Colorado Insurance Commissioner Michael Conway gave an overview the state’s plan for implementing the recently passed Prescription Drug Affordability Board (PDAB) at a recent webinar hosted by the Colorado Department of Health Care Policy and Financing (HCPF).
The heavily debated SB 21-175 creates an affordability board to review the prices of prescription drugs in the state and establish upper payment limits (UPLs) for medications deemed to be too expensive. The board will collect and evaluate data from drug manufacturers and other stakeholders to make informed decisions about which prescription drugs are too expensive for consumers. It can also make policy recommendations to the legislature based on its findings.
See below the Division of Regulatory Agencies (DORA)’s timeline for implementing the board.
Establishing UPLs is the board’s most important role, Conway said. Beginning in April 2022, for the first three years of its existence, the board can place up to 12 UPLs on 12 prescription drugs. After this, the board won’t be restricted to 12 UPLs per year, but Conway believes the yearly number will continue to be around 12.
The board will have five members, each of whom must have an advanced degree and relevant experience in health care economics or clinical medicine. These members are appointed by the governor, who will appoint one member as the “chair” of the board.
The bill also creates a 15-member Advisory Council to provide stakeholder input to the board. These members are appointed by the board, and will consist of HCPF Executive Director Kim Bimestefer and 14 other community stakeholders including a labor union representative, a health care consumer advocacy organization representative, and a pharmacy benefit management firm representative.
Conway said:
“ … because Kim is going to be on it, because HCPF’s tools are going to be available to that advisory board, I think that the information and the advice that the [council] is able to give to the PDAB — the actual board itself — is going to be vital.”
Applications for both the PDAB and the Advisory Council opened on Aug. 6, 2021. The governor must appoint the five PDAB board members by Oct. 1, 2021 (subject to Senate approval), and the board must appoint the 15 council members no later than Jan. 1, 2022.
Conway highlighted that Colorado’s affordability board has a broader jurisdiction than those of other states. While UPLs in other states only apply to “narrow subsets” of prescriptions, such as state employee plans, Colorado’s will apply to all purchases of and payer reimbursements for prescription drugs dispensed to Coloradans.
Conway explained why he thought the legislature made the “right decision” in granting the board such broad authority:
“I think it’s really tough to tell folks within the commercial market … that the state employee plan should get the benefit and there should be more affordability brought to the state employee plan, but that same benefit shouldn’t apply to the rest of the marketplace. And I think the state has a vital interest in making sure that there is more affordability brought to the entire marketplace and not just the state employee plan.”
Conway said that although affordability boards in other states have transparency requirements as well, Colorado’s model is unique in that it requires all of the savings from the initiative to be passed on to consumers. Carriers in Colorado will need to demonstrate that the savings from UPLs will pass through to the commercial market.
The independence granted to the board also sets it aside from similar boards in other states, Conway said. While some other states require the board to get permission to enforce UPLs from the legislature or the governor, Colorado’s PDAB will establish the limits independently without needing secondary approval. SB 21-175, however, does allow the General Assembly to pass legislation overturning UPLs established by the board.
The bill was amended during the legislative process to repeal on Sept. 1, 2026, after a sunset review by DORA, unless it’s extended by the legislature. Conway believes an extension is likely.
“I think there will be very interesting conversations during the 2025 session, and going into the 2026 session as well, about whether or not we’re going to be extending the PDAB board. It’s fully my expectation that the PDAB board is going to pay huge dividends for the state, so I think it will be extended.”