Amgen Challenges Colorado's First-in-Nation Drug Price Cap in Federal Court
Colorado's Prescription Drug Affordability Board imposed a price cap on Enbrel, making it the first U.S. state to cap a specific drug's price. Amgen is suing to block the cap, arguing it interferes with federal patent law protections for innovative drugs. The federal court is considering whether to issue a temporary injunction, with a ruling expected soon.
The pharmaceutical company Amgen is challenging Colorado's first-in-the-nation price cap on the prescription drug Enbrel in federal court, arguing the regulation interferes with federal patent law. A hearing was held in the U.S. District Court in Denver to debate whether the court should issue a temporary injunction blocking the pricing measure while the lawsuit proceeds.
Colorado created the Prescription Drug Affordability Board, or PDAB, in 2021. The board, made up of members appointed by the governor, reviews the costs of certain prescription drugs and can declare a drug unaffordable, then move to set a cap on what patients or insurance companies are required to pay for the drug in the state. Last year, after years of data gathering and analysis, the PDAB voted to cap the price of Enbrel, which treats rheumatoid arthritis and other autoimmune diseases and which last year brought in more than $2.2 billion worldwide for Amgen. While other states have also established PDABs, Colorado became the first state in the country to impose a cap on the price of a specific prescription drug. The cap is set to go into effect next year.
Amgen argues the price cap should be struck down because it interferes with federal patent law. In selecting Enbrel for a price cap, the PDAB focused on drugs for which there are no lower-cost generic alternatives available. This means it zeroed in on drugs still covered by patent protection, the company argues. Federal patent law for pharmaceutical companies exists to promote research and development in exchange for offering companies an exclusive window to sell their products at whatever price they can get. Capping the price, Amgen contends, undermines this incentive for innovation.
On the other side, the state argues that Amgen hasn't actually shown that the price cap will hurt it. Technically, the cap is not a cap on the price Amgen charges but an "upper payment limit" on what the end purchaser—either a patient or an insurance company—pays. Those end purchasers aren't buying the drug from a pharmacy, and there could be distributors and other entities in between the pharmacy and Amgen.
The hearing was emblematic of the uncertain footing for numerous progressive health policy initiatives undertaken during the administration of Governor Jared Polis. Polis made reforming the healthcare system a major focus, establishing an Office of Saving People Money on Health Care and championing policies to slash healthcare prices. In addition to the PDAB, initiatives included a plan to import lower-cost prescription drugs from Canada, health insurance programs like reinsurance and the Colorado Option. The effort to import drugs from Canada is stalled awaiting federal government approval. The reinsurance program, which the state estimates has saved consumers more than $2 billion on premiums, faces reduced funding from the federal government due to the expiration of certain federal health insurance subsidies. Lawmakers have patched together temporary solutions but have yet to identify a sustainable funding source. Now Amgen's lawsuit could significantly constrain what the PDAB can do.