In recent years, prescription drug affordability boards (PDABs) have struggled as they implement their cost review and price-setting policies.
Now, some states are attempting to cut out these regulatory processes entirely. Instead of creating new PDABs, some states are considering simply tying prescription drug reimbursements in the state to the maximum fair price (MFP) set for the Medicare program.
The logic appears simple at first — if PDABs are slow-moving, why not adopt a federal pricing benchmark to set upper payment limits faster?
This shortcut, however, doesn’t solve for the critical concerns patients and providers have raised about upper payment limits and it moves the decision-making process even further from the people it impacts.
Lack of Savings
State adoption of the MFP doesn’t guarantee savings for the system or the patient. In fact, evidence suggests the opposite.
A recent fiscal analysis by Nevada’s Public Employees’ Benefit Program determined a cost of nearly $2 million to that program alone if the state implemented MFP reference pricing. Health plans have refuted claims that upper payment limits will lower premiums and patient costs. And, a recent study from the Pioneer Institute notes that patient out of pocket costs for drugs subjected to Medicare’s maximum fair price have actually increased – not decreased – by an average of 32% for patients within the Medicare program.
Threat to Access
Two surveys conducted by the Partnership to Fight Chronic Disease have shown that health plans intend to implement utilization management – tactics that often delay or deny access to medications – for drugs impacted by upper payment limits.
And, under Medicare’s MFPs, community pharmacies are also raising alarms about challenges to access. A recent survey revealed a majority of community pharmacies will not stock drugs subject to the MFP due to fears of inadequate reimbursement, leaving patients scrambling to find their necessary medications.
No Local Considerations
Despite concerns about PDAB processes, policies that automatically set upper payment limits based on actions of a distant third party may be even less patient friendly. Rather than incorporating local considerations and stakeholder input, adopting MFPs abandons a local PDAB process in favor of a one-size-fits-all pricing scheme.
This shift sidelines the most crucial voices in health care: patients, providers, and caregivers who understand the real-world impact of these decisions. They are left with no meaningful avenue to participate in policies that directly affect their treatment and health.
Through Medicare reference pricing, state policymakers are ceding decisions impacting their constituents’ health to federal regulators who aren’t considering state-level impacts.
Speed Comes at a Cost
True progress for health care affordability requires a thoughtful, transparent approach that prioritizes patient access and brings all stakeholders to the table.
Using the MFP as a shortcut to upper payment limits may seem efficient at first glance, but the end result is still an unproven policy with no track record of savings, a growing body of evidence showing reduced access, and a lack of local considerations that jeopardizes patient care.