We’ve previously written about state prescription drug affordability review boards (PDABs) that have been instituted around the country, often with the intent to review higher-cost prescription drugs and determine whether the state should take action to reduce those drug prices. While PDAB boards vary throughout the country in what they are permitted to do, PDABs may attempt to reduce drug prices by performing affordability reviews, making recommendations to each state’s respective legislature on ways to reduce spending, negotiating prices and Medicaid supplemental rebates with manufacturers, and setting upper payment limits (UPLs) or caps on what a state will spend on a particular medication.
However, as PDABs continue to grow in popularity, it turns out their goals may not be reached as planned. Oregon, for one, found that drug pricing and complexities in the supply chain may limit implementation of its proposed upper payment limits. The State of Oregon Department of Consumer and Business Services, Division of Financial Regulation published a Constituent Group Engagement Report based on the perspectives of seven constituent groups, (1) 340B Covered Entities, (2) carriers, (3) hospitals, (4) patient advocacy groups, (5) pharmaceutical manufacturers, (6) pharmacy benefit managers (PBMs), and (7) retail pharmacies.
The report found that while constituents were generally concerned about drug affordability, perceptions regarding using UPL to lower prices were mixed. More than half of respondents felt that UPLs woul dnot result in cost savings, and 47% were concerned that a UPL would have a negative financial impact on their organization. Additionally, 54% of respondents expressed their belief that a UPL would actually create challenges to patient access to care, with 47% of respondents expressing the belief that a UPL would have a neutral impact on patients’ ability to afford their medications and 26% expressing the belief a UPL would have a negative impact on patients’ ability to afford their medications.
The Oregon PDAB also conducted focus groups with constituent groups, with similar results to the report findings. Of note, the focus group participants were not in agreement as to the definition of affordability (or how it should be determined) and were uncertain about how to assess the impact of a possible UPL.
Despite concerns coming out of Oregon, Maryland recently moved forward with approving an Action Plan for the state’s PDAB to use to reduce costs of medications in the state that pose an “affordability challenge,” including approval of the implementation of a UPL. The Maryland Action Plan also allows the state’s PDAB to begin the policy review process once it has been found that use of a drug has led – or will lead – to an affordability challenge. The policy review process is done in three phases: (1) information gathering, (2) preliminary policy recommendations, and (3) policy approval.
Maryland’s PDAB started with eight drugs to conduct a “cost review” to understand whether use of the drug has led – or will lead – to affordability challenges. If found to meet the requisite criteria, those drugs may be some of the first drugs subject to a UPL.
Over the course of time, we will see more data as to whether PDABs are achieving the goals they were set to achieve.