Prescription Drug Affordability Boards (PDABs)

By: Tracy Baroni Allmon, Rebecca (Becky) Roman, Charlotte Hanby

What are PDABs?

Prescription Drug Affordability Boards (PDABs) are state-appointed entities empowered to review drug prices, and, in some cases, set upper payment limits (UPLs) in an attempt to lower drug costs for identified populations within the state.  The boards typically consist of five to nine members with expertise in healthcare economics, pharmacology, medicine, health policy, and insurance. In addition to core board members, PDABs often have advisory councils that may include patients, healthcare providers, industry representatives, and other key stakeholders who provide additional insights on drug affordability and access issues.

What do PDABs do?

As states experiment with new strategies to lower drug costs, the functions and authorities of PDABs vary widely. Their roles may include:

  • Affordability Reviews: PDABs conduct evaluations to determine whether certain prescription drugs present affordability challenges to patients and healthcare systems. This process involves analyzing insurers’ spending trends, wholesale acquisition costs, patient out-of-pocket expenses, manufacturer rebates, and the availability of therapeutic alternatives.
  • Upper Payment Limits: In states where PDABs are granted broader authority, they can set ceiling prices, capping the maximum amount that payers can reimburse for specific drugs dispensed to impacted populations that are deemed “unaffordable”.
  • Policy Recommendations: Some PDABs are tasked with advising state legislatures on potential policy measures to mitigate high drug costs, which may include negotiating prices directly with manufacturers or exploring bulk purchasing agreements.

Which states have established PDABs?

As of March 2025, 11 states  (CO, ME, MD, MA, MN, NJ, NY, OH, OR, VT, WA) have enacted laws to establish PDABs with a mandate to control drug costs in identified categories.1-14 While PDABs in 8 of these states (CO, ME, MD, MN, NH, NJ, OR, and WA) have taken steps to identify that are unaffordable to patients or the state, 4 states (CO, MD, MN, WA) further have the ability to set price ceilings on drugs deemed “unaffordable.” Colorado has been at the forefront in moving beyond the evaluation phase and is starting the process of setting UPLs, however, no state has set a UPL to date.

Which states are considering establishing PDABs?

In the current legislative session, 12 states have active PDAB legislation, 7 of which do not currently have laws enacting PDABs (IL, IA, KS, MI, PA, VA, WV) reflecting a growing legislative interest amongst states.15-23

Seven states (AZ, CT, KY, NE, RI, SC, WI) introduced bills to establish PDAB in a previous legislative session but have not yet introduced legislation this session.24-33

UPL Deep Dive

Each state has a different approach to setting UPLs, illustrating the complexity and variability inherent in addressing prescription drug affordability at the state level.

  • Number of UPLs set by PDAB: In some states there is no limit to the number of UPLs the PDAB can set, whereas in others PDABs may establish 12 to 18 UPLs per year.
  • Methodology for determining UPL: Each of the four states with the authority to set UPLs has a different methodology for determining the ceiling prices. Minnesota mandates that the state’s UPL align with Medicare’s maximum fair price (MFP) from the Drug Price Negotiation Program (DPNP). Other states, such as Colorado, employ a combination of cost-benefit analyses and benchmarking prices against other states or countries, like Canada.
  • Exceptions to UPLs: Some states have allowed for exceptions for drugs on the FDA shortage list or for drugs designated as the sole treatment for a rare disease or condition by the FDA.
  • UPL application: Depending on the state, UPLs may apply broadly across public and state-regulated commercial plans, while others focus on specific state-funded programs such as Medicaid and state employees. Some state laws recognize that self-insured plans with enrollees in the state can chose to utilize the UPLs established.

Navigating PDABs and UPLs

Drug manufacturers may encounter several challenges when navigating PDABs and UPLs including:

