The Colorado Prescription Drug Affordability Board (PDAB) recently took a first-in-the-nation step to lower prescription drug costs for state residents, deeming the popular rheumatoid arthritis drug, Enbrel, unaffordable. Next up: over the next six months, the PDAB will determine an Upper Payment Limit (UPL) that the manufacturer, Amgen, will be required to adhere to when selling the drug in Colorado.
Desire for excessive profit is driving costs higher
The prescription drug system is complicated and costly. Traditionally, manufacturers set the initial or list price at which a drug is offered to the market. This price is typically over-inflated and reflects a primary goal of excessive self-enrichment. Some say that manufacturer-led programs, like copay coupons and patient assistance programs, alleviate affordability concerns for consumers. But those programs are not available to everyone, and many patients continue to struggle to pay for their prescriptions. Those programs also do nothing to lower costs for employers and taxpayers, who are on the hook for high costs.
State PDABs determine the range of prices ultimately paid for a particular drug through an objective investigation called an Affordability Review. At the end of the Colorado PDAB’s Affordability Review for Enbrel, it found that the drug, which is used to treat psoriatic arthritis and other autoimmune diseases, is unaffordable for Coloradoans. The medication can cost patients and their insurance companies more than $46,000 a year.
Lowering drug prices are popular politics and PDABs can expand on federal efforts
About 82% of adults say the cost of prescription drugs is unreasonable. In a survey from the Kaiser Family Foundation, about eight in 10 people across political parties say drug company profits are a significant contributing factor to prescription drug costs. PDABs in states across the country – including Maine, Maryland, Minnesota, New Hampshire, New Jersey, Oregon, and Washington — are all aiming to address prescription drug affordability for their residents. In Maryland, for example, collectively, the manufacturers that produce the state’s most costly prescription drugs spent $76 billion on dividends, stock buybacks, and executive compensation, compared to $67 billion on research and development. Within the next few weeks, the state’s PDAB will officially recommend a set of drugs for an Affordability Review.
Portion of adults who consider the cost of prescription drugs unreasonable
While the Inflation Reduction Act (IRA) allows the Centers for Medicare & Medicaid Services (CMS) to negotiate directly with drug manufacturers, this authority only helps Medicare lower prices. States are stepping up to build on the IRA, and it is playing out in real time in Colorado. Enbrel was one of the first 10 selected by CMS for Medicare negotiation, and its price is actively being negotiated. As CMS works to lower the price of Enbrel for Medicare patients, the state’s PDAB is working to do this for Colorado patients who aren’t enrolled in Medicare.
While there is still a long road ahead for Colorado and the seven other states with active PDABs, state lawmakers are stepping up to help lower drug prices and protect their constituents from high health care costs.
