Massachusetts 2025-2026 Regular Session

Massachusetts Senate Bill S830 Compare Versions

Only one version of the bill is available at this time.

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2	2	SENATE DOCKET, NO. 1262 FILED ON: 1/16/2025
3	3	SENATE . . . . . . . . . . . . . . No. 830
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Bruce E. Tarr
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act to preserve community pharmacies.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :Bruce E. TarrFirst Essex and Middlesex 1 of 7
16	16	SENATE DOCKET, NO. 1262 FILED ON: 1/16/2025
17	17	SENATE . . . . . . . . . . . . . . No. 830
18	18	By Mr. Tarr, a petition (accompanied by bill, Senate, No. 830) of Bruce E. Tarr for legislation to
19	19	preserve community pharmacies by conducting audits on contracts for pharmacy services.
20	20	Financial Services.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Fourth General Court
24	24	(2025-2026)
25	25	_______________
26	26	An Act to preserve community pharmacies.
27	27	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
28	28	of the same, as follows:
29	29	1 SECTION 1. Chapter 175 of the Massachusetts general laws is hereby amended by
30	30	2adding the following new section:
31	31	3 Section 226A Contracts for Community Pharmacy Services
32	32	4 “Brand name drug”, a drug that is: (i) produced or distributed pursuant to an original new
33	33	5drug application approved under 21 U.S.C. 355(c) except for: (A) any drug approved through an
34	34	6application submitted under section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act that
35	35	7is pharmaceutically equivalent, as that term is defined by the United States Food and Drug
36	36	8Administration, to a drug approved under 21 U.S.C. 355(c); (B) an abbreviated new drug 407
37	37	9application that was approved by the United States Secretary of Health and Human Services
38	38	10under section 505(c) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 355(c), before the
39	39	11date of the enactment of the federal Drug Price Competition and Patent Term Restoration Act of
40	40	1219 of 58 1984, Public Law 98-417, 98 Stat. 1585; or (C) an authorized generic drug as defined in 2 of 7
41	41	1342 C.F.R. 447.502; (ii) produced or distributed pursuant to a biologics license application
42	42	14approved 412 under 42 U.S.C. 262(a)(2)(C); or (iii) identified by the health benefit plan as a
43	43	15brand name drug based on available data resources such as Medi-Span.
44	44	16 “Generic drug”, a retail drug that is: (i) marketed or distributed pursuant to an
45	45	17abbreviated new drug application approved under 21 U.S.C. 355(j); (ii) an authorized generic
46	46	18drug as defined in 42 C.F.R. 447.502; (iii) a drug that entered the market before January 1, 1962
47	47	19and was not originally marketed under a new drug application; or (iv) identified by the health
48	48	20benefit plan as a generic drug based on available data resources such as Medi-Span.
49	49	21 “Pharmacy Audit”, a process that involves the inspection of pharmacy records to ensure
50	50	22high quality services and the lack of Fraud Waste, and Abuse. This includes desk audits as well
51	51	23as in-person audits.
52	52	24 “Pharmacy Benefit Manager” as defined in MGL c 175 Section 226 (a).
53	53	25 Section 1: Payment for pharmacy services
54	54	26 A contract for pharmacy services between a pharmacy benefit manager and a pharmacy
55	55	27must include an ingredient cost that meets the criteria in section 2 and a dispensing fee equal to
56	56	28what is paid by the State Medicaid Program. Payment for clean claims must include all
57	57	29applicable discounts. Contracts that include retroactive discounts and use “Generic Effective
58	58	30Rate” or “Brand Effective Rate or any other similar retroactive rate reductions are prohibited.
59	59	31 Section 2: Ingredient and Maximum Allowable Cost
60	60	32 (a) For the purposes of this section the term "maximum allowable cost list" shall mean a
61	61	33list of drugs, medical products or devices, or both medical products and devices, for which a 3 of 7
62	62	34maximum allowable cost has been established by a pharmacy benefits manager or covered entity.
63	63	35The term "maximum allowable cost" shall mean the maximum amount that a pharmacy benefits
64	64	36manager or covered entity will reimburse a pharmacy for the cost of a drug or a medical product
65	65	37or device inclusive of all discounts when the claim is processed or taken retroactively.
66	66	38 (b) The maxim allowable cost (if used) or the ingredient cost (if not used) must be equal
67	67	39to or greater than the cost used by the Massachusetts Medicaid Program
68	68	40 (c) The maximum allowable cost for non-affiliated pharmacies must be equal to or
69	69	41greater than the maximum allowable cost to pharmacies affiliated with or owned by the
70	70	42pharmacy benefit manager.
71	71	43 (d) Before a pharmacy benefits manager or covered entity may place a drug on a
72	72	44maximum allowable cost list the drug must be listed as "A" or "AB" rated in the most recent
73	73	45version of the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, also
74	74	46known as the Orange Book, or has an "NR" or "NA" rating or a similar rating by a nationally
75	75	47recognized reference; and that there are at least two therapeutically equivalent, multiple source
76	76	48drugs, or at least one generic drug available from one manufacturer, available for purchase by
77	77	49network pharmacies from national or regional wholesalers registered in Massachusetts.
78	78	50 (e) A pharmacy benefits manager or covered entity shall make available to each
79	79	51pharmacy with which the pharmacy benefits manager or covered entity has a contract and to
80	80	52each pharmacy included in a network of pharmacies served by a pharmacy services
81	81	53administrative organization with which the pharmacy benefits manager or covered entity has a
82	82	54contract, at the beginning of the term of a contract upon renewal of a contract, or upon request: 4 of 7
