New Primer Highlights Unanswered Questions and Unintended Consequences of State Prescription Drug Affordability Boards

For Immediate Release: June 5, 2024

Contact: Michael Pratt, 202-827-2088, [email protected] 

Washington, D.C. – Many uncertainties and gaps remain as to how state prescription drug affordability boards (PDABs) will assess the “affordability” of drugs and cap drug prices by setting upper payment limits (UPLs), according to a new publication from the National Pharmaceutical Council (NPC) published in Health Affairs Forefront. The primer, "Unanswered Questions and Unintended Consequences of State Prescription Drug Affordability Boards,” was co-authored by NPC researchers Julie A. Patterson, PharmD, PhD, James Motyka, PharmD, Jonathan D. Campbell, PhD, MS, and John Michael O’Brien, PharmD, MPH. 

Since 2019, states have enacted PDABs with the declared intention of lowering drug spending and improving affordability for patients. Variability across states and uncertainty surrounding the implementation of PDAB processes, however, leave unanswered questions about the impact and downstream consequences of state governments setting maximum reimbursement rates for drugs purchased in their state. As more states debate PDAB legislation, ongoing litigation challenges aspects of PDAB constitutionality, and states with PDABs begin ill-defined affordability review processes and rulemaking, the policy relevance of these unanswered questions continues to increase. 

NPC’s primer provides an overview of key components of PDAB legislation for four states —Colorado (2021 and 2023), Minnesota, Maryland, and Washington — that have passed legislation giving PDABs the purported authority to set UPLs for prescription drugs the board deems “unaffordable.” It focuses on legislation given significant differences in how states have begun circulating regulations and implementing policies and reviews. 

Overall, the review found that a singular focus on price-related factors into PDAB reviews and price setting in the absence of statutory requirements to prioritize value-related elements amplifies concerns about the potential unintended consequences while providing no assurance that PDABs will achieve their intended goals of improving affordability for patients. 

“Our examination of PDABs found incredible variance and ambiguity — in board structure, drug identification and selection for affordability review, factors considered when conducting reviews, and the process for setting UPLs,” said Julie Patterson, co-author and NPC Senior Director of Research. "Good policy requires understanding how the current system works, and the current set-up of these boards reflects a lack of understanding of how the pharmaceutical system works, the pressure points patients are feeling, potential legal hurdles, and unintended long-term impacts on benefit design, patient access, and innovation.” 

Key takeaways from the publication include:  

• Affordability review processes vary across states, lack detail and clarity, and focus narrowly on the role of isolated concepts of “affordability” over benefit design in patient access and at the exclusion of clinical and value-related factors. 

• Patient access may be limited, rather than expanded as intended, if upstream transactions (e.g., between manufacturers, wholesalers, and pharmacies) occurring wholly outside states with PDABs are subject to the provisions of state PDAB regulations. (Specifically, pharmacies in states with PDABs might face new challenges acquiring drugs subject to UPLs due to shifting economics at the wholesale level.) Thus, while UPLs are often discussed in the context of lowering costs for patients, their impact on patient cost-sharing and access is not guaranteed, difficult to predict, and now, the subject of legal challenges. 

• While drugs are eligible for affordability review at launch in most states, limiting prices at the time of market entry is likely to reduce manufacturer research and development — including post-approval research towards additional evidence and new indications. These disincentives for clinical development may disproportionately impact orphan development given no state has currently excluded orphan drugs from affordability review eligibility. The impact of price setting on subsequent indications is also being discussed in the context of the federal government price setting introduced by the Inflation Reduction Act’s Medicare Drug Price Negotiation Program.  

“As more and more states enact PDABs, we will continue to monitor the legislation’s unintended consequences,” said Patterson. “PDABs may have been intended to lower patient costs, but ‘the how’ remains unclear — and the potential unintended consequences ought not to be ignored.” 

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About the National Pharmaceutical Council 

The National Pharmaceutical Council (NPC) is a health policy research organization dedicated to the advancement of good evidence and science, and to fostering an environment in the United States that supports medical innovation. Founded in 1953 and supported by the nation's major research-based pharmaceutical companies, NPC focuses on research development, information dissemination and education on the critical issues of evidence, innovation and the value of medicines for patients. For more information, visit www.npcnow.org and follow NPC on LinkedIn.