Board OKs upper payment limit process to cap drug costs on state health plans

Maryland's Prescription Drug Affordability Board is working through governing regulations that could help limit the price of some prescription drugs for state health plans in the future. Photo by Getty Images.

The Prescription Drug Affordability Board (PDAB) finally approved a process that could lead to “upper payment limits” on high-cost prescription drugs for state health plans, a hurdle it has faced since the board’s creation.

The board early this summer selected six drugs for “cost review” that could be subject to the new procedures approved Tuesday, which would use a variety of methods to bring down costs for medications that pose an “affordability challenge.” One of those could be the upper payment limit.

Vincent DeMarco, president of Maryland Health Care for All who wants to expand the authority of PDAB, is “thrilled” at the decision.

“It is really a tremendous step forward in making high cost drugs more affordable, first for state and local governments, and then hopefully soon for all Marylanders,” he said.

That said, Marylanders are a ways off from seeing reductions.

The Upper Payment Limit Action Plan does not actually limit costs yet – it merely sets up a tool for prescription cost reduction efforts, where the state would set a limit on how much it is willing to pay for certain prescription drugs under the state health care plans.

But the procedure must first be reviewed by the Legislative Policy Committee, which then has 45 days to approve or deny. If the committee does not respond in that timeframe, then the board would have to go to the governor and the attorney general for approval.

During the meeting, board Chair Van T. Mitchell, who last month expressed frustration in the slow progress of the board , acknowledged the efforts made by the five-person staff to get the new procedures in place.

“I am not sure I’ve seen a process – and this is kudos to the staff, is certainly not me – where it has been as deliberate and transparent and wanting to do the right thing,” Mitchell said. “Does that mean we’re going to get it 100% correct? Not sure yet, to be determined. But for a little team … It’s really hats off to everyone that has rolled up their sleeves.”

Targeted drugs

Six drugs were recently selected for “ cost review ,” and address several conditions including type 2 diabetes, heart disease, kidney disease, eczema, crohn’s disease and more.

• Dupixent
• Farxiga
• Jardiance
• Ozempic
• Skyrizi
• Trulicity

The Prescription Drug Affordability Board was created by the General Assembly in 2019. It was slow to get started, after then-Gov. Larry Hogan (R) cut its funding in 2020 amid pandemic-induced economic uncertainty.

Gov. Wes Moore (D) signed separate legislation last year that reaffirms the board’s authority to issue upper payment limits and extends deadlines from the earlier law.

The board has been in a lengthy rule-making process to get business underway, determine what drugs could be expensive for state employees and establish methods to bring those costs down.

“It should have happened two years ago under the original 2019 statute,” DeMarco said. “It was supposed to have been done in 2022 … but unfortunately former Gov. Larry Hogan vetoed a critical funding measure for the board in 2020 and that set everything back.”

If approved by the Legislative Policy Committee, it does not mean an upper limit would be set. It just means that board staff would begin to investigate various avenues to lower prescription drug costs, with upper payment limits as one option if staff determines it would be an effective cost-cutting measure.

The procedure calls for staff to look at a variety of factors, including the price for the drug when it first hit the market, cost of comparative drugs, its cost in other countries and how much the drugs cost under other programs such as Medicare. A payment limit could also be set using a combination of those factors.

The staff will weigh the payment limit options along with other cost-reduction measures and make a recommendation to board for its approval. The board would then coordinate with state and local governments to implement the payment caps, potentially saving money on state health care costs through reduced prescription drug costs.

The rule also allows the board to monitor any accessibility issues that may arise from an upper payment limit and suspend the limit if needed.

Some of the written public comments on the proposal wanted more specificity on the upper payment action plan. Board member Gerard Anderson recognized that the procedures lacked some specificity, but that’s because “each drug is unique and probably will require a slightly different approach.”

Board member Eberechukwu Onukwugha added that “it is going to be hard to be specific until we start.”

“ Even when you have a process that’s committed to transparency and methodology and talking about the rationale for why you elevate one method versus another — no method is uniformly best,” she said. “And so, until you start and stress-test that process, you can’t even improve your methodology and your process for selection.”