On October 17, 2017, the Massachusetts Senate Working Group on Health Care Cost and Containment and Reform (initially convened in the fall of 2016) released draft legislation entitled “An Act furthering Health Empowerment and Affordability by Leveraging Transformative Health Care.”  The Massachusetts Senate engrossed the bill, with significant amendments, on November 11, 2017 (the “bill”).  In addition to proposed changes in the regulation of hospitals and insurers operating within the state, the bill would impose significant drug price transparency and notification obligations on drug manufacturers, and subject drug manufacturers to the oversight of two state entities.

First, the bill requires drug manufacturers to provide early notice of certain pipeline drugs to the state’s Health Policy Commission.  Manufacturers must provide such early notice for: 1) any pipeline drug; 2) any abbreviated new drug application for generic drugs; or 3) any biosimilar/biologics license application.  Manufacturers must make this notice no later than 60 days after the receipt of FDA action date, or after submission of an ANDA application to FDA.  For each prescription drug, notice to the Health Policy Commission shall include a brief description of the: 1) primary disease, health condition or therapeutic area being studied and the indication; 2) route of administration being studied; 3) clinical trial comparators; and 4) estimated year of market entry.  For each pipeline drug, notice to the Health Policy Commission shall include a statement whether the drug has been designated by FDA as: 1) an orphan drug; 2) fast track; 3) a breakthrough therapy; 4) for accelerated approval; or 5) priority review for a new molecular entity.

Second, the bill authorizes the Health Policy Commission to assess fees on manufacturers for any increased expenses in connection with the commission’s review of these early notice submissions.  The Health Policy Commission may also report any non-complying manufacturer to the Attorney General.

Third, the bill requires the state’s Center for Health Information and Analysis (“CHIA”) to promulgate regulations requiring drug manufacturers and PBMs to submit extensive product cost and pricing information for prescription drugs identified by CHIA including, but not limited to: 1) changes in WAC: 2) aggregate, company-level and product-specific research and development costs attributable to the specific drug; 3) the price paid by the manufacturer to acquire the prescription drug product if not developed by the manufacturer; 4) the 5-year history of any increases in WAC; 5) annual marketing and advertising expenses; and 6) a description of factors contributing to reported changes in WAC.  CHIA must use this information to publish an annual report on drug manufacturer and PBM costs and cost trends.

Fourth, CHIA can fine drug manufacturers and PBMs for failure to timely submit drug pricing information.  If, after notice from CHIA, a drug manufacturer or PBM does not submit the requested information within 2 weeks, CHIA can fine the manufacturer or PBM up to $5,000, and can continue assessing fines for each successive two-week period of delinquency up to $200,000.

Fifth, the bill authorizes CHIA to assess fees on drug manufacturers and PBMs for any increased expenses in connection with CHIA’s review of drug pricing information submissions.  CHIA may also report any non-complying drug manufacturer or PBM to the Attorney General.

Sixth, the bill authorizes the Attorney General to investigate any organization referred to it by the Health Policy Commission or CHIA to determine whether the organization engaged in unfair methods of competition or anticompetitive behavior in violation of the state’s consumer protection laws.

This bill has engendered much debate in Massachusetts.  We will be sure to keep you updated as drug price transparency legislation may now move through the House of Representatives.

Copyright © 2019, Foley Hoag LLP. All rights reserved.