The Joint Committee on Financial Services convened on June 10, 2025, to address critical issues surrounding the current system used by insurance companies and pharmacy benefit managers (PBMs) for medication coverage. The meeting highlighted significant concerns regarding transparency and accountability within the system, which has been criticized for allowing PBMs to generate excessive profits at the expense of community pharmacies.

David Morgan, a seasoned pharmacist and past president of the Massachusetts Pharmacy Association, presented compelling evidence of the disparities in profit margins among various entities in the drug distribution chain. According to reports from the Federal Trade Commission and the U.S. Department of Health and Human Services, PBMs have been found to have gross margins of 31.2%, significantly higher than the 6.3% for wholesalers and 3.2% for pharmacies. Morgan emphasized that these margins have been increasing rapidly, adversely affecting local pharmacies and their patients.

The committee discussed legislative measures, specifically House Bill 1157 and Senate Bill 831, aimed at promoting fair reimbursement practices. These bills seek to eliminate harmful practices such as spread pricing and retroactive discounts, ensuring that independent pharmacies receive equal payment rates as those owned by PBMs. The proposed legislation would establish a reimbursement floor based on the state Medicaid program's payment formula, which mandates accurate and transparent cost estimations for medications.

Morgan noted that similar reforms in other states have resulted in significant savings, and the federal government is also considering legislation that could save an estimated $1 billion over the next decade. He urged the committee to support the proposed measures, stressing that they would benefit all citizens of Massachusetts, particularly the most vulnerable populations.

The meeting concluded with a call for continued legislative action to address the pressing issues surrounding PBMs and their impact on community pharmacies. Morgan expressed gratitude for the committee's past efforts and reiterated the urgency of implementing these reforms to ensure fair practices in the pharmaceutical industry.