THE BAKER ADMINISTRATION recently released its budget proposal for one of their most high-profile issues: drug prices in the Medicaid program. To the surprise of many in the biopharmaceutical industry, there are some promising initiatives in the proposal from an administration that is thought to be hostile to the industry on drug prices.
By far the most important provision in the proposal is the governor’s request for the authority to negotiate so-called “supplemental rebate payments” that are “based upon the value, efficacy or outcomes of the drug.” This is an extremely promising development for the Massachusetts biotechnology industry, which is churning out many new drugs for rare and life-threatening diseases that have very high price tags.