As Prescribed


2024 is shaping up to be a big year for prescription drug affordability boards (PDABs). Like state price transparency reporting laws, state legislation establishing PDABs continues expansion. In response to rising prescription costs and overall state-level health care spending, numerous states have established PDABs to review certain high-cost prescription drugs and determine if states should take action to reduce those prices.

The primary function of PDABs is to reduce overall government and commercial spending on prescription drugs. And although no two boards are the same, generally speaking, boards may accomplish these goals through various means, such as conducting affordability reviews, making recommendations to each state’s respective legislature on ways to reduce spending, negotiating prices and Medicaid supplemental rebates with manufacturers, and setting upper payment limits (UPLs) or caps on what a state will spend on a particular medication.

At present, 11 states—Colorado, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Ohio, Oregon, and Washington—have established PDABs. There is also legislation to establish similar boards in 13 more states: Arizona, Connecticut, Iowa, Kentucky, Michigan, Nebraska, Pennsylvania, South Carolina, Vermont, Virginia, West Virginia, and Wisconsin. However, as the tide of PDABs continues to rise, it is being met with opposition.

In February, the Colorado Prescription Drug Affordability Board found that Amgen Inc.’s arthritis medication Enbrel was unaffordable for patients in the state and voted to subject it to an upper payment limit. The UPL applies to “all purchases of and payer reimbursements for a prescription drug that is dispensed or administered to individuals in the state in person, by mail, or by other means. It is the first time any state in the country has made such a declaration and set up a months-long process to determine whether the board should set a ceiling on what Colorado patients and pharmacies pay for that drug.

On March 22, Amgen Inc., Immunex Corporation, and Amgen Manufacturing, Limited filed suit against Colorado’s PDAB. The complaint alleges:

  • Colorado law violates the US Constitution’s Supremacy Clause by overriding federal patent law, which grants pharmaceutical manufacturers a period of exclusivity to market and sell their products; “Congress struck a deliberate balance in the pharmaceutical arena—allowing those who develop innovative new drugs, and who can be expected to invest in new innovations, to benefit from market exclusivity for a specific and defined period while encouraging price competition thereafter”
  • Colorado’s PDAB process of declaring a drug unaffordable violates the Due Process Clause in that it does not provide drug manufacturers with a meaningful opportunity to be heard, nor does it provide any standards to ensure a constitutional rate of return on investment
  • Colorado’s price-control statute is preempted insofar as it purports to set prices that Medicare and other federal healthcare programs are required to pay for prescription drugs on behalf of beneficiaries of those programs
  • Colorado’s price-control law violates the Commerce Clause in that it is broad enough to apply to transactions outside of Colorado

The state has yet to file a response to the lawsuit. Stay tuned for further developments.

How We Can Help

Morgan Lewis guides and provides strategic counseling to pharmaceutical manufacturers navigating complex federal and state government pricing matters. Morgan Lewis lawyers can assist manufacturers in understanding and navigating the myriad state laws and regulations.