Washington’s new PDAB can set upper payment limits on up to 12 drugs per year beginning in 2027


Shane Ersland


A board that aims to mitigate unsupported price increases on prescription drugs for Washingtonians recently discussed its goals and initial tasks.

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The Washington State Health Care Authority’s (HCA) Prescription Drug Affordability Board (PDAB) held its first meeting on Oct. 20th. PDAB was created with the passage of Senate Bill 5532 in 2022.

Prescription drug expenditures in the US increased by 9.4 percent from 2021 to 2022, and the anticipated increase in drug spending for 2023 is between six and eight percent. About three in 10 people say they haven’t taken their medications as prescribed purely due to their costs, Evan Klein, special assistant for policy and legislative affairs for the HCA, said.

“We’re just trying to better understand what’s driving those cost increases in the state and nationally, and think about the controls the state might have to do something about that,” Klein said.

Several national cost transparency efforts have been launched in the past couple years. States have used all-payer claims databases (APCD) to better understand claims costs and expenditures, and understand how those costs translate to specific services, Klein said. More than 25 states have enacted legislation to implement APCDs. 

“Cost growth benchmarks have been another tool used by states to better understand cost growth and put some pressure on cost growth at a health system level. We’ve seen 10 states that have enacted cost growth benchmarks in some fashion.”

— Klein

Washington has had a prescription drug price transparency statute in place since 2019. The HCA analyzes data from health carriers, pharmacy benefit managers, drug manufacturers, and pharmacy services administrative organizations, and provides reports to the legislature, Klein said. 

“We also have a Health Care Cost Transparency Board (HCCTB) that was enacted in 2020,” Klein said. “The board analyzes cost growth and drivers in the state, and is charged with establishing a cost growth benchmark. It submits annual reports as well.”

Washington, Maine, New Hampshire, Oregon, Ohio, Colorado, Maryland, and Minnesota have created PDABs. Michael Neuenschwander, PDAB program manager at the HCA, said Washington will work closely with other states that have implemented PDABs to outline objectives. 

“We’re excited to begin this adventure. It’s an exciting and innovative new program. We are lucky that we have a few other states that are doing similar programs as well. We’re all more or less in the same boat moving forward together on this. That is also good because we’re able to collaborate with each other a little bit.”

— Neuenschwander

The majority of the people Washington’s PDAB has been working with are in Colorado, Maryland, and Oregon, Neuenschwander said. 

“This is kind of uncharted territory, so being able to collaborate, to learn from them and [see] how they’ve approached this has been a real blessing for us,” Neuenschwander said. “Especially as we have a relatively small team and are still building our staff.”

Some PDAB states are permitted to set upper payment limits (UPL), which Washington’s board will do. The board will perform affordability reviews in order to determine which drugs to set UPLs for, and can conduct affordability reviews for up to 24 drugs per year. The board can set UPLs on up to 12 drugs per year beginning in 2027. UPLs will be based on how much a health plan would pay for a prescription drug.

“Before we can do a drug review, we’ve got to have a list of drugs to review,” Neuenschwander said. “So we’re working on creating that list of drugs. And once that list is created, how many drugs are we going to pick? You can review up to 24, but that’s a little ambitious, especially right out of the gate. Colorado chose five to start their review process.” 

While conducting reviews, the board will consider the cost of administering a drug, the cost of delivering that drug to patients, the status of the drug on the drug shortage list, and any other relevant administrative costs related to production or delivery, Klein said.

“This is going to be a long road. The first couple years are going to be hyper-focused on getting the board up and running on some of the initial analysis and affordability reviews. But eventually, the state envisioned the board would have the opportunity to start setting UPLs. This is one of many affordability policies the state is engaged on. There’s a lot of connectivity between work we’ll be doing and work taking place with our HCCTB and all other transparency initiatives taking place across the state.”

— Klein

In the immediate future, PDAB will work on setting up policies and procedures on how it will operate, Neuenschwander said. 

“We have started our first set of rules to govern how the board is administered and how we’re going to be working,” Neuenschwander said. “Education for the board, as a whole, is going to be an important step.”

The next PDAB meeting will be in December.