapter 176G of the General Laws, as so appearing, is
960hereby amended by adding the following paragraph:-
961 Coverage for insulin under this section shall not be subject to any deductible or co-
962insurance and any co-payment shall not exceed $25 per 30-day supply, regardless of the amount
963or type of insulin needed to fill an insured’s insulin prescription; provided, however, that nothing 46 of 77
964in this section shall prevent any individual or group health maintenance contract that is issued or
965renewed within or without the commonwealth, from reducing the co-payment for insulin for a
96630-day supply below the amount specified in this section.
967 SECTION 57. Said chapter 176G, as so appearing, is hereby further amended by
968inserting after section 4GG the following new section:-
969 Section 4HH. Any carrier offering a policy, contract or certificate of health insurance
970under this chapter shall provide coverage for the brand name drugs and generic drugs identified
971by the drug access program established in section 16DD in chapter 6A. Coverage for identified
972generic drugs shall not be subject to any cost-sharing, including co-payments and co-insurance,
973and shall not be subject to any deductible. Coverage for identified brand name drugs shall not be
974subject to any deductible or co-insurance and any co-payment shall not exceed $25 per 30-day
975supply.
976 Notwithstanding this section or any other general or special law to the contrary, coverage
977for insulin shall be provided under section 4H of this chapter.
978 SECTION 58. Section 2 of chapter 176O of the General Laws, as so appearing, is hereby
979amended by adding the following subsection:-
980 (i) Every 3 years, a carrier that contracts with a pharmacy benefit manager shall
981coordinate an audit of the operations of the pharmacy benefit manager to ensure compliance with
982this chapter and to examine the pricing and rebates applicable to prescription drugs that are
983provided to the carrier’s covered persons. 47 of 77
984 SECTION 59. Said chapter 176O, as so appearing, is hereby further amended by
985inserting after section 22 the following section:-
986 Section 22A. Notwithstanding any other general or special law to the contrary, each
987carrier shall require that a pharmacy benefit manager receive a license from the division under
988chapter 176X as a condition of contracting with that carrier.
989 SECTION 60. Said chapter 176O as so appearing, is hereby further amended by adding
990the following section:-
991 Section 30. (a) For the purposes of this section, the following words shall have the
992following meanings unless the context clearly requires otherwise:
993 “Cost-sharing”, an amount owed by an individual under the terms of the individual’s
994health benefit plan.
995 “Pharmacy retail price”, the amount an individual would pay for a prescription
996medication at a pharmacy if the individual purchased that prescription medication at that
997pharmacy without using a health benefit plan or any other prescription medication benefit or
998discount.
999 (b) At the point of sale, a pharmacy shall charge an individual the: (i) appropriate cost-
1000sharing amount; or (ii) pharmacy retail price, whichever is the lowest; provided, however, that a
1001carrier, or an entity that manages or administers benefits for a carrier, shall not require an
1002individual to make a payment for a prescription drug at the point of sale in an amount that
1003exceeds the lesser of the: (a) individual’s cost share; or (b) pharmacy retail price. 48 of 77
1004 (c) A contract shall not: (i) prohibit a pharmacist from complying with this section; or (ii)
1005impose a penalty on the pharmacist or pharmacy for complying with this section.
1006 SECTION 61. The General Laws are hereby amended by inserting after chapter 176W
1007the following chapter:-
1008 Chapter 176X. LICENSING AND REGULATION OF PHARMACY BENEFIT
1009MANAGERS.
1010 Section 1. As used in this chapter, the following words shall have the following
1011meanings, unless the context clearly requires otherwise:-
1012 “Carrier”, as defined in section 1 of chapter 176O “Commissioner”, the commissioner of
1013the division of insurance.
1014 “Cost-sharing requirement”, any copayment, coinsurance, deductible, or annual limitation
1015on cost-sharing (including a limitation subject to 42 U.S.C. §§ 18022(c) and 300gg-6(b)),
1016required by or on behalf of an insured in order to receive specific health care services, including
1017a prescription drug, covered by a health benefit plan .
1018 “Division”, the division of insurance.
1019 “Health benefit plan”, as defined in section 1 of chapter 176O
1020 “Health care services”, supplies, care and services of a medical, surgical, optometric,
1021dental, podiatric, chiropractic, psychiatric, therapeutic, diagnostic, preventative, rehabilitative,
1022supportive, or geriatric nature including, but not limited to, inpatient and outpatient acute
1023hospital care and services, services provided by a community health center or by a sanatorium, as 49 of 77
1024included in the definition of “hospital” in Title XVIII of the federal Social Security Act, and
1025treatment and care compatible with such services or by a health maintenance organization.
1026 “Insured”, an enrollee, covered person, insured, member, policyholder or subscriber of a
1027carrier, including an individual whose eligibility as an insured of a carrier is in dispute or under
1028review, or any other individual whose care may be subject to review by a utilization review
1029program or entity as described under other provisions of this chapter.
1030 “Mail order pharmacy”, a pharmacy whose primary business is to receive prescriptions
1031by mail, telefax or through electronic submissions and to dispense medication to insureds
1032through the use of the United States mail or other common or contract carrier services and that
1033provides any consultation with patients electronically rather than face to face.
1034 “Network”, as defined in section 1 of chapter 176O.
1035 “Network pharmacy”, a retail or other licensed pharmacy provider that contracts with a
1036pharmacy benefit manager.
1037 “Person”, a natural person, corporation, mutual company, unincorporated association,
1038partnership, joint venture, limited liability company, trust, estate, foundation, not-for-profit
1039corporation, unincorporated organization, government or governmental subdivision or agency.
1040 “Pharmacy”, a facility, either physical or electronic, under the direction or supervision of
1041a registered pharmacist which is authorized to dispense prescription drugs and has entered into a
1042network contract with a pharmacy benefit manager or a carrier.
