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Prescription Drug Affordability Board might not deliver savings to patients

By Hannah Pfeiffer and Candace DeMatteis
June 5, 2024
Boulder Daily Camera
A group of unelected state officials is pondering a decision with enormous consequences for thousands of Colorado patients battling chronic diseases.

In 2021, Colorado established a Prescription Drug Affordability Board (PDAB) with the power to determine whether certain medications are affordable. If the PDAB deems a drug unaffordable, it can establish an upper payment limit — or price cap — limiting how much insurers can reimburse clinics and pharmacies for a particular medicine. This is already happening for medications that treat Crohn’s disease, psoriasis, arthritis and many other conditions.

This might sound like a positive development for patients who struggle to afford necessary prescriptions. But a mounting body of evidence shows that the PDAB is unlikely to generate significant savings at the pharmacy counter, and could actually jeopardize Colorado patients’ access to cutting-edge therapies.

A new report analyzing insurers’ perspectives on PDABs found that payment limits could make it harder for patients to access the medicines they need. For instance, if one drug in a therapeutic class is assigned a payment limit, health plans could direct patients toward that drug, even if they prefer to take a different drug in the class. The same report found that limiting how much insurers and their pharmacy benefit managers (PBMs) reimburse pharmacies and clinics could have unintended consequences on patient access.

There’s a risk this exact scenario could play out here in Colorado. Earlier this year, Colorado’s PDAB determined that one treatment for autoimmune diseases — including several types of arthritis and psoriasis — was unaffordable. Now, the board will determine whether, and at what level, to set the upper payment limit. If the board proceeds, it’ll be the first state-level drug payment cap in American history.

The predictably devastating, and now insurer-validated, consequences the decision could have on patients’ health should concern us all.

Lowering patient costs is an important goal. But medications must also still be available. With the distortions PDAB’s upper payment limit could introduce, access could suffer. Many pharmacies, clinics and hospitals might no longer be able to stock certain drugs because the PDAB cap on reimbursement will shrink their margins to almost nothing. They could even lose money on some drugs.

Consider drugs that must be administered under the supervision of a physician, or ones that must be delivered through a specialty pharmacy. The providers purchase the drugs directly and are reimbursed for them by insurers. If the PDAB sets the state’s upper payment limit far below the cost of acquisition, those providers may stop providing those medicines to patients altogether.

While well-resourced clinics and specialty pharmacies in affluent areas may be able to absorb some loss, rural clinics and facilities in underserved communities may not. Many of them are barely able to keep their doors open right now. The impact on Black and Latino populations could be severe.

A Health Affairs study noted that there were far more “pharmacy deserts” in Black or Latino neighborhoods than in White or mixed-race communities. In fact, Black patients spend an average of ten minutes longer traveling for health care needs than their white counterparts. The impacts of upper payment limit implementation will only exacerbate existing access challenges, while doing little to save patients money or improve health outcomes.

Payment limits could even affect patients who don’t currently take the medicine in question. That’s because insurers and their pharmacy benefit managers (PBMs) will inevitably try to steer patients toward the medicines with the largest profit margins.

For instance, insurers and PBMs may require doctors and patients to obtain “prior authorization” before agreeing to pay for a medicine — but erect no such barriers for a competing drug with an upper payment limit. Similarly, if one drug in a therapeutic class is assigned an upper payment limit, health plans could force patients to try that drug first, even if a patient’s doctor recommends a different treatment in the same class.

These policies aren’t just a headache. They have real-world consequences on health. It’s well documented that switching stable patients from one drug to another can harm patients’ health since different drugs affect people differently. This is especially true for people managing multiple chronic conditions who have to avoid interactions between different medications.

In essence, doctors’ clinical judgment will take a back seat to health plans’ financial considerations. Colorado’s PDAB is playing with fire — but it’s Colorado patients living with serious chronic illnesses who will get burned.

Hannah Pfeiffer is a cystic fibrosis patient and advocate living in Parker, Colorado. Candace DeMatteis, JD, MPH is the Policy Director for the Partnership to Fight Chronic Disease.