States continue to explore state-imposed upper payment limits (UPLs) as a way to control healthcare spend, specifically around prescription drugs. In earlier analyses, we found that UPLs are unlikely to reduce patient out-of-pocket costs or lower spending, while introducing legal, administrative and implementation challenges. Yet rather than reconsidering the approach, some states are now turning to what may seem to be a less burdensome path: using existing pricing benchmarks—such as Medicare’s “maximum fair price,” international reference prices or other states’ payment limits—to guide or set drug payment caps.
Our latest analysis finds using other benchmarks does not fix the underlying flaws of UPLs. These metrics were created for different populations, programs and policy objectives, and they do not reflect the clinical needs, utilization patterns or insurance design of individual states. Applying prices developed for Medicare, foreign health systems or another state ignores how drugs are actually paid for and accessed within a given state market.
More concerning, reliance on external benchmarks introduces new risks. Imported metrics can replicate data limitations, embed assumptions that do not apply locally and compound inaccuracies as they are layered across markets. They also still fail to address predictable market responses to payment limits—such as changes in formulary placement, utilization management, reimbursement levels or provider participation—that could directly affect patient access and affordability. For patients, these reactions could mean higher cost sharing, narrower coverage or delays in care, regardless of the benchmark used.
The central lesson from this third analysis is straightforward: changing the benchmark does not change the outcome. Whether states create their own UPLs or rely on external pricing references, the same structural challenges and downstream consequences remain. Policymakers should be cautious about viewing existing benchmarks as a solution to lowering patient costs. In practice, they risk shifting that complexity—and its consequences—onto patients and providers without addressing the root causes of cost and access challenges.
This analysis was conducted by Johnson & Johnson’s Center for U.S. Healthcare Policy Research. It is an update to an original 2025 paper titled “Update: Effect of State Prescription Drug Affordability Boards (PDABs) and Upper Payment Limits (UPLs) on the Drug Pricing Ecosystem.” For more information on the analysis, methods and limitations, see the full report: Johnson & Johnson Innovative Medicine. “The effect of using established pricing metrics to set state upper payment limits (UPLs).” The Center for U.S. Healthcare Policy Research. July 2026. Available from: https://policyresearch.jnj.com/influence-of-prescription-drug-affordability-boards-and-upper-payment-limits-on-state-drug-pricing.
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