.02 Criteria for Setting an Upper Payment Limit.

A. When determining whether to set an upper payment limit and when setting an upper payment limit amount, the Board shall apply the criteria set forth in this regulation.

B. The Board shall:

(1) Consider the cost of administering the drug and delivering the drug to consumers, as well as other relevant administrative costs;

(2) Determine whether an upper payment limit is an appropriate tool to address the drivers of the affordability challenge identified for the prescription drug product;

(3) Set an upper payment limit in a way to minimize adverse outcomes and minimize the risk of unintended consequences; and

(4) Prioritize drugs that have a high proportion of out-of-pocket costs compared to the system net cost of the drug.

C. The Board shall not set an upper payment limit if:

(1) Spending on the prescription drug product by the eligible governmental entities is less than the administrative cost to implement an upper payment limit; or

(2) The prescription drug product is a generic and there are nine or more marketed therapeutic equivalents for the product.

D. The Board shall not set an upper payment limit at an amount that:

(1) Impacts statutory or regulatory amounts, such as Medicaid Best Price; or

(2) Is lower than the Medicare Maximum Fair Price.