83	83	55 (1) The sources used to determine the maximum allowable costs for the drugs and
84	84	56medical products and devices on each maximum allowable cost list;
85	85	57 (2) Every maximum allowable cost for individual drugs used by that pharmacy benefits
86	86	58manager or covered entity for patients served by that contracted pharmacy; and
87	87	59 (3) Upon request, every maximum allowable cost list used by that pharmacy benefits
88	88	60manager or covered entity for patients served by that contracted pharmacy.
89	89	61 (f) A pharmacy benefits manager or covered entity shall:
90	90	62 (1) update each maximum allowable cost list at least every 3 business days
91	91	63 (2) Make the updated lists available to every pharmacy with which the pharmacy benefits
92	92	64manager or covered entity has a contract and to every pharmacy included in a network of
93	93	65pharmacies served by a pharmacy services administrative organization with which the pharmacy
94	94	66benefits manager or covered entity has a contract, in a readily accessible, secure and usable web-
95	95	67based format or other comparable format or process; and
96	96	68 (3) Utilize the updated maximum allowable costs to calculate the payments made to the
97	97	69contracted pharmacies within 2 business days.
98	98	70 (g) A pharmacy benefits manager or covered entity shall establish a clearly defined
99	99	71process through which a pharmacy may contest the cost for a particular drug or medical product
100	100	72or device.
101	101	73 (h) A pharmacy may base its appeal on one or more of the following: 5 of 7
102	102	74 (1) The ingredient cost established for a particular drug or medical product, or device is
103	103	75below the cost used by the Massachusetts Medicaid Program
104	104	76 (2) The pharmacy benefits manager or covered entity has placed a drug on the maximum
105	105	77allowable cost list that does not meet the requirements of subsection (d).
106	106	78 (i) The pharmacy must file its appeal within seven business days of its submission of the
107	107	79initial claim for reimbursement for the drug or medical product or device. A Pharmacy Services
108	108	80Administrative Organization (PSAO) may appeal on behalf of a pharmacy or group of
109	109	81pharmacies. The pharmacy benefits manager or covered entity must make a final determination
110	110	82resolving the pharmacy's appeal within seven business days of the pharmacy benefits manager or
111	111	83covered entity's receipt of the appeal.
112	112	84 (j) If the final determination is a denial of the pharmacy's appeal, the pharmacy benefits
113	113	85manager or covered entity must state the reason for the denial and provide the national drug code
114	114	86of an equivalent drug that is generally available for purchase by pharmacies in this state from
115	115	87national or regional wholesalers licensed by the state at a price which is equal to or less than the
116	116	88cost for that drug.
117	117	89 (k) If a pharmacy's appeal is determined to be valid by the pharmacy benefits manager or
118	118	90covered entity, the pharmacy benefits manager or covered entity shall retroactively adjust the
119	119	91cost of the drug or medical product or device and reprocess all claims that were paid incorrectly.
120	120	92The adjustment shall be effective from the date the pharmacy's appeal was filed, and the
121	121	93pharmacy benefits manager or covered entity shall provide reimbursement for all reprocessed
122	122	94claims. 6 of 7
123	123	95 (l) Once a pharmacy's appeal is determined to be valid by the pharmacy benefits manager
124	124	96or covered entity, the pharmacy benefits manager or covered entity shall adjust the cost of the
125	125	97drug or medical product or device for all similar pharmacies in the network as determined by the
126	126	98pharmacy benefits manager within 3 business days.
127	127	99 (m) A pharmacy benefits manager or covered entity shall make available on its secure
128	128	100web site information about the appeals process, including, but not limited to, a telephone number
129	129	101or process that a pharmacy may use to submit cost appeals. The medical products and devices
130	130	102subject to the requirements of this part are limited to the medical products and devices included
131	131	103as a pharmacy benefit under the pharmacy benefits contract.
132	132	104 (n) A pharmacy shall not disclose to any third party the cost lists and any related
133	133	105information it receives from a pharmacy benefits manager or covered entity; provided, a
134	134	106pharmacy may share such lists and related information with a pharmacy services administrative
135	135	107organization or similar entity with which the pharmacy has a contract to provide administrative
136	136	108services for that pharmacy. If a pharmacy shares this information with a pharmacy services
137	137	109administrative organization or similar entity, that organization or entity shall not disclose the
138	138	110information to any third party.
139	139	111 (o) Pharmacy Benefit Managers shall provide annually a report to the Commissioner that
140	140	112details all denied pharmacy appeals for that year to include: the name of the pharmacy, date of
141	141	113service for the claim as well as drug name and billing code used on the claim, and the reason for
142	142	114the denial.
143	143	115 Section 3: The Insurance Commissioner shall enforce this act and shall promulgate
144	144	116regulations to enforce the provisions of this act. The commissioner may examine or audit the 7 of 7
145	145	117books and records of a pharmacy benefits manager providing claims processing services or other
146	146	118prescription drug or device services for a health benefit plan to determine if the pharmacy
147	147	119benefits manager is in compliance with this act. The information or data acquired during an
148	148	120examination is:
149	149	121 (a) Considered proprietary and confidential; and
150	150	122 (b) Not subject to the Freedom of Information Act of Massachusetts