State-based Prescription Drug Affordability Board’s (PDABs) have an important goal – to cut health care costs by reducing spending on prescription drugs. However, in an effort to do so, PDAB actions often overlook the complexities of America’s health care system and subsequently oversimplify the issue.
To better understand potential impacts of an upper payment limit, the Oregon PDAB dedicated one of its meetings to a series of discussions with supply chain stakeholders, including patients, pharmacy benefit managers, insurance companies, manufacturers, and advocacy groups. Unsurprisingly, each group raised questions and concerns with the implementation of upper payment limits and the unintended consequences resulting from them.
Stakeholders expressed concerns that an upper payment limit could lead to:
- The removal of significant negotiating tools that pharmacy benefit managers use to secure rebates and discounts from drug manufacturers;
- Cost shifts that may result in higher premiums if not handled appropriately;
- Less incentives for generic or biosimilar drugs to come to market;
- Drug manufacturers shifting focus to produce more profitable drugs;
- Access challenges for patients.
In addition to stakeholder concerns, a recent analysis commissioned by the Oregon PDAB calls into question the likelihood of savings being achieved by an upper payment limit. In fact, the report lays out broad scenarios where state spending could actually increase depending on the price level set by the board and the resulting effects to the complex prescription drug supply chain.
Despite this information, in November the Oregon PDAB voted to send its report on upper payment limits – viewed by some board members to be recommendations – to the legislature.
When the stakeholders directly involved with the delivery of healthcare are voicing concern with the impact of PDAB actions, and its own analysis indicates its actions may not even live up to its mission of reducing healthcare costs, one might wonder: Who do Prescription Drug Affordability Boards actually listen to?