1043 “Pharmacy benefit manager”, a person, business or other entity, however organized, that
1044directly or through a subsidiary provides pharmacy benefit management services for prescription 50 of 77
1045drugs and devices on behalf of a health benefit plan sponsor, including, but not limited to, a self-
1046insurance plan, labor union or other third-party payer; provided, however, that pharmacy benefit
1047management services shall include, but not be limited to: (i) the processing and payment of
1048claims for prescription drugs; (ii) the performance of drug utilization review; (iii) the processing
1049of drug prior authorization requests; (iv) pharmacy contracting; (v) the adjudication of appeals or
1050grievances related to prescription drug coverage contracts; (vi) formulary administration; (vii)
1051drug benefit design; (viii) mail and specialty drug pharmacy services; (ix) cost containment; (x)
1052clinical, safety and adherence programs for pharmacy services; and (xi) managing the cost of
1053covered prescription drugs; provided further, that “pharmacy benefit manager” shall include a
1054health benefit plan that does not contract with a pharmacy benefit manager and manages its own
1055prescription drug benefits unless specifically exempted by the commission.
1056 “Pharmacy benefit services” shall include, but not be limited to, formulary
1057administration; drug benefit design; pharmacy network contracting; pharmacy claims processing;
1058mail and specialty drug pharmacy services; and cost containment, clinical, safety, adherence
1059programs for pharmacy services, and any other pharmacy benefit service that the commissioner
1060deems appropriate. For the purposes of the chapter, a health benefit plan that does not contract
1061with a pharmacy benefit manager shall be a pharmacy benefit manager.
1062 “Rebates or fees”, all fees or price concessions paid by a manufacturer to a pharmacy
1063benefit manager or carrier, including rebates, discounts, and other price concessions that are
1064based on actual or estimated utilization of a prescription drug. Rebates also include price
1065concessions based on the effectiveness a drug as in a value-based or performance-based contract.
1066 “Retail pharmacy”, as defined in section 39D of chapter 112. 51 of 77
1067 "Spread pricing" means the practice of a pharmacy benefit manager retaining an
1068additional amount of money in addition to the amount paid to the pharmacy to fill a prescription.
1069 "Steering", a practice employed by a pharmacy benefit manager or carrier that channels a
1070prescription to a pharmacy in which a pharmacy benefit manager or carrier has an ownership
1071interest, and includes but is not limited to retail, mail-order, or specialty pharmacies.
1072 Section 2. (a) Any pharmacy benefit manager contracting with a pharmacy that operates
1073in the commonwealth shall comply with the provisions of this chapter.
1074 (b) A pharmacy benefit manager shall receive a license from the division before
1075conducting business in the commonwealth. A license granted pursuant to this section is not
1076transferable.
1077 (c) A license may be granted only when the division is satisfied that the entity possesses
1078the necessary organization, background expertise, and financial integrity to supply the services
1079sought to be offered.
1080 (d) The division may issue a license subject to restrictions or limitations upon the
1081authorization, including the type of services that may be supplied or the activities in which the
1082entity may be engaged.
1083 (e) A license shall be valid for a period of three years. The commissioner shall charge
1084application and renewal fees in the amount of $25,000
1085 (f) The division shall develop an application for licensure that includes at least the
1086following information: (i) the name of the pharmacy benefit manager; (ii) the address and contact
1087telephone number for the pharmacy benefit manager; (iii) the name and address of the pharmacy 52 of 77
1088benefit manager’s agent for service of process in the commonwealth; (iv) the name and address
1089of each person beneficially interested in the pharmacy benefit manager; and (v) the name and
1090address of each person with management or control over the pharmacy benefit manager.
1091 (g) The division may suspend, revoke, or place on probation a pharmacy benefit manager
1092license under any of the following circumstances: (i) the pharmacy benefit manager has engaged
1093in fraudulent activity that constitutes a violation of state or federal law; (ii) the division received
1094consumer complaints that justify an action under this chapter to protect the safety and interests of
1095consumers; (iii) the pharmacy benefit manager fails to pay an application fee for the license; or
1096(iv) the pharmacy benefit manager fails to comply with a requirement set forth in this chapter.
1097 (h) If an entity performs the functions of pharmacy benefit manager acts without
1098registering, it will be subject to a fine of $5,000 per day for the period they are found to be in
1099violation.
1100 Section 3
1101 (a) (i) The pharmacy benefit manager shall have a duty and obligation to perform
1102pharmacy benefit services with care, skill, prudence, diligence, and professionalism.
1103 (ii) In addition to the duties as may be prescribed by regulation:
1104 (1) A pharmacy benefit manager interacting with a covered individual shall have the
1105same duty to a covered individual as the health plan for whom it is performing pharmacy benefit
1106services. 53 of 77
1107 (2) A pharmacy benefit manager shall have a duty of good faith and fair dealing with all
1108parties, including but not limited to covered individuals and pharmacies, with whom it interacts
1109in the performance of pharmacy benefit services.
1110 Section 4
1111 (a) A pharmacy benefit manager shall provide a reasonably adequate and accessible
1112pharmacy benefit manager network for the provision of prescription drugs, which provides for
1113convenient patient access to pharmacies within a reasonable distance from a patient’s residence.
1114 (b) A pharmacy benefit manager may not deny a pharmacy the opportunity to participate
1115in a pharmacy benefit manager network at preferred participation status if the pharmacy is
1116willing to accept the terms and conditions that the pharmacy benefit manager has established for
1117other pharmacies as a condition of preferred network participation status.
1118 (c) A mail-order pharmacy shall not be included in the calculations for determining
1119pharmacy benefit manager network adequacy under this section.
