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Now that the US government is negotiating drug prices directly with manufacturers, states want to get in on the action, too.
These efforts vary by state, but generally involve creating a board to review drugs’ affordability and sometimes setting upper price limits (UPLs). While none have implemented UPLs as of April, as the idea gains momentum, there are questions about UPLs and boards’ legality, practicality, and whether they will actually lower costs for patients.
A legal first
Colorado, for instance, enacted legislation to establish a prescription drug board in 2021, and drug prices have continued to rise since then. Over the last year, that board reviewed five drugs and declared three unaffordable, including biopharmaceutical company Amgen’s Enbrel, a biologic which treats autoimmune disorders like rheumatoid arthritis. The state then moved to set a UPL for “all purchases and payer reimbursements” in February 2024.
Enbrel can cost about $8,000 a month without insurance, according to GoodRx, and cost insurers in Colorado $46,772 per patient in 2022, according to the Colorado All Payer Claims Database—though Amgen advertises a co-pay program promising insured patients can pay “as little as $0 out-of-pocket for each dose.”
Amgen responded by suing the state in March 2024—the first legal challenge to this broader concept—alleging this move was unconstitutional. On March 28, a judge ruled that the company lacked standing and threw the case out, creating a path for Colorado to continue with its board.
Amgen moved to appeal the ruling in early April.
“We continue to have significant concerns with the board’s flawed policy and procedures during the rulemaking process to set an upper payment limit…Price controls will not meaningfully address affordability at the pharmacy counter and will instead create new access barriers for patients,” Amgen spokesperson Kelley Davenport said in an emailed statement to Healthcare Brew.
The Colorado Division of Insurance, which oversees the board, did not respond to a request for comment, but Isabel Cruz, policy director at the Colorado Consumer Health Initiative, sent a statement to Stat News celebrating the ruling as a promising step forward.
“Drugs don’t work if people cannot afford them,” she wrote.
Unanswered questions
Zachary Cook, VP of Healthcare Policy for government affairs consulting firm Stateside Associates, told Healthcare Brew via email he expects the ruling could inspire other states to create boards of their own.
Starting with Maryland in 2019, at least nine states have implemented prescription drug affordability review initiatives, including boards, according to a 2024 blog post from the National Alliance of State Pharmacy Associations. States like Michigan are debating implementing drug affordability reviews.
Colorado’s review board is set to start Enbrel rulemaking during a May 23 meeting.
This concept has inspired mixed reactions and plenty of questions. Patient advocacy organizations like the American Cancer Society Action Network (ACS CAN) and the Cystic Fibrosis Foundation have said that boards could potentially help drive down costs, but have the potential to hurt patient access if they do not center patients in the design process.
For instance, if manufacturers think a new drug could be subject to a UPL, they might jack up launch prices to compensate, ACS CAN said in a recent report. Manufacturers could also choose to stop selling a drug in a state with a low UPL or eliminate patient assistance programs to make up for lost profits.
“The impact of UPLs could be positive, negative, or a mix of both, depending on how they are implemented,” the report read.
Cook echoed this idea.
“There are many unknowns as to the effects of a board-implemented UPL on drug cost and patient access,” Cook said.
Michael Abrams, a managing partner at healthcare consulting firm Numerof & Associates, told us he agreed the approach raises questions. (He disclosed his company has worked with Amgen in the past but does not currently.)
“As more and more states set upper price limits on more and more individual drugs, it becomes a huge administrative burden, both for the state and for the pharmaceutical companies, and that simply adds to everybody’s overhead,” he said.
He added that many patients don’t pay the list price, and it’s unclear whether UPLs will actually result in lower costs for consumers.
“This general approach just doesn’t seem to be viable,” he said.