PAYANO: MA Senate Passes PACT Act 3.0 for Affordable Healthcare


Massachusetts State Senator Pavel Payano
December, 2023

In a historic move, the Massachusetts Senate unanimously passed the Act Relative to Pharmaceutical Access, Costs, and Transparency, commonly known as the PACT Act 3.0, on November 15, 2023.

This bipartisan legislation is a crucial step in urgently needed reforms to address the rising costs of prescription drugs and enhance transparency in our state’s pharmaceutical system.

The bill received widespread acclaim, finding broad support among legislators. Senate President Karen E. Spilka (D-Ashland) underscored the urgency of providing immediate relief from the escalating costs of prescription drugs, underscoring its alignment with the Senate’s steadfast commitment to affordability, equity, and transparency. In her words, “The urgency of relieving prescription drug costs becomes paramount when lives are on the line.

I eagerly anticipate the bill’s enactment, envisioning a future where residents and seniors paying a visit to the pharmacy counter will witness a tangible reduction in the costs of vital medications. This legislative reform mirrors the Senate’s unwavering dedication to addressing affordability, equity, and transparency, ensuring the Commonwealth remains a competitive and thriving place to live and work.”

Senator Michael J. Rodrigues (D-Westport), Chair of the Senate Committee on Ways and Means echoed these sentiments, expressing his satisfaction with the Senate’s approval of the crucial prescription drug legislation. As the Chair of the Senate Committee on Ways and Means, he emphasized the bill’s transformative impact on healthcare accessibility and affordability.

In his words, “Healthcare is all about accessibility and affordability, and this reform-minded, consumer-focused bill will allow increased access to prescription drugs while also considerably driving down the cost of everyday medications. I thank Senator Friedman for her leadership on this and many healthcare issues, as this bill will literally save lives.”

The bill’s proponent, Senator Cindy F. Friedman (D-Arlington), a recognized leader in healthcare reform, conveyed her contentment with its passage and underscored its vital implications for accessibility and affordability. Senator Friedman, who serves as the Senate chair of the Joint Committee on Health Care Financing, highlighted Massachusetts’ pioneering role in healthcare services and the life sciences sector.

She stated, “This bill begins to meet the urgency of this challenge by eliminating cost-sharing for generic drugs and capping out-of-pocket costs for brand name drugs used to treat insulin, asthma, and the most prevalent heart conditions. In addition, this legislation will provide much-needed relief for certain high-cost drugs, improve patient access to medications and pharmacies of their choice, and enhance transparency and oversight within the pharmaceutical industry. I thank President Spilka, Chair Rodrigues, my Senate colleagues, and the many stakeholders who helped craft and improve this pressing legislation. Massachusetts deserves a healthcare system that delivers affordable, high-quality, and accessible care to all our residents, and this bill brings us one step closer to that goal. I hope this is the year we can get this bill signed into law.”

Key Highlights of the PACT Act 3.0
Lowering Costs for Life-Saving Medications:

The legislation focuses on providing immediate price relief and reducing out-of-pocket spending for prescription drugs treating diabetes, asthma, and chronic heart conditions. Importantly, it addresses disparities affecting Black and brown residents.

To achieve this, the bill mandates insurers to eliminate deductibles and cost-sharing for one generic drug and caps co-payments on one brand-name drug at $25 per 30-day supply. This approach aims to improve access and mitigate the financial burden that often leads to the dangerous practice of rationing life-saving drugs.

Ensuring Patients’ Preferred Pharmacy Access:

The PACT Act 3.0 takes significant strides to ensure patients can obtain prescription drugs from their chosen pharmacies. It empowers independent pharmacists to dispense specialty medications and allows any network pharmacy to contract with carriers for mail-order prescriptions. This change disrupts the current practice of carriers determining available pharmacies for mail-order prescriptions.

Holding Drug Companies Accountable:

Enhanced accountability tools in the bill address rising medication costs and barriers to care. It empowers the Health Policy Commission (HPC) to identify high drug prices creating access barriers and recommend measures to increase patient access. Non-compliant pharmaceutical manufacturers face fees directed to a trust fund for a new drug cost assistance program.

