As we have previously reported, the federal government has taken an acute interest in pharmaceutical drug pricing, resulting in a raft of hearings and draft legislation. States are getting on board too, with a Maryland law to go into effect on July 1, 2019, creating a Prescription Drug Affordability Board. The Board was created by a drug pricing bill, passed by the Maryland General Assembly last spring.
The Board will consist of five members, each having expertise in health care economics or clinical medicine. The members are appointed by various elected officials, including the Maryland Governor, Speaker of the House, President of the Senate and Attorney General.
The Board will work in conjunction with a Prescription Drug Stakeholder Council, which will consist of 25 members from various stakeholder groups, including representatives of pharmacists, brand and generic biopharmaceutical manufacturers, physicians and hospitals, managed care organizations, labor unions, health care coalitions, organizations for seniors and diverse communities, and pharmacy benefit managers.
The Board will identify drugs that may create affordability challenges, including:
Brand name drugs or biologics that, as adjusted for inflation, have a launch wholesale acquisition cost (“WAC”) of $30,000 or more per year or course of treatment, or have a WAC increase of $3,000 or more in any 12-month period, or course of treatment if less than 12 months.
Generic drugs that, as adjusted for inflation, have a WAC of $100 or more for a supply lasting 30-days or fewer, or for one unit of the drug, or that have a WAC that increased by 200% or more during the immediately preceding 12-month period.
The Board will then determine whether to conduct a cost review of the drugs identified by this process, by seeking input from the Stakeholder Council and by considering the average cost share of the drug. This cost review will be conducted by using publicly available information. If none is available, the Board will request such information from relevant entities, including the manufacturer, pharmacy benefit managers, health insurance carriers and managed care organizations.
In performing the cost review analysis, the Board may consider a number of factors, including the WAC for the drug, the monetary price concessions the manufacturer provides, the prices of therapeutic alternatives, the cost to health plans, the impact on patient access resulting from the cost relative to the insurance benefit, the dollar value of patient access programs supported by the manufacturer, the relative financial impacts to health, medical and social services, and the average patient co-pay or cost-sharing.
When the Board determines that spending on a prescription drug leads to an affordability challenge, the Board will set an upper payment limit for that drug. The Board’s proposals will then be submitted to the Maryland General Assembly’s Legislative Policy Commission for Approval. The Board will also monitor the availability of any drugs that are subject to upper payment limits. Should a shortage develop for any of the drugs, the Board can reconsider or suspend the upper payment limit.
Maryland isn’t the only state concerned about drug pricing. The legislatures in Illinois, Maine, Nevada and New Jersey are also considering drug pricing measures.