Three ways state drug price setting boards fail patients

State drug price setting boards put politics in between doctors and their patients. Instead of addressing the root cause of affordability and accessibility problems, these bureaucratic proposals are likely to harm patients’ access to care and threaten research and development (R&D) of new medicines. Despite misleading rhetoric, the reality is that state price setting boards:

1. Fail to address drivers of access and affordability challenges.

Over half of every dollar spent on medicines goes to insurers, PBMs and others in the supply chain, and three PBMs control 80% of the national market. These self-serving middlemen employ abusive practices to pad their bottom line by deciding what medications patients receive and what price they pay — repeatedly choosing profits over patients. These middlemen may even divert assistance from manufacturers meant for patients to themselves as profit.

Concerns are mounting around PBMs, from investigations for anticompetitive behavior that illegally distorts the market to hurting consumers and threatening the survival of independent pharmacies, according to a recent report by the U.S. Federal Trade Commission and a U.S. House Committee on Oversight and Accountability investigation.

The bottom line: State drug price setting boards do not fix this broken system, instead turning a blind eye to PBM and insurer practices that drive up costs and create access barriers, like prior authorization.

2. Discourage R&D for crucial lifesaving medications.

Federal price-setting policies are already impacting investment in R&D, increasing the likelihood that these state boards will do the same. In recent comments in the Wall Street Journal from Charles River Laboratories International, which provides drug-development services to pharmaceutical companies, the company cited federal price setting policies in the Inflation Reduction Act as one of the drivers of cuts to R&D by its clients. Those policies have not even fully been implemented yet and they are already having an impact. This should be a massive warning sign to all state governments.

The bottom line: Americans rely on cutting-edge medications to address a wide range of diseases and chronic conditions. Policies like state drug price setting boards, which threaten drug development, put access to future treatment and cures at risk.

3. Have yet to save taxpayers and patients money; but already cost states and taxpayers millions.

States with existing price setting boards have already spent millions of dollars each on creating their board, without one dollar saved to show for it. In fact, these boards are designed to put a state’s fiscal year budget first rather than implementing policies that prioritize patient savings without jeopardizing the research and development of medicines.

The bottom line: State price setting boards not only cost states money, but also, often, taxpayers foot the bill.

Even worse, PDAB members are forging ahead toward price-setting for life-saving medications despite a lack of understanding about how their decisions will function in reality and affect patient access to medicines.

At a meeting earlier this summer in Colorado, board members acknowledged that many unanswered questions remain surrounding the impact and feasibility of their work, and that they themselves don’t know how price setting will impact patients.

“...how our decision is going to lead to a net cost reduction for patients I think is still kind of an unknown for us...” - PDAB Member Dr. Amy Guiterrez (56:30 – 56:39)

In addition, state drug price setting boards lack clear, transparent, and consistent standards and processes; routinely rely on flawed data, rarely provide (see page 2) adequate time for public comment to help inform their decisions; and are not always required to provide clarity regarding their conflicts of interests — or those of the advisors who have shaped the boards — and recusal processes for board members.

It’s clear that state drug price setting boards could hurt the patients they claim to serve. They needlessly risk patient access to medications, could stifle the pipeline of future innovative medicines, and allow PBMs to continue gouging patients at the pharmacy counter. It is critical that these boards tackle the true drivers of increasing drug prices rather than pursuing a politically charged policy that harms and doesn’t help.