Making medications more accessible to those who need them is the focus of attention in the media and in all levels of government. For a drug to be accessible, it must be affordable and available. Something may be affordable, but if it isn’t available, no one will have access to it. Think of toilet paper in the first year of the COVID pandemic. The opposite is also true. An item may be available, but if it isn’t affordable, access is lost. While medication affordability is viewed as the major problem for patients, lack of availability has begun to creep into our drug supply chain. We are now experiencing drug shortages for medications that are very affordable. The perverse incentives, inherent in formulary construction, favor higher-priced medications, which decreases the availability of lower-priced – yet still expensive – drugs, thus increasing patient cost share. Formulary placement and patient cost share, important determinants of accessibility, are controlled by health plans and differ considerably even from the same payer. And yet, the price of drugs remains the target of most approaches to increasing patients’ access. And now price negotiations and drug affordability boards enter into the picture.
What are prescription drug affordability boards?
Both state and federal legislatures have placed the affordability of medications front and center on their agendas. However, neither are considering how formulary construction affects patient’s access to medications. The Inflation Reduction Act is Congress’s foray into price setting/negotiation of expensive drugs. Over the last few years, states are also attempting to make drugs more affordable by creating prescription drug affordability boards (PDABs). Governors (or other state leaders) appoint PDAB members who are charged with the task of evaluating the affordability of certain drugs for both the state and its residents. How to do it, and what the limitations are, vary from state to state. In 2019,to establish a PDAB, charging its members to study commercial insurance and drug pricing and make recommendations on how to make drugs more affordable for Maryland residents. Other states that have passed PDAB legislation are Colorado, Maine, Minnesota, New Hampshire, Ohio, Oregon, and Washington.
Colorado, Minnesota, and Washington – and soon Maryland and Oregon – hope to make drugs more affordable for patients by allowing their PDABs to set an upper payment limit (UPL). A UPL serves as a cap on the sales price and reimbursement for a drug. The Michigan legislature is actively debating legislation that would establish a PDAB and allow it to set UPLs. On the surface, this may appear to be a potential solution to the affordability issue. However, as always, there are many questions as to how this will work and what are the unintended consequences of price setting and establishing UPLs for medications. UPLs have the potential to harm access to provider-administered drugs. With the help of advocacy from the Coalition of State Rheumatology Organizations (CSRO), Washington’s PDAB statute potentially has a carve-out for provider-administered drugs.