Q&A: How Maryland’s First-in-the-Nation Rx Affordability Board Is Faring

Maryland’s first-in-the-nation Prescription Drug Affordability Board (PDAB), enacted last year, has the authority to set upper payment limits for certain high-cost drugs purchased by state and local government. The board is also tasked with proposing a plan to extend upper payment limits to all purchasers in the state. This Q&A provides an update on Maryland’s implementation of its PDAB.

Who sits on Maryland’s PDAB?

The five appointed members of the PDAB include a pharmacist, clinician, and health policy researchers. They are:

• Van Mitchell, President/CEO of MSI, Inc. and, former Secretary, Maryland Department of Health and Mental Hygiene (PDAB Chair);
• Eberechukwu Onukwugha, MS, PhD, Associate Professor of Pharmaceutical Health Services Research, University of Maryland School of Pharmacy;
• George Malouf, MD, FACS, Optholmalogist in private practice and affiliated with the University of Maryland Capital Region Health Prince George’s Hospital Center;
• Gerard Anderson, PhD, Professor, Health Policy and Management, Johns Hopkins Bloomberg School of Public Health;
• Joseph Levy, PhD, Assistant Scientist, Health Policy and Management, Johns Hopkins Bloomberg School of Public Health.

When does the Maryland PDAB meet?

The board’s first two meetings were in January and February of 2020. Its initial tasks include hiring an executive director and developing a five-year budget and staffing plan. The staff is likely to consist of four to five people. The board will meet at least four times a year to complete its work.

How is Maryland’s PDAB funded?

The board has proposed legislation for the 2020 Maryland General Assembly session to fund its work through assessments on pharmaceutical manufacturers and other entities within the drug supply chain, including pharmacy benefit managers (PBMs), health plans, and wholesalers. The $800,000 allocated from the state’s General Fund to cover the PDAB’s start-up costs must be repaid to the state with the funding source that the board creates.

When will the PDAB begin setting upper payment limits for drugs?

Maryland’s PDAB has a phased-in approach to setting upper payments, beginning with placing upper payment limits on drugs for state and local purchasers before potentially expanding its reach to include all purchasers in the state. Maryland’s PDAB will begin to set upper payment limits for public payers in 2022 — pending approval by the state’s Legislative Policy Committee.

In 2023, the PDAB will recommend whether the assembly should pass legislation to expand the board’s authority to make high-cost drugs more affordable by setting upper payment limits on drugs for all purchasers (both public and private). The law also authorizes the board to explore other strategies to improve drug affordability, including bulk purchasing of drugs and reverse auction, a procurement method in which bidders compete by decreasing prices in response to an invitation to bid until a specified deadline.

Which drugs will the PDAB set upper payments for?

If authorized by the Legislative Policy Committee, the PDAB will begin setting upper payment limits in 2022 for certain high-cost drugs that surpass the price thresholds identified in the 2019 law. The Maryland PDAB will work with other states that are already collecting drug price data through transparency laws in order to establish memorandums of understanding for obtaining information to determine which drugs the PDAB should consider for review. While the thresholds specified in the law that trigger mandatory reviews focus on very high-cost drugs, the board also has the authority to review any drug deemed to cause an affordability issue for Maryland’s health care system or patients.

How are other stakeholders involved?

In addition to establishing the five-member PDAB, the Maryland law also establishes a 26-member advisory council that includes a diverse range of stakeholder opinions. Advisory council members represent brand-name and generic drug manufacturers, PBMs, health care advocates, labor unions, employers, researchers, clinicians, pharmacists, and hospitals. The public will have the opportunity to review and provide comments on proposed upper payment limits before any payment limits are finalized.

Has Maryland’s PDAB faced a legal challenge?

Maryland’s PDAB law has not been challenged as of March 3, 2020. However, once the PDAB begins to set upper payment limits, a legal challenge is expected. Unlike Maryland’s anti-price-gouging law, which was struck down for regulating prices outside the state, the PDAB is clearly limited to setting upper payment limits for purchasers within the state only.

Are other states enacting or considering PDABs?

Maine enacted a PDAB law in 2019. Rather than setting upper payment limits, the Maine PDAB establishes a spending target for prescription drugs for public payers and advances strategies to leverage public purchasing power to meet that target. Strategies can include establishing a common drug formulary, bulk purchasing of drugs, collaborating with other states, and other approaches.

Twelve states are currently considering PDAB legislation, including Arizona, Florida, Illinois, Massachusetts, Minnesota, Missouri, New Jersey, Pennsylvania, Rhode Island, Virginia, Vermont, and Washington.

The National Academy for State Health Policy (NASHP) released the original Model Act to establish a PDAB several years ago, and is currently working on new approaches to setting upper payment limits without having to establish a PDAB. These more streamlined models may be necessary alternatives for states when establishing a PDAB is not feasible.