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SENATE DOCKET, NO. 1264 FILED ON: 1/16/2025
SENATE . . . . . . . . . . . . . . No. 831
The Commonwealth of Massachusetts
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PRESENTED BY:
Bruce E. Tarr
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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act to ensure access to prescription medication and community pharmacies.
_______________
PETITION OF:
NAME:DISTRICT/ADDRESS :Bruce E. TarrFirst Essex and Middlesex 1 of 8
SENATE DOCKET, NO. 1264 FILED ON: 1/16/2025
SENATE . . . . . . . . . . . . . . No. 831
By Mr. Tarr, a petition (accompanied by bill, Senate, No. 831) of Bruce E. Tarr for legislation to
ensure access to prescription medication and community pharmacies. Financial Services.
The Commonwealth of Massachusetts
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In the One Hundred and Ninety-Fourth General Court
(2025-2026)
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An Act to ensure access to prescription medication and community pharmacies.
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 175 is hereby amended by adding the following new section:-
2 Section 226A Contracts for Community Pharmacy Services
3 “Brand name drug”, a drug that is: (i) produced or distributed pursuant to an original new
4drug application approved under 21 U.S.C. 355(c) except for: (A) any drug approved through an
5application submitted under section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act that
6is pharmaceutically equivalent, as that term is defined by the United States Food and Drug
7Administration, to a drug approved under 21 U.S.C. 355(c); (B) an abbreviated new drug 407
8application that was approved by the United States Secretary of Health and Human Services
9under section 505(c) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 355(c), before the
10date of the enactment of the federal Drug Price Competition and Patent Term Restoration Act of
1119 of 58 1984, Public Law 98-417, 98 Stat. 1585; or (C) an authorized generic drug as defined in
1242 C.F.R. 447.502; (ii) produced or distributed pursuant to a biologics license application 2 of 8
13approved 412 under 42 U.S.C. 262(a)(2)(C); or (iii) identified by the health benefit plan as a
14brand name drug based on available data resources such as Medi-Span.
15 “Generic drug”, a retail drug that is: (i) marketed or distributed pursuant to an
16abbreviated new drug application approved under 21 U.S.C. 355(j); (ii) an authorized generic
17drug as defined in 42 C.F.R. 447.502; (iii) a drug that entered the market before January 1, 1962
18and was not originally marketed under a new drug application; or (iv) identified by the health
19benefit plan as a generic drug based on available data resources such as Medi-Span.
20 “Pharmacy Audit”, a process that involves the inspection of pharmacy records to ensure
21high quality services and the lack of Fraud Waste, and Abuse. This includes desk audits as well
22as in-person audits.
23 “Pharmacy Benefit Manager” as defined in MGL c 175 Section 226 (a).
24 Pharmacy Steering” A practice employed by a pharmacy benefit manager or carrier that
25channels a prescription to a pharmacy in which a pharmacy benefit manager or carrier has an
26ownership interest, and includes and is not limited to retail, mail order, or specialty pharmacy.
27 “Specialty Medications” medications that have a complex profile that require intensive
28patient management or special handling.
29 Section 1: Network Pharmacies and Payment for pharmacy services
30 A contract for pharmacy services between a pharmacy benefit manager and a pharmacy
31must include an ingredient cost that meets the criteria in section 2 and a dispensing fee equal be
32no less than what is paid by the State Medicaid Program. Payment for clean claims must include 3 of 8
33all applicable discounts. Contracts that include retroactive discounts and use “Generic Effective
34Rate” or “Brand Effective Rate” or any other similar retroactive rate reductions are prohibited.
35 Payment for pharmacy services to non-affiliated pharmacies must be equal to or greater
36than payment to pharmacies affiliated with or owned by the pharmacy benefit manager.
37 A pharmacy benefit manager shall not engage in pharmacy steering.
38 A pharmacy benefit manager must allow any pharmacy licensed in Massachusetts to
39provide any medication including “specialty medications” if the pharmacy is willing to provide
40the required services. The required services must be the same among all pharmacies.
41Requirements to provide specialty pharmacy medications cannot be designed to exclude
42community pharmacies
43 Section 2: Ingredient and Maximum Allowable Cost
44 (a) For the purposes of this section the term "maximum allowable cost list" shall mean a
45list of drugs, medical products or devices, or both medical products and devices, for which a
46maximum allowable cost has been established by a pharmacy benefits manager or covered entity.
47The term "maximum allowable cost" shall mean the maximum amount that a pharmacy benefits
48manager or covered entity will reimburse a pharmacy for the cost of a drug or a medical product
49or device inclusive of all discounts when the claim is processed or taken retroactively.
50 (b) The maxim allowable cost (if used) or the ingredient cost (if not used) must be equal
51to or greater than the cost used by the Massachusetts Medicaid Program 4 of 8
52 (c) The maximum allowable cost for non-affiliated pharmacies must be equal to or
53greater than the maximum allowable cost to pharmacies affiliated with or owned by the
54pharmacy benefit manager.
55 (d) Before a pharmacy benefits manager or covered entity may place a drug on a
56maximum allowable cost list the drug must be listed as "A" or "AB" rated in the most recent
57version of the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, also
58known as the Orange Book, or has an "NR" or "NA" rating or a similar rating by a nationally
59recognized reference; and that there are at least two therapeutically equivalent, multiple source
60drugs, or at least one generic drug available from one manufacturer, available for purchase by
61network pharmacies from national or regional wholesalers registered in Massachusetts.
