An independent board of experts that researches, reviews and establishes payment limits on the most expensive prescription drugs. Like any public board, the public has an opportunity to weigh in, offer comments and provide feedback. The PDAB is structured similarly to the Michigan Public Service Commission and applies to what consumers will pay for prescription drugs, rather than their water and energy costs. Its mission is to protect consumers and hold drug companies accountable.
Lifesaving medications are increasingly too expensive for the average Michigan resident because the price of prescription drugs consistently rises faster than inflation and other consumer goods. According to an AARP Rx Price Watch report, the increases in prescription drug prices have consistently exceeded the general inflation rate since 2006. Between 2019 to 2020, they increased by 4.8%, more than three-and-a-half times higher than general inflation at 1.3%. Prescription drug companies must be held accountable for out-of-control costs.
A PDAB has the authority to review prescription drug costs and evaluate their impact on Michiganders. The Board may recommend ways to address those costs and may set an Upper Payment Limit (UPL) for certain high-cost drugs. UPLs are common in the health care industry, including limits on how much providers and suppliers charge and the amount that will be reimbursed by insurers.
Michigan would join six states that have enacted laws establishing PDABs including: Colorado, Maine, Maryland, Minnesota, New Hampshire and Washington. Several other states are considering similar proposals to rein in the skyrocketing costs of prescription drugs.
The PDAB is a public board, with industry experts appointed by the governor with input from the public. Members must have expertise in health care economics and/or clinical medicine and cannot have a personal or financial interest that has the potential for or the appearance of bias. The board would operate independently, with experts researching, reviewing and setting payment limits on the most expensive prescription drugs.
Yes. This is a collaborative and public process where members of the public, local governments, pharmacists, health plans, labor unions, health care providers, researchers, hospitals, drug manufacturers, Pharmacy Benefit Managers (PBMs) and others affected by the legislation will all be part of the discussion.
The bottom line is a PDAB will have a direct impact on Michigan consumers. This legislation is unique in that it will directly lower the cost of certain prescription drugs for consumers where they are sold. Consumers stand to benefit greatly from this legislation, in addition to pharmacists, health insurance companies and other entities in the prescription drug supply chain.
A PDAB will save small businesses money. Prescription drug costs are the biggest share of health insurance premiums. By lowering prescription costs, small businesses will see lower health care premiums, saving them money without having to sacrifice employee benefits. Additionally, hard-working employees need access to affordable medications to be healthy, productive team members. A PDAB makes prescription medicine and health insurance more affordable, benefiting small business owners and employees.