1120 Section 5.
1121 (a) After the date of receipt of a clean claim for payment made by a pharmacy, a
1122pharmacy benefit manager shall not retroactively reduce payment on the claim, either directly or
1123indirectly, through aggregated effective rate, direct or indirect remuneration, quality assurance
1124program or otherwise, except if the claim is found not to be a clean claim during the course of a
1125routine audit performed pursuant to an agreement between the pharmacy benefit manager and the
1126pharmacy. When a pharmacy adjudicates a claim at the point of sale, the reimbursement amount
1127provided to the pharmacy by the pharmacy benefit manager shall constitute a final 54 of 77
1128reimbursement amount. Nothing in this section shall be construed to prohibit any retroactive
1129increase in payment to a pharmacy pursuant to a contract between the pharmacy benefit manager
1130or a pharmacy.
1131 (b) For the purpose of this section, "clean claim" means a claim that has no defect or
1132impropriety, including a lack of any required substantiating documentation, or other
1133circumstance requiring special treatment, including, but not limited to, those listed in subsection
1134(d) of this section, that prevents timely payment from being made on the claim.
1135 (c) A pharmacy benefit manager shall not recoup funds from a pharmacy in connection
1136with claims for which the pharmacy has already been paid unless the recoupment is:
1137 (1) otherwise permitted or required by law; or
1138 (2) the result of an audit, performed pursuant to a contract between the pharmacy benefit
1139manager and the pharmacy; or
1140 (d) The provisions of this section shall not apply to an investigative audit of pharmacy
1141records when:
1142 (1) fraud, waste, abuse or other intentional misconduct is indicated by physical review or
1143review of claims data or statements; or
1144 (2) other investigative methods indicate a pharmacy is or has been engaged in criminal
1145wrongdoing, fraud or other intentional or willful misrepresentation.
1146 (e) No pharmacy benefit manager shall charge or collect from an individual a copayment
1147or cost-sharing that exceeds the contracted amount by the pharmacy for which the pharmacy is 55 of 77
1148paid. If an individual pays a copayment, the pharmacy shall retain the adjudicated costs and the
1149pharmacy benefit manager shall not redact or recoup the adjudicated cost.
1150 Section 6
1151 (a) As used in this section:
1152 (1) “Generically equivalent drug”, a drug that is pharmaceutically and therapeutically
1153equivalent to the drug prescribed;
1154 (2)(A) “Maximum allowable cost list”, a listing of drugs or other methodology used by a
1155pharmacy benefit manager, directly or indirectly, setting the maximum allowable payment to a
1156pharmacy or pharmacist for a generic drug, brand-name drug, biologic product, or other
1157prescription drug.
1158 (B) Maximum allowable cost list includes without limitation:
1159 (i) Average acquisition cost, including national average drug acquisition cost;
1160 (ii) Average manufacturer price;
1161 (iii) Average wholesale price;
1162 (iv) Brand effective rate or generic effective rate;
1163 (v) Discount indexing;
1164 (vi) Federal upper limits;
1165 (vii) Wholesale acquisition cost; and 56 of 77
1166 (viii) Any other term that a pharmacy benefit manager or a carrier may use to establish
1167reimbursement rates to a pharmacist or pharmacy for pharmacist services;
1168 (3) “Pharmaceutical wholesaler”, as defined in section 36A of chapter 112;
1169 (4) “Pharmacist”, a pharmacist who, pursuant to the provisions of M.G.L. c. 112, § 24, is
1170registered by the Board to practice pharmacy;
1171 (5) “Pharmacist services”, products, goods, and services, or any combination of products,
1172goods, and services, provided as a part of the practice of pharmacy as defined in section 39D of
1173chapter 112;
1174 (6) “Pharmacy”, shall have the same meaning as defined in section 39D of chapter 112;
1175 (7) “Pharmacy acquisition cost” means the amount that a pharmaceutical wholesaler
1176charges for a pharmaceutical product as listed on the pharmacy's billing invoice;
1177 (8) “Pharmacy benefit manager”, as defined in section 1 of chapter 176X;
1178 (9) “Pharmacy benefit manager affiliate”, a pharmacy or pharmacist that directly or
1179indirectly, through one (1) or more intermediaries, owns or controls, is owned or controlled by,
1180or is under common ownership or control with a pharmacy benefits manager; and
1181 (10) “Pharmacy benefit plan or program”, a plan or program that pays for, reimburses,
1182covers the cost of, or otherwise provides for pharmacist services to individuals who reside in or
1183are employed in the commonwealth.
1184 (b) Before a pharmacy benefit manager places or continues a particular drug on a
1185maximum allowable cost list, the drug: 57 of 77
1186 (1) If the drug is a generically equivalent drug, it shall be listed as therapeutically
1187equivalent and pharmaceutically equivalent A or B rated in the United States Food and Drug
1188Administration's most recent version of the Orange Book or Green Book or have an NR or NA
1189rating by Medi-Span, Gold Standard, or a similar rating by a nationally recognized reference;
1190 (2) Shall be available for purchase by each pharmacy in the state from national or
1191regional wholesalers operating in the commonwealth; and
1192 (3) Shall not be obsolete.
1193 (c ) A pharmacy benefit manager shall:
1194 (1) Provide access to its maximum allowable cost list to each pharmacy subject to the
1195maximum allowable cost list;
1196 (2) Update its maximum allowable cost list on a timely basis, but in no event longer than
1197seven (7) calendar days from an increase of ten per cent or more in the pharmacy acquisition cost
1198from sixty per cent or more of the pharmaceutical wholesalers doing business in the state or a
1199change in the methodology on which the maximum allowable cost list is based or in the value of
1200a variable involved in the methodology;
1201 (3) Provide a process for each pharmacy subject to the maximum allowable cost list to
1202receive prompt notification of an update to the maximum allowable cost list; and
1203 (4)(A)(i) Provide a reasonable administrative appeal procedure to allow pharmacies to
1204challenge maximum allowable cost list and reimbursements made under a maximum allowable
1205cost list for a specific drug or drugs as:
1206 (a) Not meeting the requirements of this section; or 58 of 77
1207 (b) Being below the pharmacy acquisition cost.
