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3 Things You Need to Know About Prescription Drug Affordability Boards
Rx medication prices keep rising, and some states are working to rein them in
AARP (Getty Images,2)
Americans may be divided on plenty these days, but poll after poll finds a broad consensus on one issue: Prescription drug prices are too high — and they keep rising.
Six in 10 Americans say they are worried about affording their medications, according to a recent report from the health policy nonprofit KFF, up from about 4 in 10 in 2018. And many are skipping doses, not filling prescriptions or making other trade-offs because of costs — decisions that can have serious, even life-threatening, consequences.
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“In the United States, we allow drug companies to charge whatever price they want for their brand-name drugs without any negotiation or oversight,” says Dr. Aaron Kesselheim, a professor of medicine at Harvard Medical School and a faculty member in the Division of Pharmacoepidemiology and Pharmacoeconomics in the Department of Medicine at Boston’s Brigham and Women’s Hospital. That means widely used medications — and recently approved drugs in particular — carry high price tags for individuals and insurers, including state-run health programs.
In an effort to rein in rising drug prices and make medications more affordable for their residents, several states have created prescription drug affordability boards (PDABs) to review high drug prices and, in some cases, take steps to reduce them.
“No one should have to choose between filling a prescription and paying the electric bill, but that’s the choice high prices are forcing,” said Glen Fewkes, senior director of health care access and affordability for AARP Government Affairs.
“Prescription drug affordability boards give states real authority to examine what a drug costs and why — and AARP is fighting to make sure those boards have the tools to actually bring costs down,” he said.
Here’s what you need to know about these boards, including how they could help curb your medication costs in the future.
1. They review high-cost medications
PDABs are state-appointed groups that identify and examine high-cost drugs and look for ways to make them more affordable. Since Maryland established the first board in 2019, several states have followed suit as part of a broader push to curb rising prescription drug prices.
AARP state offices and volunteers were critical to the creation of PDABs in Maryland, Colorado, Minnesota, Washington and elsewhere, and AARP continues to support the development of these boards and state efforts to address high prescription drug costs.
The federal 2022 prescription drug law allows Medicare to negotiate prescription drug prices with manufacturers for a select number of drugs each year — a move that is expected to save enrollees $1.5 billion this year. But Medicaid and commercial insurers are left out of this opportunity to set more affordable prices, says Gerard Anderson, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. Medicaid is funded jointly by the federal government and the states, but each state operates its own Medicaid program within federal guidelines.
“For the vast majority of drugs, payers and patients are sort of left on their own,” Kesselheim adds. “And I think that’s what the states are responding to,” by forming their own PDABs.
2. The boards can take different approaches to lowering costs
Each state’s board operates differently, depending on the legislation that established it.
In Maryland, where Anderson serves on the board, the group identifies and reviews medications with high list prices that are unaffordable to many. Drugs that are commonly used by Maryland residents are given the highest priority, he says.
In addition to conducting reviews, the Maryland board can set upper payment limits — the maximum price that the state will pay for specific medications. So far, the Maryland board has set upper payment limits on two diabetes drugs: Ozempic and Jardiance. “And we are in the process of expanding the number of drugs quite dramatically over the next year,” Anderson says.
For now, these upper payment limits apply only to Maryland state-funded programs, though officials ultimately plan to extend them to commercial insurers, Anderson says. The goal is for residents taking these medications to pay less — both in insurance copays and at the pharmacy counter.
It’s important to note that not every state has the ability to set these upper payment limits. Some boards highlight “excessively priced drugs, then stop,” Kesselheim says. This puts pressure on drug companies and draws federal policymakers’ attention to the issue.
Other boards may go one step further and recommend strategies to lower costs for their state’s health budget, such as negotiating rebates with manufacturers.
Several states are considering setting upper payment limits on all the drugs that Medicare negotiates.
3. Experts expect more states to establish these boards
Since Maryland established its PDAB, several other states have followed suit, though the powers granted to those boards vary considerably.
“I expect that we will see more and more states adopting some form of [PDABs] over the next five years,” Anderson says — especially as prices keep rising.
A recent report from AARP found that prices for the top 25 brand-name drugs have increased by an average of 81 percent since they entered the U.S. market. In 19 other high-income countries, prices of those same drugs have fallen by an average of 13 percent.
“High drug prices remain an issue for a lot of patients,” Kesselheim says. “And so this is one step that states can take that is a fair and reasonable approach to try to deal with it.”
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