How Will PDABs and UPLs Impact Drug Pricing? | Simplefill
One of the tools states are considering implementing is Prescription Drug Affordability Boards (PDAB) that offer upper payment limit (UPL) authority. Only some states have PDABs, and none have yet fully implemented UPLs, but they are on their way to doing so. Can this help drug pricing? Learn more about these programs.
What Are PDABs?
PDABs are state-level entities that review certain prescription drugs that people are struggling to afford. The boards are made up of experts who have worked in the pharmaceutical or medical field.
The goal for these boards is to find ways of lowering the cost of the targeted medications so that they put less strain on the entire healthcare system and on individual patients.
But how do PDABs know if these high-cost medications cause financial hardship? They rely on data along with input from the public. Some PDABs have public hearings that offer the chance for manufacturers, patients, and providers to speak up.
What Are UPLs?
If the board determines that a particular medication is not affordable, the state has the option of placing a cap on the price. This is the UPL. It regulates what state plans pay for the drug.
Only four states in the country have UPL authority. They are Minnesota, Colorado, Maryland, and Washington. None of them has implemented it, however.
How Can UPLs Impact Drug Pricing?
There have been all manner of attempts to bring drug prices down. The Trump administration has signed the Most-Favored-Nation plan, and there has been a push to make pricing more transparent, but medication costs remain high. Can UPLs achieve what other options have not?
Increase Cost-Sharing
UPLs place direct price caps on critical medications for conditions like diabetes and HIV/AIDS.
State-regulated plans, like Medicaid, will only pay that maximum price. This could mean lower out-of-pocket costs for patients with these medications, but it’s important to note that it may prompt payers to increase patient cost-sharing for other drugs.
Move Capped Drugs to Non-Preferred Tiers
Another potential outcome is that payers and pharmacy benefit managers may change their strategies for making a profit. They could move the capped drugs to non-preferred tiers, leading to higher cost-sharing. They might also remove them from a formulary completely. Patients may no longer have access to it, if that’s the case.
By Putting Pressure On Insurance Premiums
UPLs could even put pressure on overall insurance premiums because of the financial adjustments they would cause. They could disrupt the financial models for pharmacies, as well, leading to changes in what they acquire and what they prescribe.
When looking at whether UPLs are a good option, it’s essential to consider all of these factors and see if putting a cap on certain medications is worth the potential disruption patients may face if their drugs are moved to other tiers or are just not available at their local pharmacies.
Get Affordable Access to Prescription Medications
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Frequently Asked Questions
What Do Pharmacy Benefit Managers Do?
Pharmacy benefit managers (PBMs) function as intermediaries that manage prescription drug benefits for employers, health insurance providers, and other payers. They negotiate prices and rebates with manufacturers while also handling the administrative work of processing prescription medication claims.
PBMs are also in charge of managing the list of covered drugs, so they have a direct impact on the medications that people may be able to access. Their input also affects out-of-pocket costs.
Are PDABs Beneficial for Patients?
PDABs offer some benefits, but they also have drawbacks. They strive to lower drug costs, but the ways in which these boards attempt to reduce those costs don’t always achieve the desired results.
Detractors state that if PDABs intervene with drug prices, they could stunt innovation because manufacturers will be less willing to create new drugs.
The savings are also not guaranteed, and any caps only affect state-regulated plans and not, for example, Medicare. Some people also fear that PDABs could worsen health disparities, since some recent actions by these boards have focused mainly on chronic conditions that impact minority communities and not necessarily the entire state.
Will UPLs Be Implemented Soon?
There are still issues being worked out when it comes to UPLs. Some governors continue to veto proposals that would start these programs for fear of what it could mean for innovation and patient access.