1208 (ii) The reasonable administrative appeal procedure shall include the following:
1209 (a) A dedicated telephone number, email address, and website for the purpose of
1210submitting administrative appeals;
1211 (b) The ability to submit an administrative appeal directly to the pharmacy benefit
1212manager regarding the pharmacy benefits plan or program or through a pharmacy service
1213administrative organization; and
1214 (c) No less than thirty business days to file an administrative appeal.
1215 (B) The pharmacy benefit manager shall respond to the challenge under subdivision
1216(c)(4)(A) of this section within thirty business days after receipt of the challenge.
1217 (C) If a challenge is made under subdivision (c)(4)(A) of this section, the pharmacy
1218benefit manager shall within thirty business days after receipt of the challenge either:
1219 (i) If the appeal is upheld:
1220 (a) Make the change in the maximum allowable cost list payment to at least the pharmacy
1221acquisition cost;
1222 (b) Permit the challenging pharmacy or pharmacist to reverse and rebill the claim in
1223question;
1224 (c) Provide the National Drug Code that the increase or change is based on to the
1225pharmacy or pharmacist; and 59 of 77
1226 (d) Make the change under subdivision (c)(4)(C)(i)(a) of this section effective for each
1227similarly situated pharmacy as defined by the payor subject to the maximum allowable cost list;
1228 (ii) If the appeal is denied, provide the challenging pharmacy or pharmacist the National
1229Drug Code and the name of the national or regional pharmaceutical wholesalers operating in the
1230commonwealth that have the drug currently in stock at a price below the maximum allowable
1231cost as listed on the maximum allowable cost list; or
1232 (iii) If the National Drug Code provided by the pharmacy benefit manager is not available
1233below the pharmacy acquisition cost from the pharmaceutical wholesaler from whom the
1234pharmacy or pharmacist purchases the majority of prescription drugs for resale, then the
1235pharmacy benefit manager shall adjust the maximum allowable cost as listed on the maximum
1236allowable cost list above the challenging pharmacy's pharmacy acquisition cost and permit the
1237pharmacy to reverse and rebill each claim affected by the inability to procure the drug at a cost
1238that is equal to or less than the previously challenged maximum allowable cost.
1239 (d)(1) A pharmacy benefit manager shall not reimburse a pharmacy or pharmacist in the
1240commonwealth an amount less than the amount that the pharmacy benefit manager reimburses a
1241pharmacy benefit manager affiliate for providing the same pharmacist services.
1242 (2) The amount shall be calculated on a per unit basis based on the same generic product
1243identifier or generic code number.
1244 (e) A pharmacy or pharmacist may decline to provide the pharmacist services to a patient
1245or pharmacy benefit manager if, as a result of a maximum allowable cost list, a pharmacy or
1246pharmacist is to be paid less than the pharmacy acquisition cost of the pharmacy providing
1247pharmacist services. 60 of 77
1248 (f) This section does not apply to a maximum allowable cost list maintained by
1249MassHealth or the division of insurance.
1250 (g)(1)A violation of this section shall constitute an unfair or deceptive act or practice
1251pursuant to chapter 93A.
1252 Section 7.
1253 (a) No pharmacy benefit manager or representative of a pharmacy benefit manager shall
1254conduct spread pricing in the commonwealth.
1255 (b) A pharmacy benefit manager or representative of a pharmacy benefit manager that
1256violates this section shall be subject to the surcharge under section 8 of chapter 176X.
1257 (c) A pharmacy benefit manager shall report to the commissioner on a quarterly basis for
1258each healthcare insurer the following information:
1259 (A) The aggregate number of rebates received by the pharmacy benefit manager;
1260 (B) The aggregate number of rebates distributed to the appropriate healthcare insurer;
1261 (C) The aggregate number of rebates passed on to an insured of each healthcare insurer at
1262the point of sale that reduced the insured’s applicable deductible, copayment, coinsurance, or
1263other cost-sharing amount;
1264 (D) The individual and aggregate amount paid by the healthcare insurer to the pharmacy
1265benefit manager for pharmacist services itemized by pharmacy, by product, and by goods and
1266services; and 61 of 77
1267 (E) The individual and aggregate amount a pharmacy benefit manager paid for
1268pharmacist services itemized by pharmacy, by product, and by goods and services.
1269 (d) The commissioner, in consultation with the health policy commission and the center
1270for health information and analysis, shall annually report on the rebates and amounts reported
1271under subsection (c), which shall be public record.
1272 Section 8.
1273 (a) A pharmacy benefits manager that engages in the practices of (i) spread pricing; (ii)
1274steering; or (iii) imposing point-of-sale fees or retroactive fees shall be subject to a surcharge
1275payable to the division of 10 percent on the aggregate dollar amount it reimbursed pharmacies in
1276the previous calendar year for prescription drugs in the commonwealth.
1277 (b) By March 1 of each year, a pharmacy benefit manager shall provide a letter to the
1278commissioner attesting as to whether or not, in the previous calendar year, it engaged in the any
1279of the practices under subsection (a). The pharmacy benefit manager shall also submit to the
1280commissioner, in a form and manner and by a date specified by the commissioner, data detailing
1281all prescription drug claims it administered in the commonwealth for insured residents on behalf
1282of each health plan client and any other data the commissioner deems necessary to evaluate
1283whether a pharmacy benefit manager may be engaged in any of the practices under subsection
1284(a)
1285 (c) By April 1 of each year, a pharmacy benefit manager shall pay into the general fund
1286the surcharge owed, if any, as contained in the report submitted pursuant to subsection (b) of this
1287section. 62 of 77
1288 (d) Nothing in this section shall be construed to authorize the practices of steering or
1289imposing point-of-sale fees or retroactive fees where otherwise prohibited by law.
1290 (e) The commissioner, in consultation with the health policy commission and the center
1291for health information and analysis, shall prepare an aggregate report reflecting the total number
1292of prescriptions administered by the reporting pharmacy benefit manager with the total sum due
1293to the commonwealth, which shall be public record.
