This overview is excerpted from Manatt on Health, Manatt’s subscription service that provides in-depth insights and analysis focused on the legal, policy and market developments.
On August 9, Maryland’s Prescription Drug Affordability Board (PDAB) released its draft action plan for establishing upper payment limits (UPLs) for drugs identified as causing or likely to cause affordability challenges. The draft outlines the process for determining whether a UPL should be set and the amount of that UPL.
The action plan proposes for UPLs to be set by adopting regulation through the traditional notice and comment rulemaking process. The Board defined several criteria for determining whether to set a UPL and what the UPL amount will be:
- Drugs with High Out-of-Pocket Costs. UPLs should be prioritized for drugs with a high proportion of out-of-pocket costs compared to net costs;
- Drugs with Minimal Utilization. UPLs should not be set for drugs with “minimal utilization” by payers and purchasers impacted by the UPL;
- Adverse Impacts. UPLs should minimize adverse outcomes and risk of unintended consequences;
- Drug Administration Costs. UPLs should consider the cost of drug administration and delivery, along with other relevant administrative costs;
- Medicare Maximum Fair Price. UPLs should not be lower than the Medicare Maximum Fair Price, if present; and
- Medicaid Best Price. UPLs should not impact statutory or regulatory amounts, such as Medicaid best price.
