Colorado’s Prescription Drug Affordability Board recently declared that Stelara, a popular treatment for Crohn’s disease and other autoimmune conditions, is “unaffordable.” Soon, the board’s five unelected members could decide whether to impose an “upper payment limit” on the medication.
The decision could have significant consequences not just in Colorado but across the country. Ten other states have recently established prescription drug affordability boards (including Massachusetts). They’re closely watching Colorado’s decision — and may copy it in the months and years to come.
The forthcoming price controls will inevitably restrict patients’ access to Stelara and other drugs. In the process, they’ll stifle research into future treatments and cures that could save lives.
State-imposed price controls won’t actually limit what most patients pay. Insurers require their beneficiaries to share costs. They base their co-pays on drugs’ list prices. The new price controls cap what drug makers can charge insurance companies and other payers. But insurers can still turn around and charge patients whatever they like.
In other words, patients today may not see much benefit from the state price controls. But patients tomorrow will face significant harm.
By effectively capping pharmaceutical companies’ revenues, price controls will discourage investment in research and development of new medicines. People with diseases for which there are currently no good treatment options will be forced to continue suffering.
Places with price controls also gain access to drugs later than places without them. A 2024 RAND study found that thanks to the relative “latitude to set prices” that drug developers enjoy in the United States, more than two-thirds of new medicines are launched here first.
The average lag between the U.S. launch and a medicine’s release elsewhere is one year. Some people confronted with those kinds of waits die before they are able to gain access to drugs that could save them.
Payers themselves — insurance firms, Medicare and Medicaid, and state health programs — have expressed concern that price controls will force them to restrict drug options. If one treatment is available at a controlled price, insurers won’t want to pay for costlier alternatives. But that’s dire news for a patient who has had an adverse reaction to Option A and really needs to try Option B.
In effect, state prescription drug affordability boards could end up deciding the sole treatment available to all patients with a given condition.
Similarly, by pushing payers to cover certain drugs and not others, affordability boards could quickly create shortages of price-controlled drugs in their states. As a result, people may need to travel across state lines to get the medicines they need, a challenge for many folks — especially those with low incomes or mobility issues.
Plus, leaving the state may mean leaving an insurer’s coverage network. Patients who do so will be stuck paying the full list price for their medicine. There’s nothing “affordable” about that.
Finally, price caps don’t account for a drug’s value to society — the fact that getting the right medication now can massively reduce expenditure on treatments and hospitalizations in the future. Affordability boards treat immediate monetary savings for payers as the sole measure of success.
In short, states that have established, or are considering establishing, prescription drug affordability boards need to think a little harder about the meaning of “affordability.” A dollar in savings today could be extremely costly — or even deadly — in the long run.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All” (Encounter 2020). Follow her on X, formerly Twitter, @sallypipes.
