Federal efforts to rein in prescription drug costs have attracted media coverage and legal opposition. Now, innovative state efforts to limit drug price increases are attracting significant legal scrutiny. At the end of March, Amgen filed a lawsuit in the United States District Court for the District of Colorado seeking to stop the state’s Prescription Drug Affordability Review Board (“PDAB”) from implementing a price cap on its arthritis drug Enbrel. The lawsuit highlights a growing push among states to create affordability boards to limit drug price increases, nine of which have passed similar laws as of late 2023.
In February 2024, PDAB unanimously declared that Enbrel was unaffordable, allowing the board to consider setting a price cap on transactions involving the drug. The decision came just weeks after Amgen announced that Enbrel produced fourth-quarter sales of more than $1 billion for the company. Amgen argued the statute authorizing PDAB was unconstitutional, providing four reasons to support the company’s claim. First, the company argued that the statute violated the United States Constitution’s Supremacy Clause by conflicting with federal patent laws. Second, the company argued that PDAB violated the Due Process Clause of the Fourteenth Amendment since it lacked a specific standard to determine whether a drug is unaffordable or when to implement a price cap. Third, the company alleged that PDAB violated the Supremacy Clause through the authorizing statute allowing PDAB to impose a payment limit that would apply to Medicare reimbursement. Fourth, the company argued that the statute’s regulation of transactions outside Colorado violated the Commerce Clause.
While Amgen’s actions have significant implications for the regulation of drug prices in Colorado, the lawsuit will be closely watched by states that have created similar boards or are contemplating doing so in the future. As of late 2023, nine states have passed legislation to create similar drug pricing boards, and other state legislatures have introduced more than 200 bills to create such boards. The attempts are designed to address the increasing cost of prescription drug prices but vary in their methods. Some, such as Colorado, allow for the establishment of upper payment limits to directly control the prices of what they deem to be unaffordable drugs, while others are only authorized to make recommendations to the state’s legislature. Colorado’s board is also notable in the sense that it can exert authority over commercial health plans, not just state health plans. In addition to varying levels of authority, the Commonwealth Fund noted that other important considerations in how the boards are structured have included ensuring a sustainable funding source, how members of the board are appointed, and the board’s ability to access data on the drugs it reviews.
The economic and legal outlook for Colorado’s attempt to rein in drug prices, and those of its fellow states, remains uncertain. Due to many states being in the early stages of the review process, it may be a while before policymakers and stakeholders get a good sense of whether these boards can create downward pressure on prices.
Similarly, the legal outlook for these boards remains clouded as well. Scholarly publications have noted the relatively novel legal issues that these boards present to the courts, with the only clues in a healthcare context provided dating back to a related Maryland effort. In 2017, the United States Circuit Court of Appeals for the Fourth Circuit struck down Maryland’s attempt to prohibit certain price increases on the grounds that the statute interfered with the federal government’s authority to regulate interstate commerce.
Amgen’s lawsuit in the District Court for Colorado will likely provide more clues as to whether these latest attempts to broaden access to unaffordable prescription drugs will present a viable and legal tool to lower prices. Regardless, it is clear that solutions, be they federal, state, or otherwise, are urgently needed to address what can only be called a crisis of affordability for drugs that provide life-changing results to patients across the country.