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colorado sets First-in-Nation Payment Limit on Arthritis Drug Enbrel
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A state panel’s decision to cap reimbursement for the medication could signal a broader strategy for controlling prescription drug costs nationwide.
The Decision and Its Impact
In a first-in-the-nation move, the Colorado Prescription drug affordability Board voted on august 22, 2023, to limit how much health plans in the state will pay for Enbrel, a costly medication manufactured by Amgen. This decision establishes an upper payment limit (UPL) for the drug,effectively creating a ceiling on reimbursement rates for both government and commercial health insurance plans covering Colorado residents.
The UPL is set at $600 per unit, aligning with the maximum fair price for Enbrel scheduled to take effect in the Medicare program in January 2024. This translates to an approximate annual cost of $30,350 per patient, a notable reduction from the roughly $53,000 currently paid by the average Colorado insurance plan, according to data presented to the board.
Enbrel is a biologic drug, meaning it’s made from living organisms and is significantly more expensive than traditional medications. it’s used to treat a range of autoimmune diseases, including rheumatoid arthritis, psoriasis, and ankylosing spondylitis. The high cost of these types of drugs is a major driver of increasing healthcare expenses.
How Colorado’s Board Works
The Colorado Prescription Drug Affordability Board was created in 2022 through House Bill 22-1283, aiming to address rising prescription drug costs. The seven-member board is composed of healthcare professionals, economists, and consumer advocates. Its primary function is to review prescription drug prices and establish UPLs for medications deemed unaffordable.
The board’s authority is limited to setting UPLs; it cannot directly negotiate drug prices with manufacturers. However, the expectation is that these limits will incentivize manufacturers to offer lower prices to maintain market access in Colorado. The board selected Enbrel for its initial UPL review due to its high cost and the availability of alternative treatments.
National Implications and Potential for Expansion
Colorado’s action is being closely watched by other states grappling with high drug prices. Several states, including California, Maryland, and Washington, have enacted legislation to explore similar strategies for controlling drug costs. The success of Colorado’s UPL program could encourage these states to implement their own payment limits.
The federal government is also taking steps to lower drug prices. The Inflation Reduction Act of 2022, signed into law on August 16, 2022, allows Medicare to negotiate prices for certain high-cost drugs, starting in 2026. Colorado’s initiative complements these federal efforts by addressing affordability concerns in the commercial market.
| Drug | Current Average Cost (Colorado) | Proposed UPL (Colorado) | Medicare Maximum Fair Price (Jan 2024) |
|---|---|---|---|
| Enbrel (per unit) | $1,300 | $600 |