Pharmacy Benefit Manager (PBM) Oversight:

To combat a potential driver of rising healthcare costs, the legislation introduces crucial oversight for Pharmacy Benefit Managers (PBMs), integral players in shaping the tiering and pricing of prescription drugs within insurance plans. PBMs are supposed to serve as intermediaries among health insurers, pharmaceutical manufacturers, and pharmacies, overseeing the management of prescription drug benefits for insurance plans. Their responsibilities include negotiating drug prices with manufacturers, establishing pharmacy networks, and processing prescription drug claims. Despite their intended role in streamlining the prescription drug supply chain, PBMs lack transparency and have had an impact in increasing drug pricing. Their practices such as rebate negotiations and formulary management contribute to increased costs for patients and restricted access to certain medications.

The PACT Act 3.0 seeks to address these concerns by implementing oversight and regulation for PBMs, ensuring alignment with the best interests of consumers and the broader healthcare system. Currently, PBMs operate with minimal oversight, leaving uncertainties about whether they prioritize the best interests of consumers or health plans during negotiations with pharmaceutical manufacturers.

Under the PACT Act 3.0, the Division of Insurance (DOI) is empowered to address this gap by instituting essential oversight through the licensing and regulation of PBMs, coupled with sanctions for those failing to meet specified standards.

Furthermore, both pharmaceutical manufacturers and PBMs will now participate in the Health Policy Commission’s (HPC) annual Cost Trends Hearings for the first time. This inclusion in the hearing process mandates the provision of public testimony regarding the factors influencing drug costs, accompanied by supporting documentation. The HPC will leverage this information to conduct a thorough analysis of how pharmaceutical industry costs impact the state’s healthcare market, ultimately influencing the overall cost of healthcare for residents of Massachusetts.

Protecting 340B and Future Steps:

I am proud to have contributed to the bill’s success by introducing an amendment to ensure safety net hospitals and community health centers can purchase discounted drugs through the federal 340B program.

The amendment was a crucial measure aimed at safeguarding the integrity of the 340B program, particularly benefiting our safety net hospitals and community health centers. Recognizing the paramount importance of quality and affordable healthcare access in my district, as well as in Gateway Cities and BIPOC communities statewide, it is evident that our safety net hospitals and community health centers serve as a lifeline for countless low-income and uninsured residents.

Safety net hospitals, exemplified by Lawrence General Hospital with the highest urban, stand-alone community hospital inpatient volume of 10,543 discharges and 14,280 patients in FY22, and community health centers such as the Greater Lawrence Family Health Center operating across seven community locations in Haverhill, Lawrence, and Methuen, play a pivotal role in delivering a diverse array of essential services.

At the heart of this support is the 340B program, a federal program that empowers institutions like Lawrence General and the Greater Lawrence Family Health Center to acquire pharmaceutical drugs at discounted rates from manufacturers. This program significantly enhances the financial flexibility of our safety net hospitals and health centers, allowing them to expand services and deliver a more comprehensive level of care. Notably, the Lawrence Family Health Center has utilized its savings to hire translators, community health workers, fund medication therapy management, and broaden pharmacy access.

However, recent challenges emerged as drug manufacturers and distributors imposed restrictive measures on 340B-covered entities, hindering the utilization of third-party contract pharmacies. Beginning in 2020, these restrictions, varying between manufacturers, limited health centers to a single contract pharmacy or, in some cases, barred their use altogether if the health center had an in-house pharmacy. This impediment made it harder for health centers to procure and distribute 340B drugs, subsequently restricting funds available for patient services.

To address this issue, I presented an amendment that will rectify existing ambiguities at the state level by explicitly prohibiting manufacturers and distributors from obstructing the acquisition or delivery of a 340B drug to a pharmacy under contract with a federally qualified 340B health center or a safety net hospital. While this amendment is a crucial step toward ending discrimination against 340B program participants, it is acknowledged that it doesn’t cover all entities.

As we move forward, we remain committed to expanding protections for all 340B-covered entities and addressing discriminatory practices. Together with my bill, S.704, aimed at prohibiting practices by Pharmacy Benefit Managers, we strive to restore the intent of the program and ensure accessible, affordable healthcare for all Massachusetts residents.

The PACT Act 3.0 now awaits consideration in the Massachusetts House of Representatives. As we champion comprehensive pharmaceutical reform, I am optimistic about the positive impact this legislation will have on the health and well-being of our communities. ◊