Section 12A. (a) As used in this section, the following word shall, unless the context clearly requires otherwise, have the following meaning:

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”Manufacturer”, an entity that manufactures a pharmaceutical drug covered by MassHealth.

(b) Notwithstanding any general or special law to the contrary and subject to required federal approvals, the executive office of health and human services may directly negotiate supplemental rebate agreements with manufacturers; provided that the executive office shall not be subject to any otherwise applicable requirements set forth in 801 CMR 21.00 or any successor regulation; and provided further, that such agreements maximize value to the commonwealth. Such agreements may be based on the value, efficacy or outcomes of the drug. Prior to seeking a supplemental rebate agreement with a manufacturer, the executive office shall take into consideration a drug’s actual cost to the commonwealth and whether the manufacturer is providing significant discounts relative to other drugs covered by MassHealth.

A manufacturer may request to enter into negotiations for a supplemental rebate agreement for a prescription drug; provided, however, that the executive office may prioritize other negotiations or refuse to enter into said negotiations. Nothing in this paragraph shall preclude the executive office from entering into a supplemental rebate agreement with a manufacturer at a later date.

(c) In the event a manufacturer and the executive office are unable to successfully conclude negotiations for a supplemental rebate agreement pursuant to subsection (b) and the drug that is the subject of the negotiations is projected to exceed a post-rebate cost per utilizer of $25,000 per year or a post-rebate aggregate annual cost to MassHealth of $10,000,000, the executive office may identify a proposed value of the drug and may afford interested persons an opportunity to present data, views or arguments, and, at the option of the secretary of health and human services, hereinafter the secretary, hold a public hearing as to the proposed value of the drug; provided, however, that any proposed value used by the executive office when identifying a proposed supplemental rebate amount shall be provided to the manufacturer.

In establishing the proposed supplemental rebate or proposed value with respect to a drug, the executive office may consider factors including, but not limited to, clinical efficacy and outcomes, information relating to the pricing of the drug, including but not limited to information relating to prices paid by other developed nations, the drug’s net 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, the extent of utilization of the drug, the likelihood that the use of the drug will reduce the need for other medical care, the number of manufacturers that produce the drug, whether there are pharmaceutical equivalents of the drug, analyses by independent third parties, any information supplied by the manufacturer and other appropriate measures.

The executive office shall provide at least 30 days’ notice to the manufacturer and the public prior to the date of the hearing. All testimony at the public hearing shall be provided under oath and shall be subject to examination by the executive office in a manner and form determined by the executive office.

After consideration of such information, including but not limited to the public comments or testimony received, the executive office shall make any necessary updates to the proposed value for the drug. The executive office may engage the manufacturer of the drug in further negotiations under subsection (b) at any point during this process, and shall, at minimum, solicit further negotiations with the drug manufacturer after identifying the proposed value amount for the drug. The executive office shall not disclose any confidential or proprietary information, including but not limited to drug rebate or manufacturer’s pricing information, in a manner prohibited by 42 U.S.C. § 1396r–8(b)(3)(D) or in a manner that is likely to compromise the financial, competitive or proprietary nature of the information.

(d) Any information provided by the manufacturer for the purposes of negotiating supplemental rebate agreements shall not be considered public records under section 7 of chapter 4 or chapter 66 and shall be regarded as confidential and proprietary.

(e) If the executive office relies upon any third party to provide cost-effectiveness analysis or research related to the supplemental rebate amount or proposed value, such analysis or research shall also include, but not be limited in scope to: (i) a description of the methodologies and models used in its analysis; (ii) any assumptions and potential limitations of research findings in the context of the results; and (iii) a reflection of outcomes for affected subpopulations that utilize the drug.

(f) Any information, analyses or reports regarding a particular drug reviewed or used in creating the supplemental rebate or proposed value shall be provided to the manufacturer of the drug for review and input. The executive office shall consider any clarifications or data provided by the manufacturer with respect to its drug.

(g) In the event a manufacturer and the executive office are unable to successfully conclude negotiations for a supplemental rebate agreement pursuant to subsection (b) after the process set forth in subsection (c), the executive office may refer the drug manufacturer to the health policy commission for review under section 8A of chapter 6D; provided, however, that if the executive office refers the manufacturer to the health policy commission, the secretary shall provide notice of a referral to the health policy commission for review under said section 8A of said chapter 6D.

The executive office may disclose any records that describe or relate to the manufacturer’s pricing of any such drugs that are the subject of a supplemental rebate negotiation to the health policy commission after providing notice to the manufacturer of the referral for review under said section 8A of said chapter 6D; provided, however, that such disclosures are consistent with 42 U.S.C. § 1396r–8(b)(3)(D).

(h) In the event that the executive office and the manufacturer agree to a supplemental rebate for a drug pursuant to subsection (b) or as otherwise allowed under applicable state and federal laws, the executive office shall not initiate further negotiations for enhanced rebates for the drug, and the manufacturer shall not be referred to the commission with respect to the drug, for the duration of the rebate agreement.

(i) Annually, not later than October 15, the executive office shall report in a manner consistent with 42 U.S.C. § 1396r–8(b)(3)(D) on activities conducted pursuant to this section including, but not limited to: (i) the amount of supplemental rebates received under this section; (ii) the number of drugs receiving a supplemental rebate under this section, broken down by manufacturer; and (iii) a breakdown of the duration of the supplemental rebates received. The report shall be filed with the clerks of the senate and house of representatives, the joint committee on health care financing and the senate and house committees on ways and means.

(j) The executive office shall adopt any written policies, procedures or regulations necessary to implement this section.