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Prescription Drug Affordability Board

Upper Payment Limits

What is an Upper Payment Limit?

An Upper Payment Limit (UPL) is a cap set by the state on how much any person or group can pay for a specific expensive medication. It sets a single maximum price for a drug within the state to ensure patients and healthcare providers aren't overcharged.

How UPLs Work

Maryland's Prescription Drug Affordability Boards (PDABs) use UPLs to control the rising costs of expensive drugs. Instead of trying to set a national price, Maryland sets a UPL to manage payments within its borders.

  • Who it affects: Everyone in Maryland's drug supply chain, including insurance companies, state-run health plans, pharmacies, and hospitals.
  • A "Ceiling," not a "Fixed Price": The UPL is a maximum cap. While organizations can negotiate lower prices, they cannot legally pay or charge more than the set limit.
  • The Bottom Line: Capping the payment at the top of the chain aims to pass savings down to consumers, resulting in lower copays at the pharmacy and more stable insurance premiums.

Why States Use UPLs

Maryland implements these limits to:

  • Protect residents and budgets: From sudden or extreme price hikes on essential medications.
  • Standardized Costs: Create a "single maximum price" for a drug across the state, simplifying billing and preventing wildly different prices for the same medicine.
  • Protect Local Providers: Ensure community pharmacies and small clinics don't pay more for a drug than they can get back from insurance companies.
  • Encourage Affordability: Set a clear, transparent limit, forcing the pharmaceutical market to align with what the local economy and its citizens can afford to pay.

How Maryland Determines an Upper Payment Limit

During a Cost Review Study, the Board may evaluate if a UPL is needed.

  1. Agency Staff Gather Information: To determine a UPL.
  2. Recommendation: If a UPL is necessary, staff recommend a UPL and methods for calculating it.
  3. Board Feedback: The Board reviews the methods and calculations.
  4. Public Comment: The public can provide comments on the methods and calculations.
  5. Technical Meeting: The Board may host a meeting to gather more information, which may update the methods, calculations, and recommendations.
  6. Updated Public Comment: The public can comment on any updates.
  7. Board Adopts UPL: As proposed regulations.

Drugs in Maryland with an Upper Payment Limit

At this time, no drugs in Maryland have an established Upper Payment Limit. For more information on where each drug is within the Cost Review Study Process, read about the Board Selected Drugs.