Prescription Drug Affordability Commission

AARP supports the development of a Minnesota state drug affordability review commission and believes that federal, state, and local governments should ensure that prescription drug launch prices and subsequent pricing decisions are reasonable, justified, and support improved consumer access and affordability. The Prescription Drug Commission has bi-partisan support in the Minnesota legislature (HF3228; Morrison/SF3120; Jensen).

A Prescription Drug Affordability Commission, based on a National Academy of State Health Policy (NASHP) model, is an independent body that evaluates drug prices and sets limits on how much certain payers, including state agencies, will pay for high-cost prescription medications. Maryland was the first state to pass a prescription drug affordability board in 2019 and Maine did as well.

• How Does the Commission Work? Affordability Commissions are based on the precedent of health care rate setting and state regulation of public utilities, wherein a group of appointed individuals sets rates for certain goods and services after reviewing relevant information. On an ongoing basis, a Commission, composed of persons with relevant expertise, without conflicts of interest, and appointed by elected officials, would gather information about brand name and generic drugs sold in the state. If the prices of these drugs exceed certain thresholds (e.g. a price increase of more than 10% or $10,000 during any 12-month period) the Commission would have the opportunity to conduct an affordability review, which would require manufacturers to justify the price increase or high launch price. If, after the review, which allows for public input and advice from a Stakeholder Advisory Committee, the Commission determines that a given drug’s price is excessive, the Commission would have the authority to set a rate, or upper limit, that all payers in the state would follow.

• What Does this Mean for Consumers? If the Commission sets a payment limit on a drug and the limit applies to a consumer’s insurance plan, that consumer could pay less for the drug and greatly impact the ability of consumers to afford and access their prescriptions. The more drugs that the Commission reviews and for which it finds it necessary to set an upper payment limit, the less taxpayer money goes toward affected programs and the greater opportunity to reduce Rx spending.

For more information, contact Mary Jo George at mgeorge@aarp.org.