Massachusetts, a Health Pioneer, Turns Its Focus to Drug Prices. It’s in for a Fight.

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Massachusetts officials said they were proud of coverage gains made since 2006, when the state adopted a health law that served in many ways as a model for the Affordable Care Act, signed four years later by President Barack Obama.

But drug spending in the Massachusetts health program has doubled in the last five years, to $2.2 billion, and it threatens to “crowd out important spending on health care and other critical programs,” the state said in asking the Trump administration for the Medicaid waiver.

In Massachusetts, Medicaid and the Children’s Health Insurance Program are combined into one program called MassHealth, which accounts for about 40 percent of the state budget.

Marylou Sudders, the state’s secretary of health and human services, pointed to one reason for growing costs: a steady increase in the number of residents enrolled in MassHealth, which covers nearly 30 percent of state residents, and a simultaneous decline in the proportion of people covered by commercial insurance.

To manage the rising drug spending, Massachusetts — under Gov. Charlie Baker, a moderate Republican — says it wants to use the same tools that have been widely employed by commercial insurers. State officials want to establish a list of covered drugs — what they describe in their proposal as “a commercial-style closed formulary with at least one drug available per therapeutic class.”

With the ability to exclude drugs, the state said, it will be able to negotiate better deals with drug manufacturers, guaranteeing them additional sales for the drugs it does cover, in return for larger discounts, or rebates.


Gov. Charlie Baker of Massachusetts, a moderate Republican, is seeking a Medicaid waiver to address surging drug costs.

Jose Luis Magana/Associated Press

“State officials want to be able to exert the market leverage they believe they should have as a very large purchaser of prescription drugs, without being constrained by what they see as arcane and obsolete federal rules,” said Tom Dehner, a former Medicaid director in Massachusetts.

Massachusetts said it also wanted to “use its own rigorous review process” to identify new drugs whose clinical benefits have not been proved. In this way, it said, “the state could avoid exorbitant spending on high-cost drugs that are not medically necessary.”

Mr. Trump’s budget for the coming year includes a legislative proposal for a Medicaid demonstration project that would allow five states to “determine their own drug formularies,” much as Massachusetts wants to do. Medicaid officials in Arizona said they, too, would like more discretion to decide which drugs will be covered.

Among those that have criticized the Massachusetts proposal are Health Care for All, a consumer advocacy group in Boston; the American Medical Association; the American Academy of Pediatrics; the American Cancer Society’s Cancer Action Network; the American Diabetes Association; the National Alliance on Mental Illness; and drugmakers including Amgen, Johnson & Johnson, Eli Lilly, Merck, Pfizer and Teva.

“The proposed waiver will reverse Massachusetts’ standing as a leader in public health and harm low-income patients who depend on Medicaid,” said Harold P. Wimmer, the chief executive of the American Lung Association. The possibility of making available just one drug in a therapeutic class is a real threat to patients with lung cancer or asthma, who often need more than one medication, he said in a letter to federal health officials.

Nonprofit groups that help people with diabetes, epilepsy and cystic fibrosis echoed that concern.

Sharon Torgerson, a spokeswoman for the health and human services office in Massachusetts, said that Ms. Sudders, the head of the agency, and Daniel Tsai, the state Medicaid director, would not comment on such criticism because the state was discussing its proposal with the federal government.

The objections from drugmakers are remarkably similar to the concerns expressed by patient advocacy groups.

The Massachusetts proposal “would dramatically limit access to lifesaving therapies for the poorest and most vulnerable patients,” Wayne M. Sichel, a pharmacist and lawyer at Bristol-Myers Squibb, said in comments sent to the Trump administration.

Dr. Joshua J. Ofman, a senior vice president of Amgen, said the proposed Medicaid waiver “would tear apart the basic bargain” enacted by Congress in 1990. Under the proposal, he said, Massachusetts would renege on its obligations, but would expect drug manufacturers to continue providing the price concessions required under the law. That, he said, is “fundamentally unfair.”

Massachusetts officials said they were targeting certain costly new drugs that had received “accelerated approval” from the Food and Drug Administration. Using this procedure, the agency can, for example, approve a medication that shrinks tumors without waiting for clinical trials to show whether patients actually live longer.

Patients’ advocates said that such drugs were sometimes the best option for people with life-threatening diseases.

Andy Schmeltz, a senior vice president at Pfizer, said that federal approval of the Massachusetts waiver “would undercut F.D.A.’s role, by substituting the judgment” of state officials for that of experts at the federal agency.

Massachusetts said it would have “an exceptions process” that consumers could use to request coverage of drugs that are not on the formulary but might be medically necessary in individual cases.

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