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SD 3981

MassHealth Pharmaceutical Utilization Report

194th Legislature (2025-2026)

MassHealth will report detailed FY25-FY26 drug spending, rebates, and formulary changes, showing how price and utilization shifts drive overall pharmaceutical costs and savings.

Placed on file
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Bill Summary · SD 3981

Summary of MassHealth Pharmaceutical Utilization Report (Bill SD 3981)

Purpose and intent

  • The bill pertains to the Massachusetts MassHealth program (Executive Office of Health and Human Services, Office of Medicaid) and requires ongoing analysis and reporting on pharmaceutical spending and utilization.
  • It builds on prior reporting requirements (Chapter 9 of the Acts of 2025) by detailing the program’s pharmaceutical expenditures, rebates, federal participation, and the impact of formulary changes.

Key provisions and changes

  • The bill requires EOHHS to submit a detailed report on MassHealth pharmaceutical activity, including:
    • Total spending related to pharmaceutical utilization for fiscal year 2025 (FY25).
    • Estimated total spending for fiscal year 2026 (FY26).
    • Actual and estimated revenue from supplemental rebates and Federal Financial Participation (FFP) in FY25 and FY26.
    • Total or projected savings from supplemental rebate negotiations in FY25.
    • The relative impact of price and utilization changes for drugs added to the MassHealth Drug List (MHDL) in FY25 and FY26.
  • The report must reflect the scope of direct negotiations with drug manufacturers, including the status and value of supplemental and value-based rebate agreements.
  • The report acknowledges and uses data from active supplemental rebate contracts (as of Feb 1, 2026) and notes that quarterly pricing can affect the rebate values, with the October 2026 report to reflect pricing changes.
  • The bill references the authority granted in July 2019 to negotiate rebates directly (through FY20 budget) and emphasizes that such negotiations aim to maximize value while maintaining drug access.
  • The MassHealth formulary (MHDL) remains inclusive of all FDA-approved outpatient drugs, with the understanding that supplemental rebate negotiations position drugs within the formulary without altering coverage.

Who or what is affected

  • MassHealth members: Access remains open to all FDA-approved outpatient drugs, even if manufacturers do not participate in supplemental rebates.
  • MassHealth (EOHHS): Responsible for conducting the data collection, analyses, and reporting required by the bill.
  • Drug manufacturers and pharmacy providers: Affected by the rebate contracts and formulary positioning; rebates influence drug placement on the MHDL.
  • Massachusetts Legislature and key committees: Senate Ways and Means, House Ways and Means, and Joint Committee on Health Care Financing receive the report to assess program costs and savings.

Procedural and timeline aspects

  • The report leverages data through FY25 and FY26, with actual and estimated figures for spending, rebates, FFP, and formulary changes.
  • Rebate values are calculated using a base period (Q4 FY2025 pricing) and may differ when compared to CY2025 pricing; the full impact will be reflected in the October 2026 legislative report.
  • The document notes that the information reflects the program’s activity as of February 1, 2026, and outlines anticipated trends through FY26.
  • The report status indicates it has been placed on file as of June 11, 2026.

Key figures highlighted

  • Active supplemental rebate contracts: 97 drugs with 40 manufacturers, including 11 value-based agreements.
  • Total annual rebate value: approximately $650 million (as of Feb 1, 2026).
  • FY25 (actual): MassHealth spent $3.01 billion on pharmaceuticals before rebates and FFP; rebates received totaled $1.69 billion.
  • FY26 (estimated): Projected spend on pharmaceuticals before rebates and FFP is about $3.36 billion; estimated rebates around $1.75 billion.
  • Aggregate FFP: 65.5% for both FY25 and FY26.
  • MHDL additions: 71 drugs added in FY25 (cost ~ $27.0 million); 34 drugs added in FY26 (projected cost ~ $6.7 million). New-drug utilization can be modest in the first year, leading to delayed fiscal impact.

Practical impact and interpretation

  • The bill emphasizes ongoing transparency and accountability for MassHealth drug spending, rebates, and formulary decisions.
  • It recognizes the role of direct negotiation with manufacturers in controlling costs while preserving patient access to necessary therapies.
  • The reporting provides lawmakers and the public with a clearer view of how price, utilization, and formulary changes influence overall MassHealth pharmaceutical expenditures and savings.

Compiled from official sources — confirm details with the bill’s official record.

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