Over the past decade, a number of states have attempted to lower prescription drug costs. State efforts to regulate drug prices range from price gouging laws to drug importation, pharmacy benefit manager regulations, and price transparency efforts. Prescription Drug Affordability Boards (PDABs) in particular have recently become popular, with at least twelve states having enacted PDAB legislation and seventeen more now considering the same. PDABs are state-established entities that assess the affordability of high-cost prescription drugs, and some have authority to set upper payment limits (UPLs) on those drugs. However, most of the costliest drugs that are subject to PDAB review enjoy patent and FDA market exclusivities afforded by federal law. As such, the UPLs set by PDABs have triggered concerns about preemption by the federal patent and drug regulatory regimes.
In 2024, Amgen, the manufacturer of ENBREL, a drug selected for review by the Colorado PDAB, challenged the constitutionality of the Colorado PDAB. Amgen presented patent preemption as one of its key arguments, arguing that permitting a state to limit the prices of patented drugs impermissibly interferes with the design and objectives of federal patent law. While the district court dismissed the challenge for lack of standing, the case is currently on appeal to the Federal Circuit. This case presents the Federal Circuit with a rare opportunity to revisit its interpretation of the scope of patent preemption from a prior holding—Biotechnology Industry Organization v. District of Columbia (BIO v. D.C.), in which the court held that a D.C. law that prohibited the sale of patented prescription drugs at an “excessive price” was preempted because it created an unconstitutional obstacle to the rewards and incentives established by Congress under the Patent Act.
This Article argues that PDABs are currently the strongest state-level intervention to address the public health crisis precipitated by high prescription drug prices—and are therefore essential. Unlike the law at issue in BIO v. D.C., PDABs afford drug manufacturers opportunities to participate in the affordability review process, and are thus intended to facilitate important public health discussion and negotiation with drug manufacturers. Additionally, because patents do not confer upon patentees the affirmative right to make, use, or sell the subject invention, much less the right to recoup a particular profit, UPLs do not conflict with the objectives and purposes of the Patent Act. States have traditionally wielded powers to protect the health, safety, and welfare of their citizens, and therefore must have the power to rectify market failures that lead to excessive drug prices in a way that can be reconciled with federal authority over patents and the national drug market. At a time when federal funding for healthcare has been all but gutted, policymakers must consider how to avoid preempting drug price reform at the state level.
