Colorado is proof: Too many unanswered questions remain about state government price setting's impact on patients and providers

As the Colorado Prescription Drug Board continues its affordability reviews, too many crucial issues remain unsolved. Beyond the persistent questions about methodology, data and process that we’ve discussed before, the entities responsible for implementing an upper payment limit (UPL) — insurers, hospitals, health care providers and pharmacies — have questioned whether they are even capable of doing it.

Several organizations vital to the healthcare system have voiced serious concerns about the board’s price-setting measures. But they are falling on deaf ears. Instead, the board’s decisions appear to ignore the anticipated consequences of their actions throughout the provider and supply chains as the flawed process moves forward. In fact, in public comments made during Colorado drug board meetings:

Insurers have pointed to barriers to implementation within plan design and claims systems.

• “[The Colorado Association of Health Plans] has concerns about the ability of health insurance carriers to alter their drug formularies so that individual drugs can be removed to align with an established UPL as well as changing claims systems to allow for single copay amounts specific to one drug… The uncertainty and costs associated could well outweigh the potential cost savings.” The Colorado Association of Health Plans (CAHP)

Hospitals have shared concerns about purchasing UPL drugs within their current purchasing model.

• “Colorado hospitals are concerned about any potential impact on the purchase price of national organizations as the majority of Colorado hospitals are members of Group Purchasing Organizations (GPOs) which allow hospitals to band together and realize savings through economies of scale on everything from prescription drugs to personal protective equipment to cleaning supplies. It is also important to note that GPOs are national in scope and not subject to Colorado law.” Colorado Hospital Association (CHA)

Providers have questioned how a UPL will work under their acquisition and reimbursement models and warn that a UPL will hurt their ability to stay afloat, drive up costs and endanger patients’ access to medicines.

• “As is the case for many complicated medications, there are numerous associated resources necessary in the process. If the health-system/pharmacy is not appropriately compensated for the entire process of supplying UPL medications, the only course of action is to absorb the cost and lose money, or, choose not to lose money and therefore ultimately choose not to stock the medication.” Colorado Pharmacists Society. Comment Letter. January 12, 2023
  
  
• “Not only would an Upper Payment Limit policy impact the providers ability to offer lower-cost prescription drug administration in a safe and controlled environment, but it would also increase the risk of forcing patients into a care setting the ultimately is more expensive for everyone.” Association of Women in Rheumatology (AWIR)

This political exercise already costs millions of dollars for the state without saving a dime for patients to date, and these statements only add to concerns that the board is rushing towards disastrous outcomes for patients who rely on life-saving medicines prescribed by their doctors. Colorado and other states should focus on the root cause of the affordability and accessibility problems: health insurance practices and the self-serving actions of the pharmacy benefit manager middlemen who control — and too often increase — costs at the pharmacy counter.