Colorado Prescription Drug Affordability Board proposes rules on upper payment limits


Boram Kim


During a virtual stakeholder meeting last Wednesday, the Colorado Division of Insurance presented its proposed methodology for establishing upper payment limits (UPL) on prescription drugs the Prescription Drug Affordability Board (PDAB) has determined to be unaffordable. 


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Under the proposed rules, commercially insured Coloradans’ out-of-pocket expense and  health plans’ reimbursement to the pharmacy and provider for specified prescription drugs shall not exceed the UPL.

DOI proposes that PDAB must factor in the costs of prescription drugs, supply and shortages of drugs, pharmacy fees, the impact to older adults and persons with disabilities, and feedback from stakeholders in determining UPL for a given drug. PDAB would only be permitted to establish up to 12 UPLs per year through 2024, after which it can establish more annually as it sees fit. 

During the meeting, Lila Cummings, Director of Drug Price Affordability, outlined the prescription drug price and cost metrics the Board could use in those determinations.

“… the delineation between price metrics and cost metrics is a little confusing considering many of the price method metrics have the word ‘cost’ in their title,” Cummings said. “We’re not saying price metrics and cost metrics and instead just listing all of them as data points that the board might look at. The idea here is there’s a term of art around a prescription drug price, and typically, wholesale acquisition cost, average sales price, and NADAC, the national average drug acquisition costs, are considered price benchmarks or price metrics.”

Cummings added PDAB would utilize additional data more closely approximating paid amounts would include out of pocket spending and carrier paid amounts, as identified in the all payer claims database, along with public program fee schedules and net cost estimates. 

Another detail in the proposed rules is that UPLs would not prevent pharmacies from charging health plans “reasonable” fees related to drug delivery and dispensing. 

The meeting gathered stakeholder feedback ahead of an Oct. 7th PDAB hearing, where the Board will be presented with the first reading of the proposed rules and hear testimonies from stakeholders on the proposed methodologies.