Legislation to Enact Prescription Drug Price Controls

SB 483, SB 484 and SB 485 were introduced in mid-September 2023 that would establish a new state board – a so-called Prescription Drug Affordability Board (PDAB) – that would determine how much pharmaceutical companies can charge for certain drugs by setting an “upper price limit”. According to PDAB supporters, such a body would lower out-of-pocket costs for Michigan patients struggling to afford their medicines.

Essentially, a PDAB is a mechanism for setting price controls on drugs. As proposed, the unelected, five-person board, MichBio, in partnership with its national partners BIO and PhRMA, along with many biopharma company members, is vehemently opposed to the notion of a PDAB. The legislation would not to lead to lower patient drug costs as those expenses are completely based on prescription benefit design through the pharmacy benefit managers and insurance companies. Moreoever, the concern is that imposition of price controls would chill biomedical innovation in Michigan and lead to fewer prescription drugs developed and reduced access to Michigan patients.

This legislation has been a longstanding policy priority for the Democrat majority. They rushed to pass the bills with little due diligence or willingness to hear from a broad set of stakeholders. Indeed, in their haste to introduce the bills and hold a quick Committee hearing, there was no allowance for the biopharma industry to testify publicly until the very last minute. The whole legislative process surrounding consideration of the PDAB bills was a travesty in many respects.

MichBio provided testimony before Committee and met with numerous legislators to help them better understand the implications of the PDAB bills. In addition, we embarked on a media campaign to inform the broader public of what the legislation would not do – namely, it would not lower out-of-pocket drug costs – beginning with a press release and followed by media interviews and a series of digital ads targeting key legislative districts.

The bills were passed uncharacteristically by the Senate in a matter of days and moved to the House with the intent of securing approval before the fall session concluded. However, due to considerable dialog with some key House representatives, particularly those in bio-industry hub localities, MichBio and industry partners were able to assemble a block of ‘no’ votes and the bills failed to pass before recess. The bills are likely to be taken up in 2024, though timing depends on political dynamics and the fact that the Dems lost their House majority meaning that passage of controversial legislation like the PDAB bills will be more difficult, at least for some duration.