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Prescription Drug Affordability Boards (PDABs) and Upper Payment Limits (UPLs)
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What is a Prescription Drug Affordability Board (PDAB)?
A Prescription Drug Affordability Board (PDAB) is a state-created board that reviews the cost of certain prescription drugs. These boards are typically made up of government appointees and are tasked with identifying drugs they believe may be too expensive or place a financial burden on the health care system.
Once a drug is selected for review, a PDAB may analyze factors such as the drug’s price, how widely it is used, and its impact on health care spending within the state. In some states, PDABs have the authority to take the next step and set UPLs on certain drugs.
PDABs were created with the goal of improving affordability, but it is important to ask: affordability for whom? Without meaningful patient input, these decisions may overlook the real-world impact on people who rely on these medications.
What is an Upper Payment Limit (UPL)?
An Upper Payment Limit (UPL) is a cap on how much certain entities in the drug supply chain, such as pharmacies and infusion providers, can be reimbursed for a prescription drug.
While a UPL may reduce what a health plan pays for a medication, it does not automatically lower what a patient pays. Insurance companies and pharmacy benefit managers (PBMs) are generally not required to adjust patient cost-sharing when a UPL is put in place.
For patients, especially those who pay coinsurance, or a percentage of a drug’s price, this can mean out-of-pocket costs remain high even when insurers are paying less.
How do UPLs affect patients in real life?
The example below shows why Upper Payment Limits (UPLs) may not improve affordability for a patient with a flat copay or coinsurance.
In this scenario, a drug’s reimbursement is capped through a UPL, reducing what the health plan pays. However, patient cost-sharing often stays the same because insurers generally are not required to pass those savings on to patients.
In the coinsurance example, the patient is paying a percentage of the drug’s cost after the Upper Payment Limit is applied. Even though the reimbursement amount is reduced, the patient is still responsible for a percentage of a very high price. As a result, the patient’s out-of-pocket cost can remain unaffordable, despite the payment cap or UPL.
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Where are PDABs and UPLs being considered?
PDABs and Upper Payment Limits are being considered or implemented in multiple states, and the details vary widely. Understanding how these policies are designed, and who they impact, is critical as more states explore this approach. See if your state has passed a PDAB below.
Contact your representatives
As states continue to debate and implement PDAB-related policies, it is essential that patient affordability and access remain at the center of the conversation. Contact your state lawmakers by completing the below.