Three concerns about Colorado's approach to government price setting

After roughly $2 million, several years and the use of flawed data, Colorado is now enabling unelected bureaucrats to set medicine prices through its so-called “Prescription Drug Affordability Board” (PDAB). Other states should look to Colorado as a warning for three key reasons.

1. Concerns are growing over the board’s purported “methodology” and data bias. 

• The PDAB’s so-called “methodology” is prone to error. For example, the board had to rework its method for calculating the cost of a “course of treatment,” affecting its initial determinations for the list of eligible drugs.
  
  
• Even during the board discussion that led to the selection of drugs, questions arose over the accuracy of the data available for the number of Colorado patients using a particular drug. Despite this concern, the board still used patient count as a major determining factor in selecting drugs for affordability review. 

2. Colorado’s PDAB is using an incomplete database to make decisions about the price of medicines.

• The claims data being used by the PDAB represents less than 70% of Coloradans and less than 75% of insured individuals in the state, providing an incomplete picture for decision making.
  
  
• The claims data used by the PDAB does not consider how insurance benefit design impacts out-of-pocket costs for insured Coloradan. For example, the database omits information such as whether a patient has coinsurance or a high deductible health plan. Omitting this information paints an incomplete picture because it ignores the fact that insurers and their pharmacy benefit managers are increasingly shifting more costs to patients through high deductibles and coinsurance.
  
  
• The database being used does not account for available rebates, discounts and other price reductions that Medicaid and private health insurers receive from pharmaceutical companies. This means the PDAB made decisions about the drugs to review based on amounts other than what Medicaid or health insurers actually paid.
  

3. The PDAB is rushing the process. Colorado’s law has no statutory deadline for selecting drugs for affordability reviews. Given the concerns and questions raised surrounding their methods, scope and the accuracy of the data they are relying on, rushing the process does not benefit patients.

Who is, and is not, on Colorado’s PDAB?

• Who’s on: Former insurance company and hospital executives.
  
  
• Who’s not: Patients or patient representatives, even though patients will be most impacted by the board’s decisions. And employees or representatives of the biopharmaceutical industry – which researches, develops and manufacturers life-saving medicines – are statutorily excluded from sitting on the board.  

Coloradans deserve better.

Policymakers in Colorado have created a system in which patients may face significant barriers to lifesaving medicines because of government price setting. Coloradans should demand that state lawmakers address these concerns before the PDAB makes any further decisions.

Learn about better ways to help patients pay less for their medicines without using politically-appointed government boards to make decisions that are better left between patients and their doctors at PhRMA.org/States.