Some state legislators concerned about the cost of healthcare, including those from Maryland, Colorado, Maine, Minnesota, New Jersey, Oregon and Washington, established prescription drug affordability boards (PDABs) and similar regulatory bodies in recent years.
As a policy mechanism, some PDABs have begun working toward setting upper payment limits (UPLs) (i.e., price cap) in an attempt to lower spending in the healthcare ecosystem. A 2024 analysis conducted by Johnson & Johnson concluded that because UPLs ignore the interconnected market realities of the healthcare ecosystem and supply chain, they will not help states reduce patient out-of-pocket costs or lower state drug spend. The analysis also highlighted that UPLs could create unintended negative consequences, such as reduced access, larger patient out-of-pocket burden and reduced reimbursement for providers.
In the second edition of our analysis “Update: Effect of state prescription drug affordability boards (PDABs) and upper payment limits (UPLs) on the drug pricing ecosystem”, we find that several state PDABs continue to pursue UPLs, despite facing significant procedural challenges, including:
- Payers shifting costs onto patients
- Financial pressure on pharmacies, particularly community pharmacies
- Longer-term impacts, such as increased barriers for patients to access their medicines
PDABs have yielded little progress while incurring significant costs to the states and taxpayers. For instance, the Colorado PDAB is estimated to have received nearly $2 million from state taxpayers, while Maryland’s PDAB has cost taxpayers an estimated $4.12 million over the first five years of its existence. Despite these ongoing costs, no PDAB has yet implemented a policy that reduces costs for patients. Recognizing this, New Hampshire enacted legislation in 2025 to dissolve its PDAB. Oregon’s own analysis showed UPLs could affect state health plan costs from a cost savings of $18.7 million to a combined increase of $12.1 million. The report also noted that a UPL could result in decreased access to medications and increased cost-shifting for patients.
UPL efforts are likely to be more disruptive than effective by introducing uncertainty into the drug supply chain, raising new administrative burdens and threatening patient access without delivering meaningful savings. Instead of UPLs, policymakers should consider strategies that directly address patient out-of-pocket costs while preserving access to clinically appropriate treatments. Those strategies could include:
- Requiring pharmacy benefit manager (PBM) rebates and discounts to be passed directly to patients at the point of sale.
- Re-evaluating and regulating the use of utilization management in the interest of appropriate patient access.
- Prohibiting diversion mechanisms like copay accumulator and maximizer programs.
This analysis was conducted by Johnson & Johnson’s Center for U.S. Healthcare Policy Research. For more information on the analysis, methods, and limitations, see the full report: Johnson & Johnson Innovative Medicine. Update: Effect of state Prescription Drug Affordability Boards (PDABs) and Upper Payment Limits (UPLs) on the Drug Pricing Ecosystem. The Center for U.S. Healthcare Policy Research. August 2025. Available from: https://policyresearch.jnj.com/influence-of-prescription-drug-affordability-boards-and-upper-payment-limits-on-state-drug-pricing
© Johnson & Johnson and its affiliates 2025 10/25 cp-532458v1