The Massachusetts budget bill signed by Governor Deval Patrick on July 8 contained several provisions of particular relevance to manufacturers of prescription drugs and biologicals. One such provision amended the state’s anti-kickback law to provide a limited exception for co-pay assistance and other discounts on biologicals and prescription drugs.
The Massachusetts statute (Mass. Gen. Laws ch. 175H, § 3) contains a broad prohibition on soliciting, receiving, offering, or paying remuneration in return for purchasing, or to induce a person to purchase, any good, facility, service, or item for which payment may be made by a healthcare insurer. Amendments to the law made by the budget bill now explicitly exclude certain cost-reduction arrangements from the law’s coverage.
Specifically, the following practices are now allowed under the statute:
- discounts or free product vouchers that a retail pharmacy provides to a consumer in connection with a pharmacy service, item, or prescription transfer offer, and
- discounts, rebates, product vouchers, or other reductions in an individual’s out-of-pocket expenses (including copayments and deductibles), on a biological or prescription drug, so long as the discount, rebate, product voucher, or other reduction is provided directly or electronically to the individual or through a point of sale or mail-in rebate or through similar means.
However, these exclusions are subject to the following restrictions:
- the manufacturer may not exclude or favor any pharmacy in the redemption of the discount, rebate, product voucher, or other reduction; and
- the manufacturer may not offer any discount, rebate, product voucher, or other reduction in price for any prescription drug that has an AB rated generic equivalent as determined by the FDA.
Massachusetts’ amendments, effective July 1, 2012, mean that manufacturers may now provide privately-insured state residents with coupons, co-pay cards, vouchers, and other cost-sharing reductions for their prescription drugs and biologicals as long as the restrictions noted above are followed. Massachusetts residents enrolled in Medicare, Medicaid, and other federal health care programs still are subject to the federal anti-kickback law prohibitions, however.