Direct Negotiations

(1) General. (a) EOHHS may enter into direct negotiations with any manufacturer for an SRA for any covered drug(s) manufactured by the manufacturer. Such negotiations may be initiated by EOHHS or by the manufacturer, provided that nothing obligates EOHHS to engage in negotiations with any manufacturer. (b) EOHHS will seek to prioritize direct negotiations in a manner that maximizes value to the Commonwealth, and will only enter into an SRA if EOHHS determines that doing so will maximize value to the Commonwealth in a manner consistent with the concept of “best value” as defined at 801 CMR 21.02: Definitions and consideration of the factors described in 101 CMR 801.03(3), as appropriate. (c) Nothing precludes EOHHS from utilizing the processes described at 801 CMR 21.00: Procurement of Commodities or Services, including Human and Social Services, or any other process allowed under state law, to enter into an SRA as an alternative to a direct negotiation. (2) Possible Outcomes. (a) A direct negotiation is considered successful if it results in an executed SRA between EOHHS and the manufacturer. (b) An actual or attempted direct negotiation is considered to have failed if: 1. EOHHS and the manufacturer do not execute an SRA as a result of the actual or attempted direct negotiation; 2. EOHHS has presented the manufacturer with an offer or counteroffer including, at minimum, the material SRA terms desired by EOHHS, and the manufacturer has had a reasonable opportunity to accept or reject such terms; and 3. EOHHS has provided written notice to the manufacturer of the agency’s determination that the actual or attempted direct negotiation has failed, provided that such notice must be sent at least 30 days before EOHHS initiates the process described in 101 CMR 801.04, and provided further that EOHHS identifies in the notice if the covered drug is a high-cost drug eligible for the process described in 101 CMR 801.04. (c) If neither the condition of 101 CMR 801.03(2)(a) nor the conditions of 101 CMR 801.03(2)(b) are satisfied, the direct negotiation is considered to be open, unless EOHHS notifies the manufacturer in writing of its withdrawal from the negotiation. (3) Factors for Consideration. (a) In determining whether to enter into direct negotiations with a manufacturer, or whether to enter into an SRA as a result of such negotiations, EOHHS may consider the following factors, as applicable, provided that EOHHS’s consideration of such factors is consistent with the principles set forth in 801 CMR 21.01: Purpose, Application and Authority: 1. Information regarding the clinical efficacy, effectiveness, and outcomes of the covered drug; 2. Information relating to the pricing of the covered drug, including but not limited to information relating to prices paid in other countries; 3. The covered drug’s post-rebate price to the Medicaid program as compared to its therapeutic benefits, including but not limited to the seriousness and prevalence of the disease or condition that is treated by the drug, and the extent to which the drug addresses an unmet medical need or impacts affected patient subpopulations; 4. The extent of utilization or expected utilization of the covered drug within the Medicaid population; 5. The likelihood that the use of the covered drug will reduce the need for other care, reduce caregiver burden, or enhance quality of life; 6. Whether there are therapeutic equivalents of the covered drug, and the number of such equivalents available; 7. Characteristics of the covered drug, including means and setting of administration, dosing frequency, duration of therapy, side effects, interactions and contraindications, and potential for misuse or abuse; 8. Analyses by independent third parties, provided that EOHHS will consider, as available, the methodologies and models used in the analysis, any assumptions and potential limitations of the analysis, and outcomes for specific subpopulations, if applicable; 9. The extent to which the manufacturer of the covered drug has entered into other SRAs; 10. Any information supplied by the manufacturer; and 11. Other appropriate measures or analysis related to the value, efficacy or outcomes of the covered drug. (b) If EOHHS engages a third party to provide a cost-effectiveness analysis in evaluating whether to enter into an SRA, the analysis must include: 1. a description of the methodologies and models used in the analysis; 2. any assumptions and potential limitations of the analysis; and 3. outcomes for specific subpopulations, if applicable. (c) EOHHS may, provided that doing so is consistent with its obligations under 101 CMR 801.03(1)(b), share with the manufacturer for review and input during the course of a direct negotiation any information, analyses, or reports regarding a covered drug relied on by EOHHS in developing an offer or counter offer for an SRA, and will consider any information provided by the manufacturer in response. Subject to 101 CMR 801.04(2)(e), nothing will compel EOHHS to share such information with the manufacturer during the direct negotiation process. (4) Implications of Executed SRA. In the event EOHHS and the manufacturer execute an SRA for a covered drug, whether through the process described in 101 CMR 801.03 or otherwise, EOHHS will not subject the covered drug to the process described in 101 CMR 801.04 or a referral under 101 CMR 801.05 during the term of the SRA with the intent of securing an enhanced rebate for the covered drug from the manufacturer, provided that nothing prohibits EOHHS and the manufacturer from agreeing in good faith to amend or terminate the SRA as otherwise allowed under the terms of the SRA.