An obscure Colorado board took an unprecedented step last week in an attempt to control the prices that patients pay for their medicines.
The board, called the Prescription Drug Affordability Review Board, made Colorado the first state to set, effectively, a price cap on a prescription drug. The cap, known formally as an upper payment limit, puts a ceiling on how much a patient or insurer in Colorado will have to pay for the drug — in this case a drug called Enbrel that treats rheumatoid arthritis and other autoimmune diseases. It will start Jan. 1, 2027.
The vote was four years in the making, had already survived one legal challenge and represented a major victory for allies of Gov. Jared Polis’ approach to reducing health care costs through stronger regulation.
“This groundbreaking upper payment limit on Enbrel has the potential to save $32 million from drug spending,” Sophia Hennessy, the lead policy research coordinator for the Colorado Consumer Health Initiative, said in a statement. “We’re thrilled with the board’s decision today that helps ensure more patients can afford their vital medications.”
But whether those promises will hold — whether patients will, in fact, save money or whether the relatively small number of Coloradans who take Enbrel will be able to continue to get it — is uncertain.
The pharmaceutical world is a deeply complicated place. And it is filled with intricately intertwined and sometimes competing pieces: manufacturers and distributors and pharmacy benefit managers and insurers and pharmacies, each with their own business models and financial incentives.
The upper payment limit, also called a UPL, applies only to the very end of that chain. But it has the potential to pulse throughout it and, opponents warn, create whiplash.
In debates at the drug affordability board over the past four years, various groups have argued that setting upper payment limits could cause drug companies to stop offering their drugs in Colorado, stop pharmacies from buying the drugs to sell to patients, or stop insurance companies from covering the drugs.
“The board has heard, but so far failed to heed, repeated warnings from patients, patient organizations, hospitals, pharmacies, and providers of potential unintended consequences of implementing a UPL in Colorado,” one coalition of patient advocacy groups wrote in a letter last month specifically about Enbrel. “Patients must not bear the burden of policies that are untested, inadequately monitored, and unlikely to address the affordability barriers they actually face.”
The long road to a UPL
Colorado lawmakers created the drug affordability board in 2021 and gave it a unique power to set price limits on drugs. But it can only do so after a methodical process involving months or more of data analysis, surveys, public comment, rulemaking hearings and a series of votes.
The board voted more than a year ago to declare Enbrel unaffordable, triggering the process to set a UPL.
Democratic Colorado state Rep. Yadira Caraveo, a co-sponsor of legislation to create a prescription drug affordability board, speaks at a rally in support of the bill on the steps of the Colorado Capitol on May 19, 2021. (MARKIAN HAWRYLUK / KHN)
About 2,500 people in Colorado take Enbrel, according to the drug board’s affordability report. Roughly 60% of those people are privately insured, meaning they share in paying the costs of the drug, which in 2023 was nearly $58,000 per year on average per patient. Of that, insurers picked up about $53,000 per year on average, while patients each paid a little over $4,600 on average, not including their insurance premiums.
In setting the UPL, the drug board looked to Medicare’s new “maximum fair price” for certain medications, and then rounded up to the nearest hundred to create some regulatory wiggle room. That put the UPL at $600 for a standard weekly adult dose of 50 milligrams, which comes out to about $31,000 per year.
“This is a great victory for patients in Colorado, because what good are medications to patients if we can’t afford to access them?” Laura Packard, the founder of the national advocacy group Voices of Health Care Action, said in a statement.
In its survey of Enbrel patients, the drug board found that 71% said the price of the drug made it difficult to access. But that survey received only 38 responses, highlighting the challenge the board, also known as the PDAB, had in understanding patients’ real world experiences beyond the data.
No Colorado patients taking Enbrel spoke at last week’s final rulemaking hearing where the UPL was set. A handful of patients submitted letters to the board throughout the process.
“Neither the board nor any of its experts can say unequivocally that fixing the price would lead to reduced out of pocket costs for individual patients,” one Colorado woman who said she uses Enbrel wrote in a letter last year. “That is at best curious and at worst bizarre.”
The concerns over whether a UPL will help patients focus mostly on how the health care system will react to it.
The board has made clear it wants any savings passed onto patients. But opponents question whether that will happen — or whether patients will continue paying the same copays and deductibles they do now.
Kevin McFatridge, the executive director of the insurer trade group Colorado Association of Health Plans, wrote in a letter to the board that the UPL may cause insurers to change their drug formularies and tiering levels or to use “utilization management tools” — often a euphemism for care restrictions.
One speaker at last week’s meeting warned that a lower price for Enbrel could lead to lower kickbacks from manufacturers to pharmacy benefit managers, which might cause those middlemen to change their policies on Enbrel.
“The PBM issue you raise is just incredibly frustrating for all of us,” Mizner responded.
In this Friday, July 8, 2016, file photo, a pharmacy technician fills a prescription at a pharmacy, in Sacramento, Calif. (AP Photo/Rich Pedroncelli, File)
Another speaker warned of the risk of what is known as “non-medical switching,” which is when an insurer pushes a patient onto a different drug for economic reasons, not health reasons.
“There’s just a real ingrained fear because I’m always wondering if the insurance company is going to come back to me and say, ‘Well, this is less expensive for us, so you have to be on this,’” the speaker, a woman from St. Louis named Tiffany Westrich-Robertson who is the founder of a patient advocacy group called the EACH/PIC Coalition, which fights drug affordability boards across the country, said.
The board also faced criticism for its processes and its data methods. Another lawsuit is possible — a federal judge dismissed an earlier one by Amgen, Enbrel’s maker, but the company could try again now that a UPL has actually been set.
In the end, this all means that the milestone is historic but tentative. What comes next will decide what it means.
“We’re looking at our Colorado residents and we’re looking at being able to have an impact there,” one board member, health care executive Cathy Harshbarger, said during last week’s meeting. “I feel comfortable that we’ve really worked hard on the process we have.”
Type of Story: News
Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.