A Colorado board voted to move forward with setting a price ceiling on the arthritis drug Enbrel on Friday, a first-in-the-nation step that raises questions about whether a single state can reduce drug costs without unintended consequences.
Colorado would be the first to set a price ceiling on any drug, meaning the state can’t look to others for clues to how drugmakers and other players will respond. Opponents of the process argue patients could lose access to drugs under a price ceiling, while supporters say drugmakers can’t easily cut states out of their distribution chains and still make money.
The vote by the Prescription Drug Affordability Board kicks off a six-month process to determine what price would be appropriate for Enbrel. The board also has the option to ultimately vote against a price ceiling at the end of the process.
The move by the state board is different than the Colorado legislature’s limits on how much customers pay out-of-pocket for insulin or EpiPens, because those laws only cap the amount of the cost that insurance companies can pass on to patients.
A price ceiling would limit how much pharmacies could pay for Enbrel to whatever “upper payment limit” the board may approve. Patients and their insurers would then pay that amount, plus a fee to cover the pharmacy’s costs for handling and dispensing the drug.
State regulations don’t specify what would happen if manufacturers refused to sell at that price.
The board previously had determined Enbrel cost about $46,000 for one patient to take it for one year in 2022, with patients responsible for an average of $2,295 in Colorado if they have commercial insurance or Medicare Advantage. Some patients pay less because they qualify for assistance programs to cover their out-of-pocket costs.
The vote came one day after a state Senate committee voted to advance a bill that would remove all medications that have an “orphan drug” designation from the board’s list to consider in future years. The orphan status means a drug is approved for a rare condition, meaning it may not be profitable for drugmakers to develop such treatments.
The Colorado Consumer Health Initiative estimated that about 400 of the 600 drugs that the board identified as possibilities for review have orphan drug status for at least one condition.
Enbrel, which is approved for six conditions, has an orphan drug designation for one of them, polyarticular juvenile idiopathic arthritis.
Friday’s meeting capped a months-long process of reviewing data about how much Enbrel costs, and how much patients typically pay.
Drugmaker Amgen and some patient groups criticized the board’s reliance on a survey that garnered responses from only 38 patients in Colorado to determine that the drug isn’t broadly affordable. Eight of those respondents said they went into debt because of their drug costs, 20 said they had to cut back on other expenses and nine said they sometimes stretched their doses to save money.
Brett Johnson, who spoke on behalf of Amgen at Friday’s meeting, said the board hasn’t released enough information about how it would set a price, or what it expects pharmacies and others to do after it sets one.
“We should have answers to these questions before moving forward,” he said.
The board previously voted that the cystic fibrosis drug Trikafta and the HIV antiviral Genvoya both are affordable to patients because of assistance programs from drug manufacturers or the federal government. Neither drug will be subject to a price ceiling.
Cosentyx and Stelara, which both treat conditions where the body attacks its own tissues, will undergo affordability reviews later this year. The board’s charge is to determine if drugs are affordable to patients, not to the system as a whole.
Earlier in the review process, some trade groups had raised concerns about implementing a maximum price.
The Colorado Hospital Association said it worried that its members could be reimbursed less than the cost of drugs they buy if the board set upper payment limits. In a comment sent last year, the association said some of its members are part of multi-state purchasing groups, so they wouldn’t necessarily be able to buy drugs below the price ceiling, but insurance would still reimburse them at the rate the state set.
The Colorado Pharmacists Society also sent a comment with concerns that its members wouldn’t be able to recoup the costs of stocking drugs that require more complicated handling, while the Colorado Association of Health Plans said insurers might not be able to change their formularies to bring patients’ out-of-pocket costs down to whatever level the board sets.
Corey Greenblatt, associate director of the Global Health Living Foundation, which represents patients with chronic conditions, said an upper payment limit won’t ultimately save patients money, because their insurance dictates what they pay out of pocket. Like many patient groups, the Global Health Living Foundation receives financial support from drugmakers.
If patients pay a set co-pay for their drugs (say, $40 every time they fill a prescription), they won’t see that cost go down with an upper payment limit, unless their insurance plans decide to move Enbrel to a tier with lower out-of-pocket costs. If they pay a percentage of the drug’s total cost, known as co-insurance, their out-of-pocket costs may drop.
A price ceiling wouldn’t solve all of the problems making drugs unaffordable for patients, but it’s one tool alongside efforts to reform insurance coverage and pharmacy benefit managers, who dictate which drugs insurance plans should steer patients toward, said Hope Stonner, policy manager at the Colorado Consumer Health Initiative.
“We believe that the (upper payment limit) can work alongside other policies,” she said.
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