1294 Section 9.
1295 (a) Any person operating a health plan whose contracted pharmacy benefits manager
1296engages in the practices of (i) spread pricing; (ii) steering; or (iii) imposing point-of-sale fees or
1297retroactive fees in connection with its health plans shall be subject to a surcharge payable to the
1298division of 10 percent on the aggregate dollar amount its pharmacy benefit manager reimbursed
1299pharmacies on its behalf in the previous calendar year for prescription drugs in the
1300commonwealth.
1301 (b) By March 1 of each year, any person operating a health plan and licensed in the
1302commonwealth that utilizes a contracted pharmacy benefit manager shall provide a letter to the
1303commissioner attesting as to whether or not, in the previous calendar year, its contracted
1304pharmacy benefit manager engaged in any of the practices under subsection (a) in connection
1305with its health plans. The health plan shall also submit to the commissioner, in a form and
1306manner and by a date specified by the commissioner, data detailing all prescription drug claims
1307its contracted pharmacy benefit manager administered in the commonwealth for insured
1308residents and any other data the commissioner deems necessary to evaluate whether a health
1309plan's pharmacy benefit manager may be engaged in any of the practices under subsection (a). 63 of 77
1310 (c) By April 1 of each year, any person operating a health plan and licensed under this
1311title shall pay into the general fund the surcharge owed, if any, as contained in the report
1312submitted pursuant to subsection (b) of this section.
1313 (d) Nothing in this section shall be construed to authorize the practices of steering or
1314imposing point-of-sale fees or retroactive fees where otherwise prohibited by law.
1315 (e) The commissioner, in consultation with the health policy commission and the center
1316for health information and analysis, shall prepare an aggregate report reflecting the total number
1317of prescriptions administered by the reporting health plan along with the total sum due to the
1318commonwealth, which shall be public record.
1319 Section 10.
1320 When calculating an insured’s contribution to any applicable cost sharing requirement, a
1321pharmacy benefit manager shall include any cost-sharing amounts paid by the insured or on
1322behalf of the insured by another person.
1323 Section 11.
1324 (a) A pharmacy benefit manager shall conduct an audit of the records of a pharmacy in
1325accordance with paragraphs (1) to (13), inclusive.
1326 (1) The contract between a pharmacy and a pharmacy benefit manager shall identify and
1327describe the audit procedures in detail.
1328 (2) With the exception of an investigative fraud audit, the auditor shall give the pharmacy
1329written notice at least 2 weeks prior to conducting the initial on-site audit for each audit cycle. 64 of 77
1330 (3) A pharmacy benefit manager shall not audit claims beyond 2 years prior to the date of
1331audit.
1332 (4) The auditor shall not interfere with the delivery of pharmacist services to a patient and
1333shall make a reasonable effort to minimize the inconvenience and disruption to the pharmacy
1334operations during the audit process.
1335 (5) Any audit that involves clinical or professional judgment shall be conducted by, or in
1336consultation with, a licensed pharmacist from any state.
1337 (6) A finding of an overpayment or underpayment shall be based on the actual
1338overpayment or underpayment. A statistically sound calculation for overpayment or
1339underpayment may be used to determine recoupment as part of a settlement as agreed to by the
1340pharmacy.
1341 (7) The auditor shall audit each pharmacy under the same standards and parameters with
1342which they audit other similarly situated pharmacies.
1343 (8) An audit shall not be initiated or scheduled during the first 5 calendar days of any
1344month for any pharmacy that averages more than 600 prescriptions per week without the
1345pharmacy's consent.
1346 (9) A preliminary audit report shall be delivered to the pharmacy not later than 30 days
1347after the conclusion of the audit.
1348 (10) The preliminary audit report shall be signed and shall include the signature of any
1349pharmacist participating in the audit. 65 of 77
1350 (11) A pharmacy benefit manager shall not withhold payment to a pharmacy for
1351reimbursement claims as a means to recoup money until after the final internal disposition of an
1352audit, including the appeals process, as provided in subsection (b), unless fraud or
1353misrepresentation is reasonably suspected, or the discrepant amount exceeds $15,000.
1354 (12) The auditor shall provide a copy of the final audit report to the pharmacy and plan
1355sponsor within 30 days following the pharmacy's receipt of the signed preliminary audit report or
1356the completion of the appeals process, as provided in subsection (b), whichever is later.
1357 (13) No auditing company or agent shall receive payment based upon a percentage of the
1358amount recovered or other financial incentive tied to the findings of the audit.
1359 (b)(1) Each auditor shall establish an appeals process under which a pharmacy may
1360appeal findings in a preliminary audit.
1361 (2) To appeal a finding, a pharmacy may use the records of a hospital, physician, or other
1362authorized prescriber to validate the record with respect to orders or refills of prescription drugs
1363or devices.
1364 (3) A pharmacy shall have 30 days to appeal any discrepancy found during the
1365preliminary audit.
1366 (4) The National Council for Prescription Drug Programs or any other recognized
1367national industry standard shall be used to evaluate claims submission and product size disputes.
1368 (5) If an audit results in the identification of any clerical or record-keeping errors in a
1369required document or record, the pharmacy shall not be subject to recoupment of funds by the
1370pharmacy benefit manager; provided, that the pharmacy may provide proof that the patient 66 of 77
1371received the medication billed to the plan via patient signature logs or other acceptable methods,
1372unless there is financial harm to the plan or errors that exceed the normal course of business.
1373 (c) This section shall not apply to any audit or investigation of a pharmacy that involves
1374potential fraud, willful misrepresentation or abuse, including, but not limited to, investigative
1375audits or any other statutory or regulatory provision which authorizes investigations relating to
1376insurance fraud.
1377 (d) This section shall not apply to a public health care payer, as defined in section 1 of
1378chapter 12C.
