October 17, 2021

Volume XI, Number 290

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October 15, 2021

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Drug Pricing Transparency: Massachusetts’ Proposed Reporting Requirements

Massachusetts Governor Charlie Baker has restarted the discussion on health care cost containment in the Commonwealth with a proposed bill that contains a raft of initiatives. 

Read about the Proposed Facility Fee Ban.

Read about the Proposed Massachusetts Primary and Behavioral Health Care Spending Requirement.

Governor Baker’s proposed legislation, an Act to Improve Health Care by Investing in Value (the Act), would, in addition to the already existing health care professional transparency reporting requirements described below, impose a drug price reporting requirement on pharmaceutical drug manufacturers throughout the Commonwealth.

Current Reporting Requirements for Drug Manufacturers

Currently, under M.G.L. § 111N and the implementing regulations (105 CMR 970.000), pharmaceutical drug and medical device manufacturing companies that employ a person to sell or market a drug, medicine, chemical, device, or appliance in the Commonwealth are required to disclosure data relating to provision of economic benefits to health care providers annually to the Massachusetts Department of Public Health. Specifically, manufacturers must disclose the value, nature, purpose, and particular recipient of any fee, payment, subsidy, or other economic benefit with a value of at least $50, which the company provides either directly or via an agent to a “covered recipient” in connection with the company's sales and marketing activities. In Massachusetts, a “covered recipient” is defined as any person authorized to prescribe, dispense, or purchase prescription drugs or medical devices in Massachusetts, including a physician, hospital, nursing home, pharmacist, health benefit plan administrator, or a health care practitioner.

Proposed Additional Reporting

If passed, the Act would also require pharmaceutical manufacturers to disclose information relating to the pricing of their drug(s) to the Health Policy Commission (HPC). The Act requires reporting the following information:

  • A schedule of the drug’s wholesale acquisition cost (a pharmaceutical manufacturer's list price for a drug to wholesalers or direct purchasers not including discounts or rebates) increases over the previous five calendar years;

  • The manufacturer’s aggregate, company-level research and development, and other relevant capital expenditures, including facility construction, for the most recent year for which final audited data are available;

  • A written, narrative description, suitable for public release, of factors that contributed to reported changes in wholesale acquisition cost during the previous five calendar years; and

  • Any other information that the manufacturer wishes to provide to the HPC.

The information disclosed by manufacturers will not become public records and will remain confidential.

Risks and Consequences of the Proposed Transparency Requirements

Based on the records furnished, the HPC may identify a proposed value for a prescribed drug. Within sixty days of receiving the required information from the manufacturer, the HPC is required to issue a determination on whether the manufacturer’s pricing of a drug is unreasonable or excessive in relation to the HPC’s proposed value of the drug. The consequences of such a determination were not articulated in the Act.

The Act includes a penalty provision for pharmaceutical manufacturers who fail to timely comply with the HPC’s request. The HPC notes that it aims to promote compliance with the reporting requirements, therefore, it would only impose a civil penalty (including monetary penalties up to $500,000 in each instance) on manufacturers as a last resort.

Takeaway

If the Act is passed, Massachusetts would join the ranks of states that already collect data on drug costs from their pharmaceutical manufacturers such as Louisiana, Maine, and Nevada. The proposed Act provides an opportunity for pharmaceutical manufacturers to begin considering implementation and compliance, e.g., how internal systems may need to be adjusted to accommodate the required reporting under the Act and who within each company will be tasked with reporting, management, and oversight.

© 2021 Foley & Lardner LLPNational Law Review, Volume IX, Number 353
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About this Author

Kyle Faget, Foley Lardner, Government policy lawyer
Partner

Kyle Faget is a Partner and business lawyer with Foley & Lardner LLP. She is a member of the firm’s Government & Public Policy Practice and the Health Care and Life Sciences Industry Teams. Her practice focuses on advising clients on regulatory and compliance matters involving the Food, Drug & Cosmetic Act, the False Claims Act, the Anti-Kickback Statute, the AdvaMed Code, and the PhRMA Code. She also regularly drafts and negotiates agreements required for the development and commercialization of pharmaceutical and medical device products. Prior to joining...

617.502.3292
Alexandra Shalom Health Care Lawyer Foley Lardner
Associate

Alexandra (Allie) Shalom is an associate and health care business lawyer with Foley & Lardner LLP, and a member of the firm’s Health Care Practice Group.

Allie's practice focuses on counseling clients in the health care, pharmacy, and medical device industries with respect to a wide range of regulatory and compliance matters. Her experience includes advising clients on Medicare and Medicaid reimbursement; internal investigations; managed care and value based payment arrangements; self-disclosures; federal and state fraud and abuse compliance; and state licensure issues. She also...

617-502-3272
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