Prescription Drug Affordability Boards and State-Led Effort to Control Drug Pricing
by David Hirsh
Unlike other comparable countries, in the United States, prescription drugs prices are not set or regulated by the federal government. The out-of-pocket costs that patients face for the drugs physicians prescribe are ultimately a function of a combination of interests divided among stakeholders including pharmaceutical companies, insurers, and pharmacy benefit managers. However, especially in view of continuously rising prices for prescription drugs for patients over the past few decades, it is clear that lowering these high prices is of vital interest to Americans. COVID-19 has only made this worse for our patients – now, nearly 40% of Americans report difficulty affording their prescription drugs. (1,2)
Despite multiple proposals to lower prescription drug prices being considered in Congress, none have yet passed. State legislatures are now stepping in to pass policies to protect their populations despite facing significant headwinds from the pharmaceutical industry including legal challenges. Nevertheless, in 2020, hundreds of drug affordability bills were put forth. Foremost amongst these are Prescription Drug Affordability Boards.
Prescription Drug Affordability Boards represent one of the most potentially impactful areas of legislation in the state-led effort to control drug pricing. These bills would regulate prescription drug costs similarly to how states already regulate public utilities and other essential services. In general, a Prescription Drug Affordability Board (PDAB) is constituted by a panel of experts, charged by statute with identifying medicines that are of high cost burden to the state and its patients. Some versions of the legislation also set “upper payment limits” or “allowable rates” for particularly expensive medications. These boards may also investigate abrupt medication price increases and act to counterbalance them. In their model legislation, the National Academy for State Health Policy (NASHP) notes that these panels are intended to “[look] at valuable drugs and [determine] at what cost they are affordable – at what cost will everyone who needs the drug be able to afford the drug.”
In 2019, Maryland was the first state to enact legislation establishing a PDAB. This piece of bellwether legislation created a state Board which was restricted to regulating only those state-purchased medications, excluding other payers including commercial health plans. Just this past year alone, 13 additional states introduced legislation to enact a PDAB – three of which were successfully passed by state legislatures:.
- Oregon: Senate Bill 844 (SB844) enacted a PDAB charged with conducting an affordability review of identified drugs that meet a certain threshold and further establish an upper payment limit for these drugs. The threshold for such a review includes:: 1) brand-name drugs or biologics with a launch wholesale acquisition cost (WAC) of $30,000 or more per year or a $3,000 WAC increase over 12 months, or2) generics with a WAC of at least $100 that increased by 200% or more over a year, or 3) other drugs that could create affordability challenges for the state. In addition, the PDAB will analyze the cost of administering and delivering the drug to patients to aid in determining an upper payment limit.
- Colorado: In June 2021, Governor Jared Polis signed into law Senate Bill 21-175 establishing the Colorado PDAB. This bill requires the PDAB to identify drugs with 1) an initial wholesale acquisition cost (WAC) of $30,000 or more for a 12-month supply or for a course of treatment that is less than 12 months in duration; or 2) an increase in the WAC of $3,000 or more during the immediately preceding 12 months for a 12-month supply or for a course of treatment that is less than 12 months in duration. The PDAB is then charged with establishing an upper payment limit for any of these drugs deemed unaffordable for Colorado consumers, limited to taking action on more than 12 prescription drugs in a year.
- Maine: Despite passage of this legislation in June 2021, Governor Janet Mills did not sign LD 675, which would have served to set annual spending targets for medications purchased by public payors and for specific drugs that may cause affordability challenges. Further, the legislation would consider methods for public payors to meet spending targets, negotiate rebates for expensive medications, and engage in bulk purchasing.
While each piece of state legislation is unique, common current threads across the bills are:
- extending PDAB oversight beyond the publicly-purchased medicines; setting upper payment limits for drugs determined to be unaffordable; and
- ongoing review of abrupt pricing changes, particularly of non-novel medications.
- These paths will undoubtedly prove helpful in reducing the burden of prescription drug costs for both states and also, more importantly, patients.
Across these states and others, Doctors for America Drug Affordability Action Team (DAAT) has been organizing local medical professional societies to educate and inform legislators about the importance of such legislation. This has taken the form of joint letters, op-eds, testimony, and social media mobilization. As more states consider such measures in the next legislative session, we need your help to build upon previous successes to encourage legislators to support such meaningful measures to curb the high costs of prescription drugs for our patients. Join us today!
- Click on the NASHP tracker to view current drug pricing legislation in your state
- Join the team to make an impact on state level policy!
1 Dan Witters, “In U.S., 66% Report Increase in Cost of Prescription Drugs,” April 28, 2020.
2 Ashley Kirzinger, Lunna Lopes, Bryan Wu, and Mollyann Brodie, “KFF Health Tracking Poll — February 2019: Prescription Drugs,” Kaiser Family Foundation, March 1, 2019,
3 Check out this newly published study on various state PDABs or equivalents with detailed documentation and comparisons: https://onlinelibrary.wiley.com/doi/abs/10.1111/1468-0009.12533