Maine Establishes a Prescription Drug Affordability Board

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Following the recent trend in northeast states, Governor Janet Mills recently signed into law An Act To Establish the Maine Prescription Drug Affordability Board, which according to advocates is designed to lower prescription drug costs in the state.  The Board will consist of 5 members, with each member having expertise in either health care economics or clinical medicine.  Two of the members will be appointed by the Senate President, two of the members will be appointed by the Speaker of the House and one member will be appointed by the Governor.  Individuals who are affiliated with or represent the interests of a public payor are specifically prohibited from serving on the Board.  The Act defines “public payor” to be any division of state, county or municipal government that administers a health plan for employees of that division of state, county or municipal government or an association of state, county or municipal employers that administers a health plan for its employees.  Notably, the Act’s definition of “public payor” expressly excludes MaineCare, Maine’s Medicaid program.

The primary responsibility of the Board is to determine annual spending targets for prescription drugs purchased by public payors based on a 10-year rolling average for the medical care services component of the Department of Labor CPI (adjusting for inflation).  In setting these annual targets the Board may consider any public payor’s prescription drug spending data including: 1) Expenditures and utilization data for prescription drugs for each plan offered by a public payor; 2) The formulary for each plan offered by a public payor and prescription drugs common to each formulary; 3) Pharmacy benefit management services and other administrative expenses of the prescription drug benefit for each plan offered by a public payor; and 4) Enrollee cost sharing for each plan offered by a public payor.  The Board may also consider any data compiled by the Maine Health Data Organization.

Based upon its review of this data, the Board is tasked with determining the methods for each public payor to meet the spending targets established by the Board.  These methods may include deploying one or more of 10 enumerated cost reduction strategies such as: 1) negotiating specific rebate amounts on the prescription drugs that contribute the most to spending in excess of targets; 2) purchasing prescription drugs in bulk; 3) collaborating with other states to buy in bulk or jointly negotiate rebates; and 4) establishing a common prescription drug formulary for all public payors.  The Board must annually report its recommendations, including prescription drug spending targets, to the joint standing committee of the Maine Legislature having jurisdiction over health coverage and insurance

Finally, the Act also establishes a 12-member Advisory Council to advise the board on establishing annual spending targets for prescription drugs and also to determine methods for meeting those targets.  Members are to be appointed by various state agency leaders and public-focused associations, including the Attorney General, the Commissioner of Corrections, the Commissioner of Health and Human Services, the Maine Municipal Association, the Maine Education Association and the Maine State Employees Association.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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