Internet Explorer 11 is not supported

For optimal browsing, we recommend Chrome, Firefox or Safari browsers.

Feds Reject Massachusetts' Unprecedented Idea for Lowering Drug Prices

The Trump administration turned down Massachusetts’ first-in-the-nation request to exclude certain drugs from its Medicaid program to gain bargaining power with pharmaceutical companies over prices.

By Michael Ollove

The Trump administration turned down Massachusetts’ first-in-the-nation request to exclude certain drugs from its Medicaid program to gain bargaining power with pharmaceutical companies over prices.

Under current law, all state Medicaid agencies must carry all drugs approved by the U.S. Food and Drug Administration in return for drugmakers providing statutorily determined rebates. In its request, Massachusetts said that if it had the power to exclude drugs from its Medicaid plan, it would be able to extract better prices.

In its application to the Centers on Medicare and Medicaid Services (CMS), Massachusetts said that high prices for prescription drugs, particularly for specialty drugs, are financially crippling for its Medicaid agency. Massachusetts’ Medicaid spending on prescription drugs rose by 19 percent between 2014 and 2016, according to the state Department of Health and Human Services.

In its denial, CMS said it “supports the State's goal of lowering drug costs, and will continue to provide technical assistance on options to test innovative drug coverage mechanisms.” However, the agency noted that in its application, the state said it expected to continue receiving manufacturing rebates even while trying to negotiate better prices with drugmakers. That, CMS said, would violate federal law.

Massachusetts hoped to operate a closed Medicaid formulary — the list of drugs covered by a health plan — just as Medicare Part D and commercial insurers do now. The state also proposed to conduct its own evaluation of the effectiveness of new drugs in relation to other drugs in the same class, and use that information to get better prices from manufacturers.

Under its plan, the state could have only excluded drugs if other medications in its formulary treated the same illnesses or conditions. It also established an appeal process for patients to challenge the exclusions.

Many organizations advocating for patients with specific illnesses such as cancer and heart disease opposed Massachusetts’ application, saying the plan would deny life-saving medication to patients. The pharmaceutical industry also opposed the proposal.

Even while turning down Massachusetts’ application, the Trump administration has indicated that it wants to launch pilot projects in five states to experiment with closed Medicaid formularies and negotiated prices with drugmakers. Based on yesterday’s ruling, however, it appears that states would have to forgo at least some of the rebates they receive now.

Caroline Cournoyer is GOVERNING's senior web editor.
Special Projects
Sponsored Stories
Sponsored
In recent years, local governments have been forced to adapt to a wildly changing world, especially as it pertains to sending bills and collecting payments.
Sponsored
Workplace safety is in the spotlight as government leaders adapt to a prolonged pandemic.
Sponsored
While government employees, students and the general public had to wait in line for hours in the beginning of the pandemic, at-home test kits make it easy to diagnose for the novel coronavirus in less than 30 minutes.
Sponsored
Governments around the nation are working to design the best vaccine policies that keep both their employees and their residents safe. Although the latest data shows a variety of polarizing perspectives, there are clear emerging best practices that leading governments are following to put trust first: creating policies that are flexible and provide a range of options, and being in tune with the needs and sentiments of their employees so that they are able to be dynamic and accommodate the rapidly changing situation.
Sponsored
Service delivery and the individual experience within health and human services (HHS) is often very siloed and fragmented.
Sponsored
In this episode, Marianne Steger explains why health care for Pre-Medicare retirees and active employees just got easier.
Sponsored
Government organizations around the world are experiencing the consequences of plagiarism firsthand. A simple mistake can lead to loss of reputation, loss of trust and even lawsuits. It’s important to avoid plagiarism at all costs, and government organizations are held to a particularly high standard. Fortunately, technological solutions such as iThenticate allow government organizations to avoid instances of text plagiarism in an efficient manner.
Sponsored
Creating meaningful citizen experiences in a post-COVID world requires embracing digital initiatives like secure and ethical data sharing, artificial intelligence and more.
Sponsored
GHD identified four themes critical for municipalities to address to reach net-zero by 2050. Will you be ready?