The recently passed legislation does what this council requested – it brings together pharmaceutical manufacturers and pharmacy benefit managers as part of the Massachusetts Health Policy Commission’s health care cost evolution process. This process currently provides oversight and transparency for insurers and hospitals. Its expansion will require drugmakers and PBMs to provide financial reports to state regulators and allow state regulators to publicly report drug prices, bringing much-needed transparency to the industry. Representatives of these groups are expected to testify at a public hearing.
However, unlike insurers and hospitals, there would be no mechanism to hold drugmakers or PBMs accountable for meeting a particular level of cost growth.
Notably, the bill does not substantially change how PBMs can operate, although it would require them to obtain a Massachusetts license with certain rules related to conflicts of interest. PBMs have been accused of various practices who extract profits while driving up drug prices. But increasing transparency is a first step in the right direction, as it will allow policymakers to better understand what additional reforms are needed. Congress can also impose national rules governing PBMs.
Another major change is that the bill would require insurers to cover a generic drug used to treat diabetes, asthma and the two most common heart diseases without cost sharing and to cover a brand-name drug for those conditions at a maximum price of $25 for $30. one-day supply, starting July 1, 2025. Consumer advocacy organization Health Care for All has pushed for the policy to make medications more affordable for common chronic conditions that disproportionately affect people of color and people with low incomes.
This is an important objective. But the problem with requiring insurance coverage without limiting drug prices is that the policy simply shifts costs from consumers to insurers, and increased costs from insurers are passed on to all consumers by through higher premiums. The Massachusetts Association of Health Plans estimates that the new rules would increase pharmaceutical spending for all premium payers by about 1 percent per year.
State regulators would be required to review the no-cost-sharing program every two years. Although there will likely be pressure from patient advocacy groups to increase the number of drugs for which cost-sharing is prohibited, regulators will need to carefully weigh the benefits of increased access to drugs versus increasing costs borne by all consumers who pay high premiums.
The market oversight bill is important because, as the Steward Health Care bankruptcy showed, existing state laws are inadequate to ensure the financial stability of health care organizations. Essentially, this bill expands existing state oversight mechanisms to cover all players involved in the modern healthcare system and the myriad types of transactions that take place. This would result in additional state reporting requirements and increased scrutiny of transactions involving private equity firms, real estate investment trusts and management services organizations.
Steward put the hospitals in debt by selling the properties they were on and then charging the hospitals rent. This legislation prohibits the leaseback of a hospital’s main campus and requires hospitals to disclose leasing information in license applications.
The bill would restart a statewide health planning process, giving the Health Policy Commission authority to analyze which health care services are needed in which regions of the state.
Recognizing the growing burden on consumers’ finances, the bill requires the Division of Insurance to consider consumer affordability when approving health insurance rates. But neither bill does anything to contain health care costs.
One of the problems with the procrastination of Parliament is that there is no possibility of exchanges with the governor, whose only options are to sign the bill or let it die, since Parliament has finished his session. And there are complexities – and potentially political considerations at play – in these bills.
For example, in reforming the Health Policy Commission, the Legislature removed the power of the state auditor to appoint three members, giving that power to the governor with input from the Legislature. Auditor Diana DiZoglio, who has a difficult relationship with the Legislature she is trying to audit, said the change hinders independent oversight and “is a blatantly selfish and pure retaliation to take power from my office and give it to yourselves.”
(A spokesman for House Speaker Ron Mariano said there would be no less oversight, since auditor appointees do not conduct audits. “This legislation ensures that members of the HPC board or appointing authorities play an active role in overseeing the state’s health care system. It redistributes appointments given to the State Comptroller and removes the seat held by the Secretary of Administration. and Finance for the benefit of the Commissioner to Insurance”, declared the spokesperson.)
This power play, however, is not a sufficient reason to defeat the legislation. And neither is the fact that bills don’t really incur costs. State Sen. Cindy Friedman (D-Arlington), who co-chairs the Joint Committee on Health Care Financing, described the package in her remarks on the Senate floor as “a first step.” The next step will be to monitor these reforms and continue to review additional changes needed to control costs and limit business practices that do not put patients first.
Editorials represent the opinions of the Boston Globe editorial board. Follow us @GlobeOpinion.