United States: Recent Developments Around Pharmaceutical Drug Spending In Massachusetts

Throughout the fall, policy makers in Massachusetts have sharpened their focus on the rise of pharmaceutical drug prices and their role in the growth of overall health care spending in the Commonwealth. Both the Center for Health Information and Analysis (CHIA) and the Office of Attorney General Maura Healey recently released reports addressing pharmaceutical spending, and the Health Policy Commission (HPC) discussed this issue extensively at its annual Cost Trends Hearings on October 17th and 18th.

In its annual report on the performance of the Massachusetts health care system released in September, CHIA reported that prescription drug spending in the state increased by 10.1% to $8.1 billion in 2015. This rate increase was below the 2014 rate increase of 13.5%. The report also notes that pharmaceutical spending accounted for one-third of the overall growth in total health care expenditures (THCE) in 2015.

Building upon CHIA's findings, Attorney General Maura Healey released on October 7th her office's annual report examining pharmaceutical cost trends in the state. The report identifies spending on specialty drugs as a major driver of total growth in pharmaceutical spending. It recommends instituting a requirement to report aggregated, standardized information on drug rebates to CHIA, promoting generic and biosimilar drugs to foster more competitive pharmaceutical markets, and improving transparency and measurement of the "comparative efficacy" of drugs that treat the same disease.

In written testimony submitted before the Cost Trends hearings, both payers and providers expressed their view that rising pharmaceutical spending is a top area of concern. All eleven payers who submitted testimony identified some aspect of pharmaceutical spending trends as a significant challenge to meeting the health care cost growth benchmark. Many pointed to increases in specialty drug prices as a particular challenge and argued that increased transparency in pharmaceutical drug pricing could aid in efforts to meet the cost growth benchmark. Providers said that pharmacy expense growth has significantly exceeded growth in other expense categories, and several pointed to the role of drug shortages in increasing pharmaceutical costs.

The HPC devoted a panel at the Cost Trends Hearing exclusively to pharmaceutical spending. The witnesses speaking on the panel were Dr. Deborah Schrag, Surgical Oncology Chief at the Dana-Farber Cancer Institute, Dr. Rick Weisblatt, Chief of Innovation and Strategy at Harvard Pilgrim Health Care, Dr. Gregg Meyer, Chief Clinical Officer at Partners HealthCare, and Lisa Joldersma, Vice President for Policy and Research at PhRMA.

Transparency in pharmaceutical pricing was a major theme of the panel discussion, with Dr. Schrag, Dr. Weisblatt, and Dr. Meyer all agreeing that greater price transparency is needed. Meyer and Schrag discussed the difficulties they have encountered in accessing information about drug pricing at the point of care, and both commented that currently there is insufficient drug pricing transparency at the point of care for providers prescribing drugs to patients. Meyer said that access to information regarding how much a drug will cost a patient and what the patient's insurance plan will cover would be "transformational."

Joldersma argued that the pharmaceutical industry is currently restricted in its ability to share information about its products with physicians and payers, saying "we have the information about our products, about their value, that we would like to be able to share, and frankly, we are not permitted to do so." Drug makers have also argued that they already disclose extensive information on research and development costs, and that certain transparency measures would make it harder for the industry to develop lifesaving drugs.

Pricing transparency for pharmaceuticals was an area of focus for legislators on Beacon Hill this past session. During this past legislative session Senator Mark Montigny introduced An Act to Promote Transparency and Cost Control of Pharmaceutical Drug Prices (S. 1048), which aimed to control growth in prescription drug costs by mandating several pricing disclosure requirements. The bill failed to emerge from a legislative committee, but similar efforts addressing pharmaceutical spending are likely to emerge in the next legislative session.

Massachusetts is only one of several states across the nation where lawmakers have pushed for measures to increase transparency around drug pricing. Thirteen other states have introduced similar legislation, and in June, Vermont Governor Peter Schumlin signed a bill into law making his state the first in the nation to require companies to justify certain drug price hikes.

Another topic of discussion throughout the sessions was the role of rebates, which the Attorney General's report found to have had an insignificant impact on the rate of increase in aggregate spending. Joldersma emphasized the role of rebates in controlling overall drug costs, and argued that overall drug spending statistics, such as CHIA's, do not account for rebates. CHIA Executive Director Ray Campbell said that his agency is very interested in the impact of rebates on drug prices and that they plan on looking into this subject more closely moving forward. Many have also expressed concern that the savings that Pharmacy Benefit Managers (PBMs) generate in the form of rebates are not passed along to the clients, such as health plans, unions, and employers, upon whose behalf they purportedly negotiate.

Governor Charlie Baker and Joldersma highlighted the role of the Food and Drug Administration (FDA) in rising pharmaceutical spending, with both calling upon the agency to speed up its approval process for generics and biosimilars. In his keynote remarks, Governor Baker criticized the FDA for the long median approval time for generic drugs (47 months) and Joldersma cited the need for federal regulators to clear the backlog of generic drug applications and make it less expensive to bring new drugs to market.

Joldersma also pushed back against the idea that pharmaceutical cost growth is increasing at a disproportionate or unacceptable rate. She pointed out the finding in the Attorney General's report that prescription drug spending in the commercial market in Massachusetts increased by just 4.1% and said that the pharmaceutical industry does not "presuppose that there is a right portion of the health care dollar that should go to prescription drugs."

Massachusetts and other states across the country will continue looking at this issue closely moving forward, but with the election of Donald Trump as President, drug pricing will no longer be an issue of the same level of importance at the national level than it would have been with a different election outcome. Drug pricing will still be discussed in Washington, D.C., but major policy changes are unlikely, especially along the lines of what Democrats have favored.

* * *

ML Strategies will continue to monitor and periodically report on discussions among political and industry leaders as they work to identify potential solutions to address rising pharmaceutical drug spending.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions