Biotech lobby in Massachusetts pressing for changes to price control plan

BOSTON - A concerted lobbying campaign by pharmaceutical makers to soften a proposal that would allow Gov. Charlie Baker's administration to directly negotiate cheaper drug prices is gaining traction this week as House lawmakers debate next year's budget.

House Democratic leaders put a proposal in the budget that would allow MassHealth, the state's Medicaid program, to directly negotiate drug prices, and force a drug manufacturer to justify its pricing to a state watchdog if agreement cannot be reached.

The proposal closely resembles one that Baker put in his budget, though it removes a provision that would involve the attorney general and possible legal action if the state believed a drug was excessively priced.

Drug manufacturers, however, are lobbying House lawmakers to also relax requirements that would compel manufacturers to share information and appear before state regulators to justify their pricing.

The Massachusetts Biotechnology Council has urged its 1,100 members to write and call lawmakers, and stakeholders on both sides of the debate say that the MassHealth pricing policy has been the subject of conversation for days leading up to this week's floor debate.

"It's a pretty bold statement to be making and it would be fairly precedent-setting, so we want to make sure we get it right," said Rep. Jennifer Benson, the new co-chairperson of the Health Care Financing Committee.

Benson said she's heard from many members and people in the biotechnology industry since the House budget proposal was released, and she said conversations are ongoing about whether and how to adjust the proposal.

"Clearly we need to do something and not one of us wants to eliminate it, but we need to make sure that it works for the long haul for Massachusetts," Benson said.

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The cost of pharmaceuticals is a known driver of health care spending in Massachusetts. The administration says drug spending in MassHealth has doubled in five years to $2 billion. But it is also a huge part of the economy.

The Massachusetts Biotechnology Council, which is leading the opposition to drug pricing controls, reports that jobs in the life sciences grew 28 percent from 2008 to 2017, totaling nearly 70,000 and accounting for $10.4 billion in wages.

Zach Stanley, the council's vice president of public affairs, said his organization is interested in "protecting the ongoing growth of the Massachusetts life sciences culture and continuing access to the drugs being developed here and across the country."

"I'm hopeful," Stanley said. "I think it's such an important issue and I hope the House understands what needs to be done to balance the needs of MassHealth and protect one of the leading businesses in Massachusetts."

The industry is rallying around an amendment offered by Rep. Edward Coppinger, a West Roxbury Democrat, that would prohibit the administration from publicly posting what it determines to be a reasonable price for drug.

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Drug makers worry that by eliminating the confidentiality around drug pricing, Massachusetts could reset the market not just here but across the country. They have also questioned the expertise of MassHealth and the Health Policy Commission to determine a "reasonable" price for a drug, which takes years of research and development to bring to market, and want guidelines established for how that analysis will be done.

House budget writers projected $28 million in savings to the state from its price-setting reform, while Gov. Baker estimated that it could save MassHealth $80 million next year if coupled with reforms to contracts with pharmacy benefit managers.

The discrepancy, one industry representative said, shows how much uncertainty exists about the impact of the drug pricing proposal.

The Coppinger amendment would also make sure that the Health Policy Commission could not refer a manufacturer to the attorney general for legal action if it refuses to comply with requests for records or to appear at a public hearing and answer questions about its pricing.

MassHealth director Dan Tsai said last month that the administration's proposal was merely an expansion of an existing regulatory process that was formed under a major cost control law. Tsai said prescription drug spending has shot up in a short period, largely due to high-cost drugs that can cost $1 million per person per year.