A report of the Executive Office of Health and Human Services (under Section 12A of Chapter 118E of the General Laws) submitting the Office of Medicaid’s MassHealth Direct Negotiations Legislative report for fiscal year 2025

194th Legislature (2025-2026)

MassHealth’s direct negotiations and value-based contracts with drug manufacturers saved about $584 million in annual net costs for FY2025, expanding rebates to more drugs and prov

Placed on file

Summary of Bill HD 5818 (Session 194th) – Massachusetts

Purpose and intent

This bill is an executive-branch report required under Section 12A of Chapter 118E of the General Laws.

The Executive Office of Health and Human Services (MassHealth) is submitting the MassHealth Direct Negotiations Legislative Report for fiscal year 2025.

The report documents MassHealth’s direct negotiation activity with pharmaceutical manufacturers for supplemental rebate agreements, and highlights outcomes, savings, and value-based payment (VBP) arrangements.

Key provisions and changes

Documentation of authority: Reiterates that since July 2019, MassHealth has had the authority to directly negotiate supplemental rebates with drug manufacturers (Section 46 of Chapter 41 of the Acts of 2019; codified in Mass. Gen. Laws ch. 118E, §12A).

Direct-negotiation results for FY2025:

As of July 1, 2025, MassHealth had active direct-negotiated supplemental rebate agreements with 32 manufacturers covering 83 drugs.
Total annual incremental savings from these agreements: approximately $584 million.

Value-based contracts (VBP):

Six manufacturers have contracts that qualify as VBPs, covering 9 drugs.
VBPs tie rebate amounts to clinical outcomes data (efficacy, utilization) or employ alternative payment models.
Examples of VBPs: outcomes-based refunds if a therapy is ineffective or requires extended therapy; payment adjustments based on real-world performance.

Basis for comparison to prior year:

FY2024 summaries cited: agreements with 21 manufacturers for 72 drugs, with roughly $450 million in annual incremental savings.
Noted increases in the number of contracts and in savings due to higher utilization and additional terms.

Manufacturer list:

The report provides a table listing participating manufacturers and the specific drugs under direct-negotiated supplemental rebates (examples include AbbVie, Amgen, AstraZeneca, Eli Lilly, Gilead, Novartis, Pfizer, Vertex, and many others).
Vertex currently has two distinct value-based contracts for Casgevy.

Administrative and contact information:

The report identifies MassHealth program leadership and points of contact for questions (Sarah Nordberg).

Who/what is affected

Providers and plan beneficiaries: MassHealth enrollees who access medications covered under MassHealth direct-negotiated rebates and VBPs benefit from reduced net drug costs.

Pharmaceutical manufacturers: Those with direct-negotiated supplemental rebates or VBPs with MassHealth are affected by negotiated terms, rebates, and performance-based payment structures.

MassHealth program finances: State-funded health program benefits from incremental savings in drug spending (reported savings of approximately $584 million in FY2025).

Procedural and timeline aspects

Reporting requirement: The bill constitutes a formal annual reporting obligation from the EOHHS/MassHealth to the Chairs and Joint Committees on Ways and Means and Health Care Financing.

Status: Action history shows the bill/report was placed on file on July 2, 2026.

No new statutory amendments appear in the text provided; the document serves as an annual accounting of existing direct-negotiation authorities and outcomes.

Practical takeaway

Massachusetts continues to leverage direct negotiation and value-based arrangements to constrain the growth of drug spending in MassHealth, reporting substantial year-over-year savings and expanding the scope of negotiated drugs and manufacturers. The 2025 report highlights ongoing use of VBPs as a framework for tying payments to real-world outcomes.