Prescription Drug Affordability Board Activity through October 18, 2024

The Center for Evidence-Based Policy (CEBP) at Oregon Health and Science University (OHSU) made a presentation entitled “Oregon PDAB Support Options.” Previously, the board chair reported that though CEBP had asked all of the states workinging on PDABs to create a multi-state collaborative, this was not viable because the states were all on different trajectories. Oregon’s PDAB has been receiving assistance from the PORTAL team at Harvard for technical assistance provided by a grant through the National Academy of State Health Policy. CEBP offered options to support the PDAB, including providing stakeholder input, health process and systems engineering, data analysis and collection of evidence. CEBP is supported by two grants, one with Arnold Ventures and the other with The Commonwealth Fund.

Between April and July 2024, the Oregon Prescription Drug Affordability Board worked with consultants Myers and Stauffer LC to host 23 community meetings. The consultations completed an upper payment limit study required by statute and discussed savings possibilities for upper payment limits. The board chair, Ralph Magrish, quoted the following sources:

“The U.S. government's first-ever negotiated prices for prescription drugs are still on average more than double, and in some cases five times, what drugmakers have agreed to in four other high-income countries.” Beasley, Deena, “US will still pay at least twice as much after negotiating drug prices,” Reuters, September 3, 2024.

“Prices for these drugs after this negotiated maximum fair price are still 4.7 times higher than that of the United Kingdom’s National Health Service.” Mueller, Lucia, “Medicare negotiated drug prices 4.7 times higher than NHS negotiated prices,” PharmacyChecker.com, August 22, 2024. 

“More than 50% of what Medicare spent on drugs from 2016 to 2018 was for drugs that were advertised on television.” Rosenthal, Elisabeth, “With TV drug ads, what you see is not necessarily what you get,” KFF Health News, September 17, 2024.

Magrish concluded that upper payment limits would impact medicine prices to consumers, premium increases, and bottom line profitability for small businesses and employees’ salaries.

On August 21, Myers and Stauffer LC provided a draft constituent group engagement report with a summary table of constituent group recommendations:

They also provided a summary of the constituent group concerns and obstacles:

Details of the constituent feedback is available here.

Myers and Stauffer LC presented a hypothetical model of 2023 savings using Medicare’s maximum fair price (MFP). The consultants analyzed data collected from insurance carriers reporting drug prices, excluding Medicare, Medical, and others.

They also created three UPL scenarios for eight prescription drugs using monthly prescription and medical drug cost data from the Oregon Educators Benefit Board (OEBB) and Public Employees’ Benefit Board (PEBB) between April 2023 and March 2024.

1. Under scenarios where there are no rebates due to an implemented upper payment limit, costs are projected to increase $8.9M or decrease by $10.7M (range of +1% to -1.1%).
2. Under scenarios where 25%-50% of rebates are retained, the PEBB program could increase by $3.6M or save $20M depending on the upper payment limit selected. For the OEBB, the program is modeled to decrease by $.2M to $13.8M, based upon the upper payment limit selected.

Magrish exhorted the board to understand that an upper limit process will require a comprehensive, detailed plan for individual drugs. 

The board and consultant discussed approaches that other states have leveraged to set upper payment limits. 

1. Net Cost - establishing a upper payment limit at or near existing average net drug price after all rebates & discounts
2. Reference Pricing to Existing Benchmarks - Establish upper payment limit based on prices already negotiated or set by other entities
3. Reference Pricing to Therapeutic Alternatives - Establish upper payment limited based on the price of drugs that can be substitute for the drug under consideration
4. Launch Price Indexing - Establish an upper payment limit that uses product launch price and indexes price to the CPI.
5. Percentage off of WAC - Establish upper payment limit as a fixed percentage off of WAC (For brand drugs, Federal Medicare rebate is 23% of AMP).
6. Payer Return on Investment - “For a drug that has been subject to valid pharmacoeconomic research on value/cost savings, establish an initial UPL with a minimal lower costs and assess health plan savings over a set period.”
7. Budget Impact-Based - Establish upper payment limit so that drug spending does not exceed a percentage of a budget.
8. 340B Program Specific - Establish reimbursement adjustment for some of or all of the 340B entities.

Board discussion on the options was varied, with concerns about upper payment limits, rebate models, net up front costs, and negotiated prices from the Department of Veterans Affairs. Concerns were brought up that international pricing comparisons are not comparable. The process is complicated by the diversity and use of drugs, i.e. comparing a long-term generic drug to a new medication for the same disease. The Executive Director suggested that all of the methods may be used for different medications. Board members raised concerns that pharmacists may have difficulty implementing a complex process.

Asked what options are problematic, the board members replied:

• 340B Program Specific - Not helpful to the state as a whole or consumers.
• Budget Impact-Based - “Not sure it will get us where we need to be.”
• Launch Price Indexing & Percentage off of WAC - List prices can be externally increased which will make the UPLs higher.

The PDAB staff presented policy recommendations for the board’s approval. More details on these and the suggested recommendations below are found in the meeting document.

1. Propose a language change from “nine drugs a year” for affordability reviews to “up to nine” drugs a year.
2. Remove requirement that Department of Consumer and Business Services (DCBS) provide Prescription Drug Affordability Board (PDAB) with a list of prescription drugs each calendar quarter.
3. Remove the generic drug report annual requirement, with a new provision that relevant content would be incorporated into the affordability review report. The information could include generics or biosimilar availability, pricing, and marketplace commentary when relevant to drugs under review.

The following additional suggestions were discussed, but not approved by the board.

1. Expand prescription assistance programs (PAP) requirements to include manufacturer coupons and any other payment that reduces a patient’s out-of-pocket cost to fill a prescription. The board also recommended manufacturers be required to report on all patient assistant programs they maintain or fund.
2. Implement mandatory reporting on copay accumulator and maximizer programs to ensure equitable access to essential medications and prioritize transparency.
3. Require that all claims for prescription drugs and services provided by critical access pharmacies (CAPs), whether under Fee-For-Service (FFS) Medicaid, coordinated care organizations (CCOs), commercial insurance, or any prescriptions adjudicated through exchange payors, be reimbursed at the exact same rate as the CAP FFS Medicaid rate. This would ensure payment parity for all payors when reimbursing CAPs.
4. Require any broker or entity facilitating the purchase of health insurance or prescription drug benefits for purchasing entities to provide an annual disclosure of all direct and indirect compensation received, as required by the CAA. The disclosure must include any commissions, fees, or other forms of compensation related to the transaction.
5. Require all payors, including CCOs, commercial health plans, exchange-based health insurance plans, and PBMs operating within the state, reimburse pharmacies at a rate that is no less than the average actual acquisition cost (AAAC) of the drug plus the state determined dispensing fee.
6. Any broker or entity facilitating the purchase of health insurance or prescription drug benefits for purchasing entities must provide an annual disclosure of all direct and indirect compensation received.
7. Minimize reimbursement for all prescriptions: All payors, including CCOs, commercial health plans, exchange-based health insurance plans, and PBMs operating within the state, shall reimburse pharmacies at a rate that is no less than the average actual acquisition cost (AAAC) of the drug plus the state determined dispensing fee.
8. Leverage collective buying power of state agencies.
9. OHP FFS has a uniform prescription drug list (PDL) for some classes of prescription drugs. Extend the current PDL to all classes of prescription drugs to make sure providers are using the most cost-effective medications and to reduce their administrative burdens.

Written comments were provided by:

• Health HIV
• Mark Sturbois
• American Diabetes Association
• National Multiple Sclerosis Society
• PhRMA

Oral comments were provided by:

• Daria McGrew, PhRMA 
• Board members