1379 (e) The commissioner shall promulgate regulations to enforce this section.
1380 Section 12.
1381 (a) The commissioner may make an examination of the affairs of a Pharmacy Benefit
1382Manager when the commissioner deems prudent but not less frequently than once every 3 years.
1383The focus of the examination shall be to ensure that a pharmacy benefit manager is able to meet
1384its responsibilities under contracts with licensed carriers. The examination shall be conducted
1385according to the procedures set forth in subsection (6) of section 4 of chapter 175.
1386 (b) The commissioner, a deputy or an examiner may conduct an on-site examination of
1387each pharmacy benefit manager in the commonwealth to thoroughly inspect and examine its
1388affairs.
1389 (c) The charge for each such examination shall be determined annually according to the
1390procedures set forth in subsection (6) of section 4 of chapter 175. 67 of 77
1391 (d) Not later than 60 days following completion of the examination, the examiner in
1392charge shall file with the commissioner a verified written report of examination under oath.
1393Upon receipt of the verified report, the commissioner shall transmit the report to the pharmacy
1394benefit manager examined with a notice which shall afford the pharmacy benefit manager
1395examined a reasonable opportunity of not more than 30 days to make a written submission or
1396rebuttal with respect to any matters contained in the examination report. Within 30 days of the
1397end of the period allowed for the receipt of written submissions or rebuttals, the commissioner
1398shall consider and review the reports together with any written submissions or rebuttals and any
1399relevant portions of the examiner’s work papers and enter an order:
1400 (i) adopting the examination report as filed with modifications or corrections and, if the
1401examination report reveals that the pharmacy benefit manager is operating in violation of this
1402section or any regulation or prior order of the commissioner, the commissioner may order the
1403pharmacy benefit manager to take any action the commissioner considered necessary and
1404appropriate to cure such violation;
1405 (ii) rejecting the examination report with directions to examiners to reopen the
1406examination for the purposes of obtaining additional data, documentation or information and re-
1407filing pursuant to the above provisions; or
1408 (iii) calling for an investigatory hearing with no less than 20 days’ notice to the pharmacy
1409benefit manager for purposes of obtaining additional documentation, data, information and
1410testimony.
1411 (e) Notwithstanding any general or special law to the contrary, including clause 26 of
1412section 7 of chapter 4 and chapter 66, the records of any such audit, examination or other 68 of 77
1413inspection and the information contained in the records, reports or books of any pharmacy
1414benefit manager examined pursuant to this section shall be confidential and open only to the
1415inspection of the commissioner, or the examiners and assistants. Access to such confidential
1416material may be granted by the commissioner to law enforcement officials of the commonwealth
1417or any other state or agency of the federal government at any time, so long as the agency or
1418office receiving the information agrees in writing to keep such material confidential. Nothing
1419herein shall be construed to prohibit the required production of such records, and information
1420contained in the reports of such company or organization before any court of the commonwealth
1421or any master or auditor appointed by any such court, in any criminal or civil proceeding,
1422affecting such pharmacy benefit manager, its officers, partners, directors or employees. The final
1423report of any such audit, examination or any other inspection by or on behalf of the division of
1424insurance shall be a public record.
1425 Section 13.
1426 A pharmacy benefit manager shall be required to submit to periodic audits by a licensed
1427carrier if the pharmacy benefit manager has entered into a contract with the carrier to provide
1428pharmacy benefits to the carrier or its members. The commissioner shall direct or provide
1429specifications for such audits
1430 Section 14.
1431 (a) A contract between a pharmacy benefit manager and a participating pharmacy or
1432pharmacist or contracting agent shall not include any provision that prohibits, restricts, or limits a
1433pharmacist or contracting agent or pharmacy’s right to provide an insured with information on
1434the amount of the insured's cost share for such insured's prescription drug and the clinical 69 of 77
1435efficacy of a more affordable alternative drug if one is available. Neither a pharmacy nor a
1436pharmacist shall be penalized by a pharmacy benefit manager for disclosing such information to
1437an insured or for selling to an insured a more affordable alternative if one is available.
1438 (b) A pharmacy benefit manager shall not charge a pharmacist or pharmacy a fee related
1439to the adjudication of a claim, including, without limitation, a fee for: (i) the receipt and
1440processing of a pharmacy claim; (ii) the development or management of claims processing
1441services in a pharmacy benefit manager network; or (iii) participation in a pharmacy benefit
1442manager network, unless such fee is set out in a contract between the pharmacy benefit manager
1443and the pharmacist or contracting agent or pharmacy.
1444 (c) A contract between a pharmacy benefit manager and a participating pharmacy or
1445pharmacist or contracting agent shall not include any provision that prohibits, restricts, or limits
1446disclosure of information to the division deemed necessary by the division to ensure a pharmacy
1447benefit manager's compliance with the requirements under this section or section 21C of chapter
144894C.
1449 SECTION 62. Notwithstanding any general or special law to the contrary, the health
1450policy commission, in consultation with the center for health information and analysis, the
1451executive office of health and human services and the division of insurance, shall produce
1452interim and final reports on the use of insulin in the commonwealth and the effects of capping
1453copayments and eliminating deductible and co-insurance requirements for insulin for individuals
1454with diabetes on health care access and system cost.
