Navigating State Prescription Drug Affordability Boards

Chad Patel and Susan Hogue

State legislatures are increasingly forming prescription drug affordability boards (PDABs) to tackle rising drug costs impacting state programs, commercial health plans, and patients. Several states have recently established or proposed Prescription Drug Affordability Boards (PDABs) aimed at reining in high drug costs.  

Here’s what you need to understand how these boards that could impact your HEOR, pricing strategies and market access: 

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What are PDABs?

PDABs are independent bodies that evaluate the affordability and pricing of expensive drugs for a state’s residentsTheir primary goal is to review certain high-cost drugs and recommend strategies to lower spending, such as setting upper payment limits above which the state will not pay. PDABs use criteria around pricing thresholds, cost impacts, and drug characteristics to select medications for an “affordability review” analyzing pricing, utilization, costs, and value. 

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Who serves on PDABs?

PDAB membership varies by state and most boards are composed of state-appointed experts in various fields of healthcare and economics. Many states’ PDABs also include other stakeholders such as healthcare providers, advocates, manufacturers, and insurance professionals. The varied backgrounds of PDAB members can lead to differentiation in selection criteria for affordability review execution. 

 

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Which states have PDABs? 

The Medicaid programs in Massachusetts and New York possess “enhanced negotiating authority”, allowing Medicaid to conduct pricing reviews, value assessments, and negotiate supplemental rebates 

Five states – Colorado, Maryland, Minnesota, Oregon, and Washington – allow their PDABs to directly set upper payment limits across some or all state-regulated plans. 

What's their impact?

If a PDAB deems a drug unaffordable at its current price, it can impose binding upper payment limits for that drug across state health plans. In February 2024, Colorado’s PDAB decided for the first time to consider a price cap. It identified the immune disorder drug Enbrel as “unaffordable.” Over the next six months, the board will do more research and listen to public feedback as it decides what “upper payment limit” it will set for the drug. 

How can manufacturers engage?

The rise of PDABs creates new strategic considerations for drug makers:

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Evidence Generation: Developing robust pharmacoeconomic evidence will be crucial, including cost-effectiveness models, budget impact analyses, real-world evidence on patient outcomes and costs. This data is vital for PDAB affordability reviews evaluating a product’s value and economic impact. 

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Pricing Strategy: PDAB payment limits may pressure manufacturers to adjust pricing strategies, such as leveraging patient assistance to offset consumer costs. There could also be spillover effects on Medicaid pricing calculations.   

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State Engagement: With differing PDAB policies across states, manufacturers must map out tailored engagement approaches for each board’s processes, timelines, and evidence requirements. 

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Access Implications: Upper payment limits risk driving formulary exclusions and higher consumer cost-sharing that restricts patient access. Proactive strategies are needed to mitigate potential access barriers.

While still evolving, state prescription drug affordability boards are poised to significantly influence drug pricing and spending policies. Keeping ahead of this evolving landscape should be a priority for leadership teams. Proactive planning and strategic response will be critical. Manufacturers must carefully navigate this landscape with robust data and state tailored engagement to maximize patient access and outcomes.  

How can AESARA support you?

Develop educational materials that simplify complex pricing dynamics and demonstrate the value of your therapy for policymakers. 

Horizon scan and map the policy landscape to identify emerging PDAB legislation and issues.  

Assess evidence generation opportunities and unlock communication avenues to fully leverage healthcare economic information with PDABs.    

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