Prescription Drug Affordability Boards Are a Classic Example of Bad Policy
Most government policies sound like a godsend at first glance. But after a bit of scrutiny, it is not difficult to see why they are deeply flawed.
Prescription Drug Affordability Boards (PDABs) are a prime example illustrating this principle. Imagine a state-appointed watchdog that steps in to set what they call “upper payment limits” (UPLs) on drug prices that seem excessive, and you have PDABs. In essence, they are just another form of government-imposed price controls that stifle competition under the guise of helping the less fortunate. Even worse, they have become a tangled mess of bureaucracy that does little to help patients.
In theory, PDABs were designed to take on skyrocketing drug prices, evaluating which prices might be “excessive” and capping them to offer some relief to consumers – especially low-income folks.
Sounds reasonable, right?
Not so fast.
In reality, these boards often get caught up in government budgets and the need to “save the state money,” which has little to do with easing the financial burden on patients. The Alliance for Patient Access points this out, noting that PDABs “take an overly narrow view of health care value, focusing on cost to the state rather than cost to the patient.” Essentially, it’s state savings first, patients’ needs second.
The National Alliance of State Pharmacy Associations noted that by setting prices at arbitrary UPLs, PDABs create a heavy financial strain for community pharmacies, especially the mom-and-pop shops that often don’t have the deep pockets to absorb these cuts. “Pharmacies may be reimbursed at rates below their acquisition costs for certain medications if UPLs are set too low,” they warn.
That’s a death knell for many independent pharmacies trying to serve their communities, not just the big chains. Check out my piece on pharmacy deserts to understand how this can impact consumers. When these local pharmacies can’t afford to stock essential meds, patients are the ones who pay the price—not with money, but with access. In many cases, the heightened costs are passed on to you, the consumer.
Somebody’s got to pay for all this, right?
One of the most damaging effects of PDABs? They hurt pharmaceutical innovation. Developing new, life-saving treatments isn’t cheap, and when government boards start enforcing arbitrary price ceilings, it doesn’t exactly inspire drug companies to pour billions into R&D.
As the Alliance for Patient Access aptly puts it, “lowering government prescription drug spending by sacrificing patient access isn’t a viable policy solution.” Translation? We might save a few bucks in the short term, but over time, patients will suffer because the innovative treatments they need won’t be there.
Worse, when PDABs enforce these UPLs, health plans may simply refuse to cover certain medications. The Alliance for Patient Access notes that “some plans may choose to drop coverage for the drug entirely.” So, if you need a particular medication, you might suddenly find it missing from your insurance formulary or bumped into a higher-cost tier that eats away at your paycheck. PDABs, ironically, may lead to higher out-of-pocket expenses, not lower ones.
At their core, PDABs are yet another government experiment with price controls in an area they have little expertise in—pharmaceutical markets. The National Alliance of State Pharmacy Associations highlights how these controls create an “administrative burden” on pharmacies, forcing them to deal with complex regulations and compliance issues that drive up costs and take time away from patient care. This kind of bureaucratic interference doesn’t just slow down pharmacies; it ultimately limits the choices patients have when they walk in for their prescriptions.
PDABs don’t address one of the root causes of high drug prices—pharmacy benefit managers (PBMs). These middlemen have a significant hand in determining the final price patients pay for medications. According to the Alliance for Patient Access, “PDABs overlook other key drivers of prescription drug costs, including pharmacy benefit managers.” By leaving PBMs unchecked, PDABs miss a huge part of the puzzle and, in doing so, let the most problematic aspects of the system persist.
Prescription drug affordability is a crisis that deserves real, effective solutions. But PDABs, with their rigid price controls and disregard for patient access, ain’t it. We don’t need yet another bureaucracy telling patients which medications they can or can’t afford. Instead, we need a healthcare market that embraces competition, transparency, and choice—elements that naturally drive prices down without stifling innovation or access.
In the end, less government leads to more competition. More competition leads to more innovation and lower prices. Everyone benefits – except politicians and government officials who want to continue expanding the government’s intrusions into our lives.