1455 The interim and final report shall include, but not be limited to: (i) rates of insulin
1456utilization; (ii) an analysis of the use of insulin, broken down by patient demographics, 70 of 77
1457geographic region and insulin delivery device; (iii) annual plan costs and member premiums; (iv)
1458the average price of insulin; (v) the average insulin price net of rebates or discounts received by
1459or accrued directly or indirectly by health insurance carriers; (vi) average and total out-of-pocket
1460expenditures on insulin delivery devices and glucose monitoring tests that are not included as
1461part of an insulin prescription; (vii) an analysis of the impact of capping co-payments and
1462eliminating deductible and co-insurance requirements for insulin on patient access to and cost of
1463care by patient demographics and geographic region; (viii) additional funding sources for the
1464Prescription Drug Cost Assistance Trust Fund established in section 2RRRRR of chapter 29 of
1465the General Laws; and (ix) any barriers to accessing insulin for individuals with diabetes and
1466policy recommendations for resolving such barriers. The interim report, including any
1467recommendations for expanding access to insulin for individuals with diabetes, shall be filed
1468with the clerks of the house of representatives and senate, the joint committee on public health,
1469the joint committee on health care financing and the house and senate committees on ways and
1470means not later than 18 months after the effective date of this act. The final report, including any
1471recommendations for expanding access to insulin for individuals with diabetes, shall be filed
1472with the clerks of the house of representatives and senate, the joint committee on public health,
1473the joint committee on health care financing and the house and senate committees on ways and
1474means not later than 3 years after the effective date of this act.
1475 SECTION 63. (a) Notwithstanding any general or special law to the contrary, the
1476commonwealth health insurance connector authority, in consultation with the division of
1477insurance, shall report on the impact of pharmaceutical pricing on health care costs and outcomes
1478for ConnectorCare and non-group and small group plans offered through the connector and its
1479members. 71 of 77
1480 The report shall include, but not be limited to: (i) information on the differential between
1481medication list price and price net of rebates for plans offered and the impact of those
1482differentials on member premiums; (ii) the relationship between medication list price and
1483member cost-sharing requirements; (iii) the impact of medication price changes over time on
1484premium and out-of-pocket costs in plans authorized under section 3 of chapter 176J of the
1485General Laws offered through the commonwealth health insurance connector authority; (iv)
1486trends in changes in medication list price and price net of rebates by health plan; (v) an analysis
1487of the impact of member out-of-pocket costs on medication utilization and member experience;
1488and (vi) an analysis of the impact of medication list price and price net of rebates on member
1489formulary access to medications. Data collected under this subsection shall be protected as
1490confidential and shall not be a public record under clause Twenty-sixth of section 7 of chapter 4
1491or under chapter 66 of the General Laws.
1492 The report shall be submitted to the joint committee on health care financing and the
1493house and senate committees on ways and means not later than July 1, 2025.
1494 (b) In fiscal year 2024, the amount required to be paid pursuant to the last paragraph of
1495section 6 of chapter 6D of the General Laws shall be increased by $500,000; provided, however,
1496that said $500,000 shall be provided to the commonwealth health insurance connector authority
1497not later than October 14, 2023 for data collection and analysis costs associated with the report
1498required by this section.
1499 SECTION 64. Notwithstanding any general or special law to the contrary, there shall be a
1500special commission to examine the feasibility of: (i) establishing a system for the bulk
1501purchasing and distribution of pharmaceutical products with a significant public health benefit 72 of 77
1502and the potential for significant health care cost savings for consumers through overall increased
1503purchase capacity; and (ii) making bulk purchase pricing information available to purchasers in
1504other states.
1505 The commission shall consist of: the commissioner of public health or a designee, who
1506shall serve as chair; the executive director of the group insurance commission or a designee; the
1507chief of pharmacy of the state office for pharmacy services; the MassHealth director of
1508pharmacy; the secretary of technology services and security; and 9 members to be appointed by
1509the commissioner of public health, 2 of whom shall be health care economists, 1 of whom shall
1510be an expert in health law and policy innovation, 1 of whom shall be an academic with relevant
1511expertise in the field, 1 of whom shall be a representative from a community health center, 1 of
1512whom shall be the chief executive officer of a hospital licensed in the commonwealth, 1 of
1513whom shall be a representative of the Massachusetts Association of Health Plans, Inc., 1 of
1514whom shall be a representative of Blue Cross Blue Shield of Massachusetts, Inc. and 1 of whom
1515shall be a member of the public with experience with health care and consumer protection.
1516 The commission shall hold not less than 3 public hearings in different geographic areas of
1517the commonwealth, accept input from the public and solicit expert testimony from individuals
1518representing health insurance carriers, pharmaceutical companies, independent and chain
1519pharmacies, hospitals, municipalities, health care practitioners, health care technology
1520professionals, community health centers, substance abuse disorder providers, public health
1521educational institutions and other experts identified by the commission.
1522 The commission shall consider: (i) the process by which the commonwealth could make
1523bulk purchases of pharmaceutical products with a significant public health benefit and the 73 of 77
1524potential for significant health care cost savings to consumers; (ii) the process by which both
1525governmental and nongovernmental entities may participate in a collaborative to purchase
1526pharmaceutical products with a significant public health benefit and the potential for significant
1527health care cost savings; (iii) the feasibility of developing an electronic information interchange
1528system to exchange bulk purchase price information with partnering states; (iv) potential sources
1529of funding available to implement bulk purchases; (v) potential cost savings of bulk purchases to
1530the commonwealth or other participating nongovernmental entities; (vi) the feasibility of
1531partnering with the federal government and or other states in the New England region; and (vii)
1532any other factors that the commission deems relevant.
1533 The commission shall file a report of its analysis, along with any recommended
1534legislation, if any, to the clerks of the senate and house of representatives, the house and senate
1535committees on ways and means, the joint committee on health care financing, the joint
1536committee on public health, the joint committee on elder affairs and the joint committee on
1537mental health, substance abuse and recovery not later than September 1, 2024.
1538 SECTION 65. (a) As used in this section, the following words shall have the following
1539meanings, unless the context clearly requires otherwise:
1540 “Chain pharmacist”, a pharmacist employed by a retail drug organization operating not
1541less than 10 retail drug stores within the commonwealth under section 39 of chapter 112 of the
1542General Laws.
1543 “Independent pharmacist”, a pharmacist actively engaged in the business of retail
1544pharmacy and employed in an organization of not more than 9 registered retail drugstores in the 74 of 77
1545commonwealth under said section 39 of said chapter 112 that employs not more than a total of
154620 full-time pharmacists.
