What is an Affordability Board?
New Mexicans are struggling to afford the prescription drugs they need, often having to choose between their medication and other necessities, like rent and groceries. Drug costs were out of control before COVID, but it is even worse now. Studies show the pharmaceutical industry has taken advantage of the pandemic to raise prices on 645 brands almost six percent in the first eight months of 2020 . It is critical that the State Legislature take action to help ensure that all New Mexicans have access to affordable medications, because drugs don’t work if people can’t afford them.
What can New Mexico do?
New Mexico can create a Prescription Drug Affordability Board, an independent body with the authority to evaluate high cost drugs and set reasonable rates for consumers to pay. The Prescription Drug Affordability Board will look at prescription drugs with costs that greatly impact New Mexicans, including high-cost, brand name medications. High costs can prevent patients from accessing the prescription drugs they need, cause significant affordability issues for the state, and threaten public health.
How a Prescription Drug Affordability Board works:
The Board is composed of five members. It will review prescription drugs that meet any of the following criteria:
- New brand name prescription drugs which enter the market at $30,000 or more per year or course of treatment;
- Existing brand name medications which increase in price by $3,000 or more per year or course of treatment;
- Generic medicines costing at least $100 with an increase of 200% or more per year;
- Biosimilars with a launch price that is not at least 15% lower than the reference brand biologic; and
- Any prescription drug that creates affordability challenges to the New Mexico health care system, including patients.
The Board will consider a broad range of economic factors when setting appropriate payment rates for reviewed drugs, allowing pharmaceutical manufacturers the opportunity to justify existing drug costs. Once a fair payment rate is determined, the Board sets an upper payment limit that applies to all purchasers and payor reimbursements in New Mexico, ensuring that lower costs benefit consumers.
 AnalySource: Drug Manufacturers Raise Prices for 645 Brands an average price increase of 5.9% in 2020 thus far.
New Mexico Prescription Drug Affordability Initiative
WHEREAS, to protect our lives and our well-being, every family in New Mexico requires access to affordable prescription drugs;
WHEREAS, skyrocketing costs are making some medicines virtually inaccessible to our families and neighbors, with nearly one-third of adults reporting not taking their medicines as prescribed due to cost;
WHEREAS, in 2019 drug manufacturers raised the costs of over 3,400 prescription drugs, with rate hikes that were five times more than the average rate of inflation;
WHEREAS, prescription drug spending accounted for over 22% of each health insurance premium dollar spent between 2014 and 2016, making it consumers’ single biggest expense on insurance premiums;
WHEREAS, the high costs of medications impact both patients and taxpayers, with New Mexico residents spending over $700 million annually on prescription drugs;
WHEREAS, to build upon the state’s landmark 2019 legislation creating an Interagency Pharmacy Purchasing Council to coordinate public purchasers the state must work to address prescription drugs purchased by both public and private payors;
THEREFORE, BE IT RESOLVED that the undersigned organization supports creating a new Prescription Drug Affordability Board to determine how best to make prescription drugs more affordable for all New Mexicans, including by: examining the entire drug supply chain, including the role of drug manufacturers and Pharmacy Benefit Managers (PBMs), and establishing payment rates for expensive drugs that create significant affordability problems for New Mexicans, building upon New Mexico’s leading efforts to lower prescription drug and health care costs for all residents.