Health Care

Mass. lawmakers consider pharmacy benefit manager reform

A national lobbying fight is exploding in state legislatures.
A CVS Pharmacy retailer drug store with a MinuteClinic and Health Hub is in the Harlem neighborhood of New York City on Friday, March 3, 2023. (AP Photo/Ted Shaffrey)

A national fight between health care behemoths is moving to state legislatures as lawmakers in Massachusetts began considering this week a measure that would dramatically shift power between pharmacy benefit managers and the pharmaceutical companies and hospitals who rely on them for access to drugs.

Pharmacy benefit managers manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other organizations that then distribute drugs to patients. While they operate behind the scenes, they impact the supply chain in a number of ways, determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid.

The three largest pharmacy benefits managers – Express Scripts (owned by Cigna), CVS Caremark (part of CVS Health), and OptumRX (owned by UnitedHealth Group) — control 85% of prescription drug benefits in the US.

The managers have been engaged in a massive lobbying battle with the Pharmaceutical Research and Manufacturers of America, one of Washington’s most powerful lobbying forces, and a coalition of pharmacies, labor unions and patient advocates.

As they await federal action, some states are taking up their own legislation.

In Massachusetts, the legislature’s Joint Committee on Health Care Financing this week heard testimony on legislation that would require pharmacy benefit managers to be licensed, provide “a reasonably adequate and accessible network” for patients to obtain prescription drugs and prohibit pharmacy benefit managers from retroactively reducing payments on a claim.

It would also provide for the use of generically equivalent drugs and ban so-called “spread pricing” – when a pharmacy benefit manager chargers health insurers, drug plans or large employers more for a drug than the benefit managers reimburse the pharmacy, pocketing the difference.

The committee is also considering measures that would place new requirements on pharmacy benefit manager compensation and outline “duty of care” requirements for pharmacy benefit managers that prioritize patients over other entities. 

Former Massachusetts Gov. Jane Swift (R) testified for the first time in two decades at a legislative hearing this week, appearing alongside her 22-year-old daughter to advocate for a package of bills aimed at reigning in pharmacy benefit managers, the middlemen who negotiate prescription drug prices.

Swift, who served as a Republican governor from 2001 to 2003, said she was compelled to return to the Beacon Hill – and encouraged her daughter Lauren Hunt to “step into the spotlight” – because of her family’s personal experience with an industry that has attracted national scrutiny in recent years, as lawmakers at both the state and federal level seek to address the high cost of prescription drugs. 

Swift said years of refilling prescriptions for her daughter’s juvenile arthritis had put her squarely on the side of reformers who argue that pharmacy benefit managers’ increasingly dominant position in the healthcare marketplace has made it harder and more expensive for patients to access the medication they need. 

“This is about a system that fails to protect vulnerable patients across the Commonwealth every day,” Swift said.

Donning a pair of cherry-red eyeglasses that she joked she didn’t need “back in the day,” Swift noted that many in her audience would remember Hunt from her first turn in the public spotlight. Swift became the first governor in American history to give birth while in office when Hunt and her twin sister were born in 2001.

“Some of you are likely surprised to learn that my twins will graduate from college this year,” she said. 

Now Hunt sat next to her mother as Swift described a series of “maddening interactions” last winter after Hunt lost access to the drugs she relies on to treat chronic pain. Swift compared the situation to the experience of stranded air travel passengers.

“Unlike canceled flights and lost luggage, there is no requirement or way to know when this system – providing the most critical drugs to patients – completely fails,” she said. “How can that be?”

Hunt testified that the arthritis symptoms she has had since a childhood bout with parvovirus had left her at the mercy of the pharmacy benefit managers who control access to her medication. When a PBM fails to fill her prescription – as it did last winter – she is left without recourse, she said. 

“I have the best rheumatologist in the country,” she said. “I now pay for not only one, but two ‘great’ insurance plans. I have a mother who was the former governor of Massachusetts. I have a degree from a prestigious U.S. university. Yet my ‘access’ to the medications I need — to live not only a healthy lifestyle, but one where I can simply get out of bed in the morning — is nonexistent.”

Federal legislation has been spurred by a surge in state legislative efforts to increase regulation of pharmacy benefit managers. 

Sam Hallemeier, director of state affairs for the Pharmaceutical Care Management Association, defended the industry at the Massachusetts hearing. 

“No one is required to use a PBM,” he said. “Plans choose to do so because PBMs save on prescription drug costs. PBMs are the only entity in the drug supply chain that exists to increase competition and drive down costs. We’re concerned that attempts to remove PBM tools will increase costs, lower competition and, at times, add no value to patient care or outcomes.”

That prompted a rebuke from both committee co-chairs. 

“We need a little more help from you guys than just, ‘It’s not our problem. We don’t do anything wrong. We care. We keep costs of drugs down, which clearly you don’t because our drug prices are increasing every day,” co-chair Sen. Cindy Friedman said. 

“I don’t mind if you guys make money,” she continued. “I really, really don’t. It’s really okay. But the amount of money is, it’s almost obscene, and it’s on the backs of people who need medication and who can’t afford it. So please take that back to your organization.”

State Rep. John Lawn (D), the primary sponsor of the Massachusetts legislation and the committee’s co-chair, accused pharmacy benefit managers of taking a “mob-like approach” to negotiations.

“When you have a group that comes into this and injects itself into this drug supply chain that does not innovate, does not do anything in research and development, and extracts billions and billions and hundreds of billions of dollars, it’s hard to say how those are lowering drug costs unless there’s some transparency,” he said. “Show us, then. Show us how. Itemize it. The industry would be welcome to sit down and try to help us break down these costs and show us how. We hear so often that if they give us any transparency, it’s going to raise drug prices, and I just find that very hard to believe.”