A Prescription Drug Affordability Board (PDAB) is a board of experts with the authority to establish statewide upper payment limits (UPLs) for some high-cost drugs. The goal of the Board is to identify the UPL at which people who need the drug can afford to buy it, and the insurers, purchasers, and state programs can afford to provide the drug to everyone in the state who should get it.

Building on Minnesota’s prescription drug price transparency legislation, the Board would review available price information and leverage it to lower the cost to patients and other payers. Following in the footsteps of insulin advocates, the Board is designed to address the affordability of critical drugs for a variety of conditions.

For years, Minnesotans have come to the Capitol to share their stories about the high cost of prescription drugs from inhalers, EpiPens, and antibiotics to treatment for Multiple Sclerosis, autoimmune diseases, cancer treatment, and insulin.

Legislative action is critical this session because when it comes to healthcare policy, states have always done the heavy lifting, paving the way for federal action. While some progress has been made in Congress, drug provisions in the Inflation Reduction Act will only lower the cost of some medicines for some Medicare patients sometime in the next five years. Minnesota is well-positioned to establish an effective PDAB and to learn from states that are in the process of implementing Boards despite industry efforts to stall.

Our lawmakers have a responsibility to address out-of-control drug costs. Most prescription drugs on the market today are available because of publicly funded research. Our public tax dollars fund research and development for everything from treatments to rare diseases to the COVID-19 vaccine, yet there are no laws stopping prescription drug companies from charging prices that are out of reach. Then, we all pay the high cost of medicines we helped develop at the pharmacy, premiums, and public health insurance programs. Meanwhile, pharmaceutical companies are spending more money on advertising, lobbying, and stock buybacks than research.

A Prescription Drug Affordability Board would help all patients, payers, and providers in Minnesota. No one in Minnesota would pay more than the Upper Payment Limit on certain drugs.

The Board is comprised of seven voting members appointed by the Governor and two nonvoting members appointed by the House and Senate. The members must have relevant expertise and be free of certain conflicts of interest. The Board is advised by an Advisory Council, including representatives of pharmaceutical companies, health care providers, patients, insurers, and more.

The Board would operate much like a state’s public service commission – determining what suppliers can charge for vital public services and balancing consumer affordability with revenue needs of suppliers. The Board could initiate a cost review of drugs that are causing affordability challenges and that meet certain price or price-increase thresholds, drawing on pricing data, public input, and more. Where determined necessary, the Board would set an upper payment limit on in-state charges and payments for the drugs.

When bills like this are under consideration, the pharmaceutical industry often threatens that they won't sell in a state if it passes. This is a fear tactic to cause inaction. At the same time, PhRMA, the industry's lobbying arm, will stir up fears and hide behind industry-funded patient groups speaking against the policy.

There are several reasons why it is highly unlikely that manufacturers would refuse to sell a drug in a state because of these policies. First, it would require major shifts in the supply chain to keep a drug from an individual state. Second, manufacturers already sell a given drug at many different price points to different payers, across the U.S. and in other countries. They accept those lower prices because they are sufficient, and they charge higher prices in the U.S. because we allow them to. Lastly, it is in the board's interest and design to consider industry needs and set reasonable UPLs, and the industry has a lot of room to give.

If the pharmaceutical industry's profits were reduced by 11%, it would still be the most profitable industry, even after accounting for any investments in research. A 21% reduction in profit would leave pharma more competitive than 75% of other industries.

The PDAB bill is primarily opposed by PhRMA, pharmaceutical companies, and the Minnesota Chamber of Commerce, whose members include pharmaceutical companies. Pharmaceutical companies also fund patient advocacy organizations to oppose legislation that would lower prescription drug costs. In 2021, PhRMA spent more money than any other industry at the State Capitol lobbying against PDAB legislation.

One of the main talking points pharmaceutical companies use to avoid action on drug costs is to say that it will stifle innovation. However, research has consistently shown that there is no correlation between drug prices and innovation. Most prescription drugs on the market today were funded through public research, including the COVID-19 vaccine that received over $18 billion in public funding for research, development, and manufacturing.

Much of the innovation today has innovative patent protection, designed to maintain high prices. For example, 78% of the drug patents awarded between 2005 and 2015 were for existing drugs that had been recycled or repurposed. In 2019, 58% (28 of 48) of approved drugs were not first-in-class. Drug companies can clearly afford to continue research and development investments at current or greater levels while also increasing the number of people who can afford to purchase needed medication.

You can make your voice heard by contacting your state legislators and urging them to include the Prescription Drug Affordability Board in the House and Senate Commerce bills (HF2680/SF2744). Let them know why this issue is important to you and why you believe everyone in Minnesota deserves access to affordable medicine.