States considering whether to enact prescription drug affordability boards have their eyes on panels in Colorado and Maryland as they move closer toward enacting their first-ever limits on what health plans pay for some of the nation’s priciest drugs.
The Colorado Prescription Drug Affordability Board is scheduled to meet in October as it considers how to establish limits on how much health plans in the state can pay for three anti-inflammatory treatments:
Maryland’s board hopes to complete affordability reviews by the end of the year for its first four selected drugs—
These two boards are the furthest along among the state PDABs with the authority to set limits on what health plans pay for selected prescription drugs, and their actions come as Enbrel, Stelara, Jardiance, and Farxiga will face negotiated prices in the federal Medicare program starting in 2026.
The boards’ work, as well as a ruling in Amgen’s lawsuit, will be key factors in whether policymakers in additional states pursue legislation to enact PDABs to tackle prescription drug affordability issues, drug pricing researchers and policy analysts say.
“People in the states are going to start to see and feel the effects of the legislation that was passed to make medications more affordable in their states,” said Benjamin Rome, a health policy researcher at Harvard Medical School’s Program On Regulation, Therapeutics, And Law, or PORTAL. PDABs in several states have tapped Rome and his team to help implement affordability reviews and payment limits.
‘Test Case’
Legislation in other states to enact PDABs has largely stalled, with patient groups and policy analysts saying the outcome in Amgen’s lawsuit will be a key factor in shaping policymakers’ willingness to push for boards.
The Amgen lawsuit is “really a test case,” said Jon Bartholomew, government affairs director for AARP, which has supported state legislation to establish PDABs.
“If the affordability board prevails, then I think that we’ll see multiple other states jump to trying to create their own as well,” Bartholomew said.
States like Connecticut, Illinois, Michigan, and Rhode Island have recently considered legislation to enact their own affordability boards. In April, Virginia Gov. Glenn Youngkin (R) vetoed legislation that would have enacted a board with the authority to set payment limits.
The Colorado board has committed to moving ahead despite Amgen’s lawsuit, which claims Colorado law allowing the board to set limits violates the supremacy clause of the US Constitution, federal patent laws, and the Fourteenth Amendment’s due process clause.
Pharmaceutical companies have unsuccessfully tried to make similar arguments in lawsuits against Medicare’s drug price negotiations under the Inflation Reduction Act.
The Colorado attorney general’s office is seeking to dismiss Amgen’s complaint, with oral arguments scheduled in the US District Court for the District of Colorado on Oct. 22.
If a court ruling is “broader around states’ ability to regulate prescription drug policy and affordability in the states,” that “would signal a really big problem and a really big gap in states’ ability to do this work,” Rome said.
Next Steps
Colorado is likely to be the first to establish a payment limit, though the boards in Maryland, Minnesota, and Washington also have the authority to set caps for health plans.
Nine additional state boards don’t have the ability to set limits, but can analyze cost and affordability data to make recommendations to states on potential policies to lower prescription drug costs.
Colorado price limit rulemaking doesn’t currently have a set timeline, but the board’s executive director has said it will be operating on a three-month timeline, with the board planning to concurrently work on the next round of drugs to consider for affordability reviews.
Board spokesperson Vincent Plymell said in an email that the board still needs to determine the exact timing of rulemaking, which will consist of hearings and public comment periods to get feedback from patients, drugmakers, and other stakeholders.
The board in Maryland, which in 2019 became the first state to enact a bill to form a PDAB, plans to finish collecting information on the first four drugs by Sept. 23. After this, the board plans to begin gathering information on two additional drugs selected for review:
The board members “made it clear that they wanted to move the process more quickly than it’s been moving,” Maryland PDAB Executive Director Andrew York said in an interview.
Measuring Affordability
The way each of the boards are defining “affordability” could influence the effects patients see on what they pay at the pharmacy counter and whether other states see PDABs as a worthwhile endeavor, policy analysts say.
Maryland is still determining which cost data will be most important in its reviews, while in Colorado, the board has focused heavily on out-of-pocket costs, Rome said.
Colorado’s affordability review reports noted that Enbrel resulted in an average of more than $2,000 in out-of-pocket costs for patients in 2022. The average out-of-pocket costs for Cosentyx and Stelara that same year were more than $3,000 and $7,000, respectively.
When considering these costs, “you really need to look at the full supply chain,” said Leslie Wood, regional vice president of state policy at the Pharmaceutical Research and Manufacturers of America, the main US pharmaceutical trade group that has lobbied aggressively against legislation establishing PDABs.
PhRMA has argued that the Colorado panel and other boards have not been set up to take into account the role of pharmacy benefit managers, which manage prescription drug benefits on behalf of health plans and determine which drugs get preferred placement on a plan’s formulary, or list of covered drugs.
Colorado PDAB Chair Gail Mizner and other board members have said they plan to incorporate feedback from insurers and PBMs as they consider whether to set price limits.
Under the Colorado PDAB’s rules, the board can consider several factors in determining what the payment cap for a drug should be, including out-of-pocket costs, estimates of manufacturer net-cost and net-sales amounts, and maximum prices negotiated by Medicare under the Inflation Reduction Act.
PhRMA spokesperson Reid Porter said PBMs are likely to adjust their formularies as a result of the Medicare negotiated drugs, which could affect the discounts that patients see.
He cited last month’s statement from the PBM trade group Pharmaceutical Care Management Association, which said the Biden administration chose prescription drugs for which “PBMs are already actively negotiating steep discounts that significantly lower costs for beneficiaries and taxpayers.”
“One wonders what the reaction then will be as each of these states moves forward in a similar fashion,” Porter said.
The existing boards, however, remain confident in their legal durability, arguing their primary goal is to improve prescription drug availability and affordability.
“When they’re making this determination, they’ll be ensuring that whatever they’re doing is increasing access to the drug, not decreasing access,” York said of the Maryland PDAB.
To contact the reporter on this story:
To contact the editors responsible for this story: