Four years later, Maryland board still hasn’t delivered for patients

Maryland may have been the first state in the country to establish a so-called prescription drug affordability board (PDAB), but Marylanders will unfortunately continue to see the failures of government price setting as the board progresses.

In 2019, Maryland created this board and authorized it to develop a state action plan. Bureaucrats who run the board are on the verge of sharing a draft action plan that recommends price setting, but it’s important to know there are more effective ways to deliver cost savings at the pharmacy counter than government price setting.

Since its inception, the PDAB has cost over $3.2 million and hasn’t saved Maryland patients one cent.

Maryland should focus on lowering costs for patients. That can’t be accomplished without addressing the role pharmacy benefit managers (PBMs) play in increasing costs for patients. PBMs decide what medicines people can get and what they pay out of pocket.

1. Only three PBMs control 80% of the entire national market share. What's worse, each of the big PBMs are owned by massive health conglomerates that also own the largest insurance companies and their own pharmacies. Where is the competition? Where is the check and balance? As studies have shown, health insurers and their PBMs are shifting costs to patients through coinsurance and deductibles, choosing profits over patients. It’s unfair to patients. There have been Congressional inquiries along with an ongoing investigation from the Federal Trade Commission into the PBM industry’s questionable practices.

2. Patients need lower out-of-pocket costs without a reduction in health care choice, quality, or access. If patients can’t access or afford their treatments, the system doesn’t work. Biopharmaceutical research companies pay billions in negotiated rebates and discounts annually (approximately $256 billion in 2022) to insurers and PBMs. These discounts lower what insurers pay, but patients are often forced to pay based on the full price.

Despite manufacturers’ rebates and discounts negotiated by health plans that have kept price increases below inflation for the last five years, nearly half of commercially insured patients’ out-of-pocket spending for brand medicines is based on the medicine’s undiscounted list price.

3. PBM compensation reform could prevent PBMs from skirting regulation on rebates. PBMs should receive a fixed fee based on the value of services they provide instead of tying their compensation to the list price of a medicine. This is a way Maryland can stop PBMs from gaming the system. There are many fee-for-service PBMs in the market, doing the right thing for patients and passing 100% of the rebates on to the patient, where they’re needed most.

4. Requiring PBMs to act in the best interest of their plans, providers, and patients would be an important step for state legislatures to take. In other words, Maryland should hold PBMs accountable so that they act in a transparent manner and place their duties to patients, providers, and their clients before their own financial interests.

While well-intentioned legislators are hoping to reduce patient costs, this board does not achieve that goal. There is no specification as to how the state could track or monitor savings for out-of-pocket costs or ensure the lowest prices reach Marylanders.

State lawmakers in Maryland can join members of Congress and other states looking to fix the broken PBM model and help patients. Learn more about how West Virginia, Arkansas, and Indiana are already leading the way to lower costs for patients at the pharmacy.