New law enhances Massachusetts’ oversight of pharmaceutical industry, lowering costs and saving lives

Includes oversight reforms to improve affordability of and access to prescription drugs

On January 9, 2025, Governor Maura Healey signed An Act Relative to Pharmaceutical Access, Costs and Transparency into law as Chapter 342 of the Acts of 2024. In 2003 and 2004, the Massachusetts Senate and House had passed their own versions of this legislation and had resolved the differing versions in a conference committee before enacting the legislation on December 30, 2024, and placing it on the governor’s desk. Chapter 342 requires health insurers to cover life-saving medications for diabetes, asthma and certain heart conditions with no or limited out-of-pocket costs for patients. The measure is particularly critical for residents of color, who disproportionately face chronic illnesses.

For each condition, Chapter 342 requires insurers to eliminate cost-sharing requirements for one generic drug and to cap copayments on one brand-name drug at $25 per 30-day supply. It further brings down consumer costs by ensuring that consumers are not charged a cost-sharing amount, such as a copay, if it would be cheaper for them to purchase the drug without using their insurance.

“Ensuring that patients with chronic illnesses are able to afford the lifesaving medications that are prescribed to them is a prerequisite for establishing health care as a human right, which is why the price caps included in this legislation are so important. At the same time, it is also imperative that lawmakers and regulators have insight into the complex inner workings of the pharmaceutical industry, as that access will make future, necessary reforms possible,” said House Speaker Ronald J. Mariano (D-Quincy). “I want to thank Chairman Lawn and the members of the conference committee for their hard work, as well as all my colleagues in the House and our partners in the Senate for voting to send this critical legislation to the Governor’s desk for her signature.”

“The Speaker’s leadership will forever be remembered as transformative in shaping health care and health insurance policy in Massachusetts. This bill is another key victory in his legacy. By holding pharmacy benefit managers accountable, we are taking crucial steps to lower prescription drug costs for all. The price reductions for generic medications, especially those most commonly used, will have a profound impact on our communities, particularly for those on fixed incomes struggling with the high cost of medication,” said State Representative Jessica Giannino (D-Revere).

“Speaker Ron Mariano will go down in the Commonwealth’s history as the most influential legislator with respect to health care and health insurance law. This important legislation is just another example of his influence. Holding pharmacy benefit managers accountable is a long overdue step to reducing the costs of prescription drugs. Statutory price reductions for generic drugs for the most commonly used medications will benefit all of us. This important law will be lifechanging for our fellow citizens on a fixed income struggling to pay the cost of prescription drugs,” said State Representative Jeffrey Rosario Turco (D-Winthrop).

Approximately nine percent of Massachusetts residents have diagnosed diabetes, and 6.2 percent of adults over 35 live with heart disease. In 2015, more than 10 percent of residents lived with asthma. Black residents face each at a higher rate: over 12 percent live with diabetes and nearly 14 percent of Black adults live with asthma.

Chapter 342 drastically increases state oversight of pharmacy benefit managers (PBMs), which currently negotiate prescription drug prices with little oversight, making it unclear if they consistently act in the best interest of consumers. To do so, the legislation authorizes the Division of Insurance to license and regulate PBMs. PBMs are also prohibited from making payments to pharmacy benefit consultants or brokers who work on behalf of health plan sponsors during a contracting or bidding process.

To create a more complete data-driven picture of drug costs in Massachusetts, the Center for Health Information and Analysis (CHIA) will collect a range of drug cost information from pharmaceutical manufacturers and PBMs. With the data, CHIA can offer a more complete examination of the drivers of health care costs in its annual health care cost report, allowing policymakers and consumers to better understand the role of pharmaceutical manufacturers and PBMs in the health care system.

In addition to CHIA’s cost analysis, pharmaceutical manufacturers and PBMs will be included in the Annual Health Care Cost Trends Hearing of the Health Policy Commission (HPC) for the first time. Participation in the annual hearings will require manufacturers and PBMs to provide public testimony on the factors that influence drug costs, allowing those factors to be taken into account as HPC identifies how to improve care and reduce costs for residents.

Further, Chapter 342 establishes the Office for Pharmaceutical Policy and Analysis within HPC, which will be tasked with analyzing trends related to pharmaceutical access, affordability and spending in Massachusetts. The office will publish an annual report with recommendations for strategies to mitigate pharmaceutical spending growth, promote affordability and enhance pharmaceutical access.