While Maryland became the first state in the nation to pass legislation creating a Prescription Drug Affordability Board, it may not be the last. Several other states are exploring similar legislation but legal challenges may follow.
Maryland’s General Assembly recently passed legislation creating a Prescription Drug Affordability Board authorized to recommend upper payment limits for high-cost drugs purchased by state and local governments. The board must obtain approval of its recommendation from the General Assembly’s Legislative Policy Committee, or from the governor and state attorney general, prior to imposing upper payment limits on drugs with price increases that meet or exceed a certain threshold. It also prohibits the imposition of payment limits on any drug that is on the FDA’s shortage list. The legislation is now pending approval by Maryland Gov. Larry Hogan.
The board was tasked with studying “the entire pharmaceutical distribution and payment system in the state,” as well as “policy options being used in other states and countries to lower the list price of pharmaceuticals,” and with reporting its findings to the General Assembly by December 31, 2020. Its findings are to include recommendations for a permanent funding source for the board. Thereafter, the legislation imposes a timeline for deliverables and approvals that must be met by the board prior to when it may begin setting upper payment limits for prescription drug products on or after January 1, 2022.
While Maryland became the first state in the nation to pass legislation creating a Prescription Drug Affordability Board, it may not be the last. Seven other states are exploring similar legislation, according to the National Academy for State Health Policy (NASHP). Building “on the precedent of healthcare rate setting and state regulation of public utilities,” the NASHP has developed model legislation to be used by state lawmakers for establishing drug cost review commissions in their states. A chart comparing the provisions of current affordability review proposals is posted to their website.
The new Maryland rate-setting law likely will be the subject of legal challenges. A separate and unrelated law passed by the Maryland General Assembly in 2017 authorizing the state’s attorney general to take legal action against generic drug companies that engaged in “price gouging” consumers was overturned last year on appeal by the US Court of Appeals for the Fourth Circuit for violating the Commerce Clause of the US Constitution. Proponents of the Maryland Prescription Drug Affordability Board maintain, however, that the new law is unlikely to encounter the same legal challenges because it specifically limits the board’s drug price regulation to drugs sold within the state.