The Price of a Cap: Are State Drug Policies Harming the Patients They Help?

WASHINGTON, D.C. – July 28, 2026 – In statehouses across America, a seemingly straightforward solution to the crisis of prescription drug costs is gaining momentum: Prescription Drug Affordability Boards (PDABs). These state-appointed bodies are empowered to set an upper payment limit (UPL) — a price ceiling — on what can be paid for certain high-cost drugs. The policy logic is simple: cap the price, lower the cost. But a new, forensic analysis of this policy tool suggests the reality is far more complex and carries a perilous risk for the very patients it aims to protect.

A new study released today by the Rare Access Action Project (RAAP), titled "Follow the UPL," delivers a stark warning: after years of state effort and significant public resources, not a single patient has seen their out-of-pocket costs decrease because of a UPL. Worse, the report argues these policies are creating structural fractures in the pharmaceutical supply chain that disproportionately threaten access for patients with rare diseases, a population that often has no alternative treatments.

As nine states have now established active PDABs, with Colorado and Maryland taking the lead by setting UPLs on the arthritis biologic Enbrel and the diabetes drug Jardiance respectively, the findings challenge the fundamental integrity of a widely adopted policy. They force a critical question: are we building a system that delivers headline-grabbing price controls, or one that ensures patients can actually get the medicine they need?

Following the Money: A Disconnect at the Counter

The central argument of the RAAP study, researched and written by veteran policy analyst Jennifer Snow of Apteka Policy, is that a UPL is not the patient-facing price cap many assume it to be. Instead, it is a reimbursement ceiling imposed on payers, such as health plans. The dollar, as it were, stops there. It does not automatically translate into lower copays or coinsurance for the person standing at the pharmacy counter.

"When you follow the dollar through every layer of the supply chain, the picture becomes clear: a UPL is a reimbursement ceiling, not a patient savings guarantee," stated Snow. "The structural dynamics of how wholesalers, pharmacies, PBMs, and health plans interact mean that savings generated by a UPL do not automatically reach the people who need them most."

This reveals a critical flaw in the system's design. The pharmaceutical supply chain is not a simple pipe; it is a complex, multi-layered ecosystem of wholesalers, pharmacy benefit managers (PBMs), pharmacies, and providers, each operating on carefully balanced economic incentives. When a state PDAB sets a UPL, it compresses the reimbursement a pharmacy or provider receives for dispensing a drug. If that reimbursement falls below the drug's acquisition cost plus the operational costs of dispensing it, the financial viability of stocking that medicine evaporates. Pharmacies, particularly independent and rural ones already squeezed by PBM reimbursement models, may be forced to operate at a loss. Providers who purchase and administer drugs under a "buy-and-bill" model face the same untenable economics.

The logical outcome, as the study documents through detailed scenarios, is supply chain disruption. A wholesaler may decide the operational complexity of managing state-specific pricing isn't worth it. A pharmacy may decline to stock the drug. The result is not a lower price for the patient, but a potential inability to find the drug at all within state lines. Patients, therefore, bear all the risk of access disruption without any guaranteed financial reward.

The Unseen Risk: A Fragile Lifeline for Rare Diseases

Nowhere are the stakes of this disruption higher than in the rare disease community. For a patient with a common condition like diabetes, a supply chain issue with one drug, while problematic, may leave them with several alternative treatment options. For a patient with a rare genetic disorder, the therapy targeted by a UPL may be the only one that exists.

"States are right to focus on affordability, but policy solutions must work within the realities of how the supply chain actually operates," said Michael Eging, Executive Director of RAAP. "For those with rare diseases who already face limited options, these policies carry real risks of cutting off access to therapies with no alternative."

This vulnerability is compounded by what the study calls the "single-indication trap." Many state and federal frameworks, including the Inflation Reduction Act, provide exemptions to protect drugs developed for rare diseases from price-setting measures. However, these protections are often contingent on the drug being approved solely for a single rare condition. The moment a manufacturer invests in further research and secures FDA approval for a second indication — even if that second use is for another, different rare disease — the drug can lose its protected status and become subject to a UPL. This creates a powerful financial disincentive for companies to investigate the full potential of their therapies, effectively punishing innovation that could benefit additional rare disease populations.

This policy quirk is not a theoretical flaw; it is embedded in the legislative language of some PDABs. It represents a structural break in the logic of promoting rare disease research, where the reward for expanding access to more patients is the risk of financial unsustainability across the board.

A System Under Strain: Unintended Consequences and Federal Conflicts

The ripple effects of state-level UPLs extend beyond their borders, threatening to destabilize national policy frameworks. One of the most significant conflicts arises with the federal Medicaid Drug Rebate Program. If a state UPL drops below a drug's federally calculated Medicaid "Best Price," that state-level price can effectively reset the rebate floor for every state Medicaid program in the country. A pricing decision made in Annapolis or Denver could trigger a cascade of increased rebate liability for a manufacturer nationwide, a profound and perhaps unintended consequence of state action.

These policies are not being implemented in a vacuum. They are being layered onto a healthcare infrastructure already showing signs of fraying. Across the country, rural and independent pharmacies are closing at an alarming rate, creating pharmacy deserts where access to basic healthcare is compromised. These closures are often attributed to the very reimbursement pressures from PBMs that UPLs threaten to exacerbate. By further squeezing pharmacy margins, state price-setting policies risk accelerating the collapse of these critical access points.

Rather than mending the system, UPLs appear to be adding another layer of stress. They represent a top-down intervention that fails to account for the intricate, interlocking gears of the healthcare delivery machine. The result is a policy that may achieve a political victory on paper but fails the ultimate test of public health: ensuring the citizen can access the care they depend on.

Beyond the Cap: Charting a New Course for Affordability

If UPLs are a flawed tool, what is the alternative? The RAAP study concludes by arguing that states have more effective and less disruptive instruments at their disposal. Instead of attempting to control reimbursement deep within the supply chain, the report suggests policies that deliver savings directly to the patient.

These include state-run reinsurance or risk-pooling programs, which spread the financial impact of high-cost specialty therapies across a wider population, lowering premiums and costs for everyone. They also include capped copay programs, which set a clear and predictable ceiling on what a patient will ever have to pay at the pharmacy counter. Finally, the study recommends restricting the use of copay accumulator and maximizer programs by insurers—programs that prevent manufacturer assistance from counting toward a patient's deductible, thereby negating its value.

Each of these alternatives shares a common design principle: they work with, not against, the economics of the supply chain to ensure that savings follow the dollar all the way to the patient. They target the true locus of the affordability crisis—the out-of-pocket cost burden—without risking the structural integrity of the distribution network.

"Policy success should ultimately be measured by whether patients can reliably access the treatments they need," Eging added. "Right now, the dollar stops at the health plan. States have an opportunity to pursue affordability solutions that strengthen, not disrupt, the systems patients depend on."