  • Regulatory Variability: Each PDAB has its own set of criteria and processes for assessing drugs, which is likely to lead to inconsistencies in how drugs are reviewed and priced across different states or jurisdictions. This fragmentation requires manufacturers to adopt a tailored approach for each PDAB review, complicating evidence development and market access strategies.
  • Impact on Pricing Strategies: A UPL or the threat of a UPL can impact a manufacturer’s ability to establish a consistent national pricing strategy. Since UPLs may result in significant price decreases, they can potentially limit the return on investment for new and innovative drugs, affecting how manufacturers allocate resources for research and development.
  • Lack of Consideration of Net Prices: Due to limited availability of rebate and discount data, PDABs base their evaluations on the list price of drugs. This can lead to decisions that do not accurately reflect the true cost or value of the drug to the healthcare system.
  • Impact on Patient Cost-Sharing: High spending on a prescription drug does not necessarily equate to high patient spending on the drug, or high cost-sharing.  Lack of information on patients’ cost-sharing can result in PDABs reviewing drugs that are affordable and accessible to patients. Following PDAB review, the same drugs may be less affordable to patients, since there are no requirements for the UPL or other PDAB price determination to be passed through to the patient.
  • Influence on Patient Access and Treatment Choices: The implementation of UPLs may lead to insurers favoring drugs that fall under these pricing limits, potentially limiting the availability of other treatments that might be more effective for certain patients. Alternatively, payers may prefer other drugs in the same therapeutic class as the drug with the UPL, since manufacturer rebates will likely be higher on non-UPL products. Both of these results undermine the clinical autonomy of healthcare providers and restrict patient access to the most appropriate treatments.
  • Complexity in Stakeholder Engagement: Manufacturers must navigate complex stakeholder landscapes that include not just PDABs, but also insurers, healthcare providers, and patient advocacy groups. Aligning these diverse interests can be challenging.

Given these challenges, manufacturers must develop robust market access and government affairs strategies that allow them to effectively engage with PDABs, adapt to evolving regulatory environments, and ensure that patient access to essential medications remains a priority.

Magnolia Market Access addresses these challenges by offering data-driven, patient-focused strategies that navigate evolving legislation, ensuring our clients can advocate for pricing frameworks that prioritize comprehensive patient access and affordability. Our services in claims analysis, policy review, and stakeholder engagement empower clients to effectively respond to PDAB selections and influence policy outcomes for improved patient care. Attend our upcoming webinar “Prescription Drug Affordability Boards: The Potential Impact on Patients” and learn more about our healthcare policy consulting services.

References:

  1. SB21-175, Colorado 2021 Regular Session. (2021)​
  2. HB23-1225, Colorado 2023 Regular Session. (2023)​
  3. HB0768, Maryland 2019 Regular Session. (2019)​
  4. HB0279, Maryland 2023 Regular Session. (2023) ​
  5. SB5532, Washington 2022 Regular Session. (2022) ​
  6. SF2744, Minnesota 2023-2024 Regular Session. (2023) ​
  7. S2007B, New York 2017-2018 Legislative Session. (2017)​
  8. H.4000, Massachusetts 2019-2020 Legislative Session. (2019) ​
  9. LD1499, Maine 2019 Regular Session. (2019)​
  10. HB1280, New Hampshire 2020 Regular Session. (2020) ​
  11. SB844, Oregon 2021 Regular Session. (2021)​
  12. SB192, Oregon 2023 Regular Session. (2023)​
  13. HB166, Ohio 2019-2020 Regular Session. (2019) ​
  14. S1615, New Jersey 2022-2023 Session. (2023)​
  15. HB1443, Illinois 2025 Session. (2025) ​
  16. SB66, Illinois 2025 Session. (2025) ​
  17. SB264, Iowa 2025 Session. (2025) ​
  18. SB212, Kansas 2025 Session. (2025) ​
  19. SD2055, Massachusetts 2025 Session. (2025) ​
  20. SB003, Michigan 2025 Session. (2025)​
  21. SB190, Pennsylvania 2025-2026 Regular Session. (2025)​
  22. HB1724, Virginia 2025 Regular Session. (2025)​
  23. LD697, Maine 2025 Session. (2025)
  24. SB1533, Arizona 2024 Session (2024)
  25. SB 8, Connecticut 2024 Regular Session. (2024)
  26. HB 5054, Connecticut 2024 Regular Session. (2024)
  27. LB 833, Nebraska 2024 Regular Session. (2024)
  28. HB 8220, Rhode Island 2024 Regular Session. (2024)
  29. SB 2719, Rhode Island 2024 Regular Session. (2024)
  30. H 4984, South Carolina 2024 Regular Session. (2024)
  31. SB 718, Wisconsin 2023-2024 Regular Session. (2023)
  32. HB 832, Kentucky 2024 Regular Session. (2024)