Prescription board sets tentative 2024 cost review plan to identify expensive drugs

State officials tasked with reining in prescription costs for Marylanders on the state health plan will soon start the process of identifying which medications are costly for patients, but actual cost reduction efforts appear to be months away.

During a Tuesday Senate Finance Committee hearing, Andrew York, executive director of the Prescription Drug Affordability Board (PDAB), outlined the upcoming year of board meetings.

In meetings over the course of 2024, the board will gather data, manufacturer information and public testimonies that will inform its consideration of which drugs should undergo state cost reduction efforts. PDAB meets once every two months.

“It’s a very complicated system,” York said following the meeting. “So a lot of this is also just working through to make sure there are no unintended consequences based on the policies.”

The board, created by legislators in 2019, has been slow to begin operating, due in part to former Gov. Larry Hogan (R) vetoing a bill that would have funded the board’s work.

Gov. Wes Moore (D) signed additional legislation last year that reaffirms the board’s authority to issue upper payment limits and that extends deadlines set in the earlier law. The General Assembly also carved out an additional $1 million in the 2024 state budget for the board’s operations.

Over the course of 2023, the board created and approved the policy framework for conducting cost review analysis.

York said that the board hopes to have a preliminary list of drugs eligible for further cost review  analysis by the upcoming Jan. 29 PDAB meeting. Drugs identified on this list do not necessarily mean they are unaffordable for Marylanders, but that the might be contenders for further investigation.

At the board’s March meeting, the board is planning to start the “consideration process” for a handful of drugs to see if the board would be interested in pursuing cost reduction efforts. This information gathering period would include testimonies through public comments, input from industry stakeholders and data from drug manufacturers.

Tentative plans call for the information and considerations gathered during this period to be given to the board during their May meeting, according to York.

York says that he hopes the list of “unaffordable” drugs will be complete in Fall 2024.

Upper payment limit action plan

When the board has settled on a final list of prescription drugs deemed “unaffordable,” the board would then discuss solutions to help bring costs down for state employees.

The board hopes to use what are called “upper payment limits” as a cost reduction tool.

“What we’re doing is we are looking a drug and then looking at the net cost of a drug, and then if it’s deemed unaffordable to the state…we would give the state leverage to negotiate what are called ‘supplemental rebates’ to get the net cost to what we think is an appropriate cost of the drug,” York explained. “So it’s going to save the taxpayers dollars, but otherwise it does not affect the rest of the supply chain.”

However, the board is still working out specifics of how upper payment limits would work. The board is creating a plan to implement upper payment limits. The implementation plan will then need approval from the Legislative Policy Committee.

“From there, we’ll set up provisions and then theoretically upper payment limits would be on drugs that come out of that first cost review process that are deemed to be unaffordable,” York said.

It seems that tangible price reductions for state employees are a ways off.

“Unfortunately, with all policy in general, that requires regulations and stuff like that, there are just very long runways,” York said.

Senate President Bill Ferguson (D-Baltimore City) told reporters Tuesday that reducing drug prices for Marylanders is going to be “very important.”

“We’re looking at how to protect pocketbooks of Marylanders, and so what we can do around prescription drugs is going to be incredibly important,” he said.

Meanwhile, the Maryland Health Care for All Coalition is urging lawmakers to expand the authority of the board to reduce costs for all Marylanders, not just state employees, in the upcoming 2024 Legislative Session.

The health care advocacy group supports Senate Bill 388 and House Bill 340. Those bills would allow the board to determine whether it is in the state’s interest to set up a process to use upper payment limits on all purchases of prescription drugs, with the goal of reducing prescription drug costs for all Marylanders, not just those on state health plans.

York said that the board has not yet issued formal support or opposition of the legislation.

Bryan P. Sears contributed to this report.

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