Colorado Ruling Raises Questions About Prescription Drug Price Caps

Last year, Colorado became the first state to use a prescription drug affordability board to set a binding payment limit for a specific drug. Now a federal judge has temporarily blocked that limit, raising questions about whether states can impose such caps on patented medications.

Colorado First to Set Drug Payment Limit

Since 2019, several states have established prescription drug affordability boards (PDABs) to review expensive drugs and recommend policy changes. Four of those boards—in Colorado, Maryland, Minnesota and Washington—have the authority to set upper payment limits (UPLs), often described as price caps, on prescription drugs.

As we previously reported, Colorado’s PDAB voted in early October 2025 to set an upper payment limit for Enbrel, used to treat rheumatoid arthritis and other autoimmune conditions. About 2,500 Coloradans use the drug, and state claims data showed average total annual payments of $57,787 per user in 2023.

The board set a UPL of $600 per 50-milligram unit, equivalent to roughly $31,000 annually for a standard weekly dose. The limit was scheduled to take effect Jan. 1, 2027.

But on July 1, Chief U.S. District Judge Daniel D. Domenico issued a preliminary injunction barring the state from enforcing the UPL while a lawsuit by Enbrel manufacturer Amgen proceeds. The decision creates substantial legal uncertainty about PDABs’ authority to impose UPLs on patented drugs.

Court Says Patent Law Likely Preempts Enbrel Limit

Domenico based his injunction largely on a 2007 federal appeals court decision involving a District of Columbia law that sought to limit prices for patented drugs.

Colorado argued that its Enbrel limit was different because it did not tell Amgen what price it could charge. Instead, the UPL restricted the amounts purchasers could pay and insurers could reimburse after the drug entered the distribution system.

Domenico was not persuaded. He found Amgen likely to succeed on its claim that federal patent law preempts the state limit. In the judge’s view, Colorado could not avoid the patent-law conflict by imposing the limit on purchasers and insurers rather than directly on Amgen because the limit would still reduce Amgen’s revenue from the patented drug.

The judge separately found that allowing the limit to take effect while the case continued could harm Amgen in ways that would be difficult to undo, including by disrupting contracts and negotiations with wholesalers and other purchasers.

The ruling is preliminary and narrow. It blocks enforcement of the Enbrel limit while the litigation continues. But it does not eliminate Colorado’s PDAB or invalidate the rest of its governing law.

Colorado appealed the injunction to the U.S. Court of Appeals for the Federal Circuit on July 30. Because that court hears patent appeals from across the country, its eventual decision could influence challenges to similar state limits beyond Colorado.

According to the Colorado Sun, Amgen said it was pleased with the ruling and confident in its position, while Adam Fox, deputy director of the Colorado Consumer Health Initiative, called the decision “a step backwards for Colorado and consumers.”

Bills Dealing with PDABs Considered in Several States

Bills dealing with prescription drug affordability boards (PDABs) were considered in at least 15 states this year, according to the LexisNexis State Net legislative tracking system. Five of those states enacted such measures.

Other States Yet to Implement UPLs

Before Domenico’s ruling, Maryland’s PDAB approved proposed regulations establishing UPLs for Ozempic and Jardiance, two widely used diabetes drugs. If finalized, the rules would take effect Jan. 1, 2027. The public-comment period closed July 27.

Some stakeholders have urged the board to evaluate the Colorado ruling before moving forward. But as of Aug. 10, the board had not announced any change to its proposed rules.

Meanwhile, Washington’s PDAB is conducting its own affordability review of Enbrel but has not set a UPL for the drug.

Minnesota’s PDAB is at an earlier stage of the implementation process. The board was scheduled to consider drug-selection criteria on July 31. Approval of those criteria is a prerequisite to choosing drugs for affordability reviews.

Because none of these three states has yet implemented a UPL, officials there have more time to assess the Colorado decision and their own statutory designs. Those differences could matter. For instance, Maryland’s proposed limits would initially apply only to qualifying state and local government purchases and health plans, while Colorado’s law applies more broadly to covered in-state purchases and payer reimbursements, subject to statutory exclusions and limits on state authority.

Even so, the ruling gives officials in all three states a new litigation risk to assess as they select drugs and design future limits.

State lawmakers were already taking different approaches to PDABs before the ruling.

State Lawmakers Take Different Approaches to PDABs

As of Aug. 7, lawmakers in at least 15 states had considered PDAB-related bills, according to the LexisNexis® State Net® legislative tracking system. The measures varied widely.

Some, such as Illinois SB 3496 and Kansas SB 212, proposed the creation of Colorado-style PDABs with the authority to set UPLs.

In contrast, Louisiana SB 401, enacted as Act 915, created a reporting- and transparency-focused PDAB. The board can identify drugs responsible for significant state spending, collect manufacturer pricing information and issue annual reports, but it cannot set UPLs.

Virginia HB 483 and SB 271 would have prohibited licensed drug manufacturers or wholesalers from accepting more than Medicare’s federally negotiated price for specified drugs intended for use in the state. Gov. Abigail Spanberger (D) vetoed both measures after lawmakers rejected her proposed substitute, which would have directed an advisory panel to study reference pricing before implementation. In her veto statement, she argued that existing PDABs had not demonstrated savings and that the proposed system would require substantial state spending.

Maine LD 697, which became law without the governor’s signature, directs that state’s existing PDAB to assess whether the state should authorize UPLs or use Medicare-based reference pricing, without immediately imposing either.

Colorado SB 140, meanwhile, would have prohibited that state’s PDAB from reviewing or setting a UPL for FDA-designated orphan drugs and certain biologic products derived from human blood or plasma. The measure, which was passed by the Senate but died in a House committee, showed that even in a state with an active PDAB, lawmakers were considering whether certain drugs should be exempt from affordability reviews and UPLs.

Colorado was poised to become the first state to test whether a UPL could reduce prescription drug spending without disrupting access. Instead, the state may first help determine whether that tool can be applied to patented drugs at all.

In the meantime, this year’s legislation suggests that state lawmakers will continue pursuing a mix of UPLs, Medicare-based reference prices, manufacturer transparency requirements and exemptions for certain categories of drugs—underscoring a fragmented state policy landscape while the Colorado ruling leaves the legal status of UPLs for patented drugs uncertain.

—By SNCJ Correspondent BRIAN JOSEPH

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