62 (e) A pharmacy benefits manager or covered entity shall make available to each
63pharmacy with which the pharmacy benefits manager or covered entity has a contract and to
64each pharmacy included in a network of pharmacies served by a pharmacy services
65administrative organization with which the pharmacy benefits manager or covered entity has a
66contract, at the beginning of the term of a contract upon renewal of a contract, or upon request:
67 (1) The sources used to determine the maximum allowable costs for the drugs and
68medical products and devices on each maximum allowable cost list;
69 (2) Every maximum allowable cost for individual drugs used by that pharmacy benefits
70manager or covered entity for patients served by that contracted pharmacy; and
71 (3) Upon request, every maximum allowable cost list used by that pharmacy benefits
72manager or covered entity for patients served by that contracted pharmacy. 5 of 8
73 (f) A pharmacy benefits manager or covered entity shall:
74 (1) update each maximum allowable cost list at least every 3 business days
75 (2) Make the updated lists available to every pharmacy with which the pharmacy benefits
76manager or covered entity has a contract and to every pharmacy included in a network of
77pharmacies served by a pharmacy services administrative organization with which the pharmacy
78benefits manager or covered entity has a contract, in a readily accessible, secure and usable web-
79based format or other comparable format or process; and
80 (3) Utilize the updated maximum allowable costs to calculate the payments made to the
81contracted pharmacies within 2 business days.
82 (g) A pharmacy benefits manager or covered entity shall establish a clearly defined
83process through which a pharmacy may contest the cost for a particular drug or medical product
84or device.
85 (h) A pharmacy may base its appeal on one or more of the following:
86 (1) The ingredient cost established for a particular drug or medical product, or device is
87below the cost used by the Massachusetts Medicaid Program
88 (2) The pharmacy benefits manager or covered entity has placed a drug on the maximum
89allowable cost list that does not meet the requirements of subsection (d).
90 (i) The pharmacy must file its appeal within seven business days of its submission of the
91initial claim for reimbursement for the drug or medical product or device. A Pharmacy Services
92Administrative Organization (PSAO) may appeal on behalf of a pharmacy or group of
93pharmacies. The pharmacy benefits manager or covered entity must make a final determination 6 of 8
94resolving the pharmacy's appeal within seven business days of the pharmacy benefits manager or
95covered entity's receipt of the appeal.
96 (j) If the final determination is a denial of the pharmacy's appeal, the pharmacy benefits
97manager or covered entity must state the reason for the denial and provide the national drug code
98of an equivalent drug that is generally available for purchase by pharmacies in this state from
99national or regional wholesalers licensed by the state at a price which is equal to or less than the
100cost for that drug.
101 (k) If a pharmacy's appeal is determined to be valid by the pharmacy benefits manager or
102covered entity, the pharmacy benefits manager or covered entity shall retroactively adjust the
103cost of the drug or medical product or device and reprocess all claims that were paid incorrectly.
104The adjustment shall be effective from the date the pharmacy's appeal was filed, and the
105pharmacy benefits manager or covered entity shall provide reimbursement for all reprocessed
106claims.
107 (l) Once a pharmacy's appeal is determined to be valid by the pharmacy benefits manager
108or covered entity, the pharmacy benefits manager or covered entity shall adjust the cost of the
109drug or medical product or device for all similar pharmacies in the network as determined by the
110pharmacy benefits manager within 3 business days.
111 (m) A pharmacy benefits manager or covered entity shall make available on its secure
112web site information about the appeals process, including, but not limited to, a telephone number
113or process that a pharmacy may use to submit cost appeals. The medical products and devices
114subject to the requirements of this part are limited to the medical products and devices included
115as a pharmacy benefit under the pharmacy benefits contract. 7 of 8
116 (n) A pharmacy shall not disclose to any third party the cost lists and any related
117information it receives from a pharmacy benefits manager or covered entity; provided, a
118pharmacy may share such lists and related information with a pharmacy services administrative
119organization or similar entity with which the pharmacy has a contract to provide administrative
120services for that pharmacy. If a pharmacy shares this information with a pharmacy services
121administrative organization or similar entity, that organization or entity shall not disclose the
122information to any third party.
123 (o) If a generic medication is readily available from a wholesaler licensed in
124Massachusetts, a pharmacy benefit manager is prohibited from requiring the brand name be used
125or giving any financial incentive to a pharmacy or patient to use the brand name product. The
126Massachusetts Medicaid program is exempt from this requirement.
127 (p) Pharmacy Benefit Managers shall provide annually a report to the Commissioner that
128details all denied pharmacy appeals for that year to include: the name of the pharmacy, date of
129service for the claim, the drug name and billing code used on the claim, the amount billed, the
130amount paid, and the reason for the denial.
131 Section 3: If during a pharmacy audit, the pharmacy can use signature logs or statements
132from the prescriber obtained after the audit to validate the intent of a prescription or medication
133order. If the pharmacy provided the intended medication to the patient but there was a clerical
134error (with no financial or clinical impact), the pharmacy benefit manager is prohibited from
135recouping the ingredient cost and can only recoup the dispensing fee. All revenue from
136pharmacy audits must be given to the plan sponsor. 8 of 8
137 Section 4: A pharmacy benefit manager is prohibited from charging a community
138pharmacy for credentialing.
139 Section 5: The Insurance Commissioner shall enforce this act and shall promulgate
140regulations to enforce the provisions of this act. The commissioner may examine or audit the
141books and records of a pharmacy benefits manager providing claims processing services or other
142prescription drug or device services for a health benefit plan to determine if the pharmacy
143benefits manager is in compliance with this act. The information or data acquired during an
144examination is:
145 (a) Considered proprietary and confidential; and
146 (b) Not subject to the Freedom of Information Act of Massachusetts