What Are Prescription Drug Affordability Boards?

AARP state offices and volunteers were critical to the creation of PDABs in Maryland, Colorado, Minnesota, Washington and elsewhere, and AARP continues to support the development of these boards and state efforts to address high prescription drug costs.

The federal 2022 prescription drug law allows Medicare to negotiate prescription drug prices with manufacturers for a select number of drugs each year — a move that is expected to save enrollees $1.5 billion this year. But Medicaid and commercial insurers are left out of this opportunity to set more affordable prices, says Gerard Anderson, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. Medicaid is funded jointly by the federal government and the states, but each state operates its own Medicaid program within federal guidelines.

“For the vast majority of drugs, payers and patients are sort of left on their own,” Kesselheim adds. “And I think that’s what the states are responding to,” by forming their own PDABs.

2. The boards can take different approaches to lowering costs

Each state’s board operates differently, depending on the legislation that established it.

In Maryland, where Anderson serves on the board, the group identifies and reviews medications with high list prices that are unaffordable to many. Drugs that are commonly used by Maryland residents are given the highest priority, he says.

In addition to conducting reviews, the Maryland board can set upper payment limits — the maximum price that the state will pay for specific medications. So far, the Maryland board has set upper payment limits on two diabetes drugs: Ozempic and Jardiance. “And we are in the process of expanding the number of drugs quite dramatically over the next year,” Anderson says.

For now, these upper payment limits apply only to Maryland state-funded programs, though officials ultimately plan to extend them to commercial insurers, Anderson says. The goal is for residents taking these medications to pay less — both in insurance copays and at the pharmacy counter.

It’s important to note that not every state has the ability to set these upper payment limits. Some boards highlight “excessively priced drugs, then stop,” Kesselheim says. This puts pressure on drug companies and draws federal policymakers’ attention to the issue.