Reasons To Reject Massachusetts’ Misguided Drug Pricing Bill

Massachusetts state legislators are considering a dangerous bill that could stifle innovation, limit patients’ access to medicines, and interfere with market competition. The bill would grant the state government broad authority to arbitrarily set the prices of medications, which could threaten the biopharmaceutical industry’s contributions to the state’s economy.

We all share the goal of ensuring that life-saving medicines are accessible and affordable for all, but this misguided bill is not the solution. Massachusetts lawmakers should reject this proposal because it could: 

•  Undercut innovation and stall the development of groundbreaking medicines. The proposal puts power in the hands of a government-run board of bureaucrats to set arbitrary drug price controls that could undermine the competitive market. 
   
•  Limit patients’ access to crucial medicines. Capping prices or profits within the drug supply chain could restrict patients’ access to medicines. Studies have shown that in countries with price controls, high percentages of patients have experienced delayed access to new drugs that treat challenging diseases like cancer.¹
   
• Harm the Massachusetts economy. This bill could threaten the positive impact of the biopharmaceutical industry in supporting high-quality jobs that are a vital part of the state’s economy. In 2017, the biopharmaceutical sector in Massachusetts directly accounted for 60,738 jobs and supported another 223,621 jobs in the state, for a total of 284,359 jobs. These jobs generated over $5.5 billion in state and federal tax revenue for Massachusetts in 2017. This bill could jeopardize these jobs and tax revenues.
   
• Do nothing to stop middlemen from siphoning off rebates. Price controls do nothing to address the issue of middlemen — insurers, pharmacy benefit managers, and others —retaining prescription drug rebates instead of passing those savings to patients.²  In 2020, about $187 billion of substantial rebates, discounts, and other price concessions did not make their way to patients at the pharmacy counter.³

Instead of misguided price controls, the Massachusetts legislature must focus on reforms that protect medical innovation and create meaningful savings for patients. These reforms include encouraging market competition and ensuring that patients receive the rebate savings they deserve.

¹PhRMA analysis of IQVIA Analytics Link and FDA, EMA and PMDA data. January 2019. Note: New Active Substances (NAS) approved by the FDA, EMA, and/or PMDA and first launched in any country between January 2011 and September 2018. Average delay represents the time in months since global first launch among NAS that
²BRG: Revisiting the Pharmaceutical Supply Chain 2013–2018. January 2020.
³ Fein, A. “The 2021 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers,” Drug Channels Institute. March 2021.