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The median price of a newly launched drug in 2023 was , up from . A tangle of manufacturers, insurers, pharmacy benefit managers, wholesalers, and pharmacies wrestle over their share of the cost in negotiations that remain nearly invisible to the average patient, who pays more for prescription drugs every year.

Some states are taking matters into their own hands with prescription drug affordability boards, or PDABs. So far, 11 states can assemble these boards to provide an added layer of oversight for prescription drug costs.

What Are PDABs?

PDABs are independent government bodies tasked with assessing high drug costs, developing recommendations to reduce them, negotiating Medicaid supplemental rebates, and, in some cases, setting upper payment limits on the costliest drugs. They have been compared to public utility boards or commissions.

PDABs have a set number of members, typically five, appointed by the state's governor and confirmed by the state senate. There may also be full-time staff, and a council of stakeholders or advisors.

"States are the laboratories of invention," said Tony Lourey, JD, chair of the Minnesota Prescription Drug Affordability Board, at a briefing hosted by the National Academy for State Health Policy. "We're all finished with the constituents, people ... loved ones that are struggling with the high cost of prescription drugs."

States that have established PDABs so far include Colorado, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Ohio, Oregon, and Washington.

What Have PDABs Done So Far?

At the briefing, members and staff from PDABs in Colorado, Minnesota, and Maryland discussed their boards' progress.

For Colorado, which has perhaps made the most headway so far, Lila Cummings, MHS, the deputy commissioner of health policy for the Colorado Division of Insurance, spoke about how their PDAB went about setting up the affordability review process with input from stakeholders and experts.

Ultimately, the board selected five drugs for review, and was the first to declare one "unaffordable" -- the autoimmune drug etanercept (Enbrel) -- in February.

On June 7, the PDAB voted on declaring another drug -- ustekinumab (Stelara) -- unaffordable, kicking off the process to give it an upper payment limit. Ustekinumab is used to treat plaque psoriasis, psoriatic arthritis, and inflammatory bowel disease.

In Maryland, Andrew York, JD, PharmD, executive director of the state's PDAB, said that, since they were formed in 2021, they had selected six drugs for their cost review process, which will gather payment data on each drug. Ultimately, they will decide whether each drug is unaffordable or not.

Currently, they are putting together an "upper payment limit action plan." If a particular drug is found to be unaffordable, their plan would go before legislators to implement the cost ceiling.

Meanwhile, Minnesota's PDAB is just getting set up, Lourey said.

Will PDABs Accomplish What They Set Out to Do?

The speakers also fielded questions about challenges to the PDAB model. Colorado is already facing a lawsuit from Amgen over its decision to cap prices on etanercept. But, as one expert said, litigation over PDABs and their goal is par for the course.

"Lawsuits are totally an expected outcome of any policy, no matter how big or how small, that threatens the profitability of pharmaceutical companies or anyone else in this space," said Benjamin Rome, MD, MPH, of Harvard Medical School in Boston, at the briefing. "It's just a highly litigious space, because there is a lot of money at stake."

Companies who profit from high drug costs may invoke the Commerce Clause of the U.S. Constitution, which prevents states from impairing interstate commerce. PDABs, however, are only designed to deal with in-state transactions.

Another potential challenge facing the boards is engaging all players in the prescription drug payment pipeline -- including pharmacy benefit managers, which have received for driving prescription drug costs up.

York, in response to a question about the role of pharmacy benefit managers in the boards' process, said that they could "play a role as a partner for PDABs if they're implementing certain policies" and described them as an "important constituent in the space."

Taking input and collecting data from so many stakeholders could also drag out even the first steps toward setting actual payment limits.

Cummings, for example, described a lengthy regulatory process in Colorado, from assembling the board, to stakeholder meetings, multiple rounds and drafts of affordability reviews with input from their advisory council and other experts, weekend meetings, public comments, and surveys of patient groups.

There were also questions about more effective ways to lower out-of-pocket patient costs, like changes to insurance benefit design or direct out-of-pocket price caps like Congress recently passed for insulin.

Cummings said that in Colorado, the PDAB's rules require insurers who save as a result of upper payment limits to pass along the savings to consumers in the form of lower out-of-pocket costs or lower premiums.

Rome said that out-of-pocket costs aren't the only obstacle posing a public burden. "We know that high out-of-pocket costs are a barrier to patients accessing and affording their medicines, but we also know that high prescription drug spending leads ultimately to higher premiums and higher taxes that affect everybody in the state," he said.

When it comes to lowering prescription drug costs, "we're going to go back to some of the core concepts," Lourey, the Minnesota PDAB chair said. "PDAB is another tool in the toolbox."

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