1547 (b) There shall be a task force to: (i) review the drug supply chain including, but not
1548limited to: (A) plan and pharmacy benefit manager reimbursements to pharmacies; (B)
1549wholesaler or pharmacy service administrative organization prices to pharmacies; and (C) drug
1550manufacturer prices to pharmacies; (ii) review ways to recognize the unique challenges of small
1551and independent pharmacies; (iii) identify methods to increase pricing transparency throughout
1552the supply chain; (iv) make recommendations on the use of multiple maximum allowable costs
1553lists and their frequency of use for mail order products; (v) review the utilization of maximum
1554allowable costs lists or similar reimbursement structures established by a pharmacy benefit
1555manager or payer; (vi) review the availability of drugs to independent and chain pharmacies on
1556the maximum allowable cost list or any similar reimbursement structures established by a
1557pharmacy benefit manager or payer; (vii) review the pharmacy acquisition cost from national or
1558regional wholesalers that serve pharmacies compared to the reimbursement amount provided
1559through a maximum allowable cost list or any similar reimbursement structures established by a
1560pharmacy benefit manager or payer and the conditions under which an adjustment to a
1561reimbursement is appropriate; (viii) review the timing of pharmacy purchases of products and the
1562relative risk of list price changes related to the timing of dispensing the products; (ix) assess
1563ways to increase transparency for chain and independent pharmacists to understand the
1564methodology used by a pharmacy benefit manager or payer to develop a maximum allowable
1565cost list or any similar reimbursement structure established by the pharmacy benefit manager or
1566payer; (x) assess the prevalence and appropriateness of pharmacy benefit managers requiring, or
1567using financial incentives or penalties to incentivize, customer use of pharmacies with whom the 75 of 77
1568pharmacy benefit manager has an ownership or financial interest; (xi) examine the impact of the
1569merger or consolidation of pharmacy benefit managers and health carrier clients on drug costs;
1570(xii) review current appeals processes for a chain or independent pharmacist to request an
1571adjustment on a reimbursement subject to a maximum allowable cost list or any similar
1572reimbursement structure established by a pharmacy benefit manager or payer; and (xiii) evaluate
1573the effect of differences between pharmacy benefit manager payments to pharmacies and charges
1574made to health carrier clients on drug price.
1575 (c) The task force shall consist of: the commissioner of insurance or a designee, who shall
1576serve as chair; and 6 members to be appointed by the commissioner, 2 of whom shall be
1577independent pharmacists employed in the independent pharmacy setting or representatives of
1578independent pharmacies, 2 of whom shall be chain pharmacists employed in the chain pharmacy
1579setting or representatives of chain pharmacies and 2 of whom shall be representatives of a
1580pharmacy benefit managers or payers who manage their own pharmacy benefit services. If more
1581than 1 independent pharmacist is appointed, each appointee shall represent a distinct practice
1582setting. If more than 1 chain pharmacist is appointed, each appointee shall represent a distinct
1583practice setting. A pharmacy benefit manager or payer appointed to the task force shall not be
1584co-owned or have any ownership relationship with any other payer, pharmacy benefit manager or
1585chain pharmacist also appointed to the task force.
1586 (d) The commissioner shall file the task force’s findings with the clerks of the house of
1587representatives and the senate, the joint committee on health care financing and the house and
1588senate committees on ways and means not later than December 1, 2024. 76 of 77
1589 SECTION 66. The health policy commission shall consult with relevant stakeholders,
1590including, but not limited to, consumers, consumer advocacy organizations, organizations
1591representing people with disabilities and chronic health conditions, providers, provider
1592organizations, payers, pharmaceutical manufacturers, pharmacy benefit managers and health care
1593economists and other academics, to assist in the development and periodic review of regulations
1594to implement section 20 of chapter 6D of the General Laws, including, but not limited to: (i)
1595establishing the criteria and processes for identifying the proposed value of an eligible drug as
1596defined in said section 20 of said chapter 6D; and (ii) determining the appropriate price increase
1597for a public health essential drug as described within the definition of eligible drug in said
1598section 20 of said chapter 6D.
1599 The commission shall hold its first public outreach not more than 45 days after the
1600effective date of this act and shall, to the extent possible, ensure fair representation and input
1601from a diverse array of stakeholders.
1602 SECTION 67. Notwithstanding subsection (b) of section 15A of chapter 6D of the
1603General Laws, for the purposes of providing early notice under said section 15A of said chapter
16046D, the health policy commission shall determine a significant price increase for a generic drug
1605to be defined as a generic drug priced at $100 or more per wholesale acquisition cost unit that
1606increases in cost by 100 per cent or more during any 12-month period.
1607 SECTION 68. Section 67 is hereby repealed.
1608 SECTION 69. The drug access program, established in section 16DD of chapter 6A of
1609the General Laws, shall take effect not later than 1 year after the effective date of this act. 77 of 77
1610 SECTION 70. To implement chapter 63E of the General Laws, as inserted by section 44,
1611the commissioner of revenue shall promulgate regulations or other guidance regarding the
1612reporting and payment of the penalty as soon as practicable after the effective date of this act.
1613 SECTION 71. Chapter 63E of the General Laws, as inserted by section 44, shall apply to
1614sales commencing on or after the effective date of this act.
1615 SECTION 72. Sections 22 and 40 shall take effect on July 1, 2024.
1616 SECTION 73. Sections 42, 47, 49, 52, 54 and 56 shall take effect January 1, 2024.
1617 SECTION 74. Section 59 shall take effect on July 1, 2024.
1618 SECTION 75. The commissioner of insurance shall promulgate regulations to implement
1619chapter 176X of the General Laws, as inserted by section 61, not later than 1 year after the
1620effective date of this act.
1621 SECTION 76. Section 68 shall take effect on January 1, 2025.