ANNAPOLIS, Md. — Maryland’s Prescription Drug Affordability Board failed to adequately collect and account for annual fees used to fund its operations, leaving approximately $1.4 million outstanding as of April 2026, according to a newly released state audit.
The Office of Legislative Audits examined the Prescription Drug Affordability Board, known as PDAB, for the period from July 1, 2022, through March 22, 2026. The audit, dated Aug. 19, found weaknesses involving unpaid assessments, returned billing notices, collection procedures and internal financial controls.
PDAB was created in 2019 to help protect Maryland residents and the state’s health care system from high prescription drug costs. Its operations are funded entirely through annual fees assessed to health insurance carriers, pharmacy benefit managers, prescription drug manufacturers and wholesale distributors doing business in Maryland.
Those entities are generally assessed an annual $1,000 fee.
According to the audit, PDAB collected approximately $4.6 million between July 2022 and March 2026, including about $3.6 million in checks and $969,000 through electronic collections.
But as of April, PDAB records showed approximately $1.4 million in outstanding fees, including $338,000 that had already been referred to the state’s Central Collection Unit.
Hundreds Of Delinquent Accounts Not Sent To Collections
Auditors found 572 delinquent accounts totaling $673,000 that, based on their age, should have been referred to the Central Collection Unit under state regulations.
That included 210 accounts totaling $210,000 dating back to fiscal year 2023.
“Delays in the pursuit of delinquent accounts may decrease the likelihood of collecting the funds,” auditors wrote.
PDAB told auditors that its board had approved not referring some delinquent accounts to collections. Auditors reported, however, that the agency could not provide documentation showing the board had approved that decision or that the Central Collection Unit had granted an exemption.
State regulations generally require delinquent accounts to be referred for collection after three written demands at 30-day intervals.
PDAB disputed portions of the finding, arguing that an account should not be declared delinquent until the agency can confirm the entity owes the money, received proper notice and has not resolved any request for a waiver or exemption.
The agency said that beginning in fiscal year 2025, almost all accounts — other than those involving incorrect addresses — have been declared delinquent and referred for collection when appropriate.
$342,000 In Bills Returned Undeliverable
The audit also found that PDAB did not adequately follow up after assessment letters were returned as undeliverable.
Between fiscal years 2023 and 2026, notices involving 169 entities and $342,000 in annual fees were returned.
As of April, auditors found PDAB had not contacted the Maryland Board of Pharmacy or Maryland Insurance Administration to determine whether updated addresses were available, meaning those fees had not been pursued for collection.
PDAB responded that it receives relatively recent address information from both agencies before issuing its annual assessments and questioned whether requesting another address only months later would produce better information.
Even so, PDAB said it is establishing a process to seek updated addresses when notices are returned and to notify the Board of Pharmacy and Maryland Insurance Administration of addresses that appear to be incorrect.
Auditors Flag Weak Financial Controls
Auditors also identified weaknesses in the way PDAB handled and verified payments.
The employee responsible for preparing checks for deposit was also responsible for updating accounts receivable records. A different employee who scanned checks for deposit was also responsible for verifying that the money had been deposited.
Auditors found the verification process did not independently confirm deposits against bank records. Instead, recorded checks were compared with a manually maintained deposit list.
The audit warned that under such a system, collections could potentially be misappropriated without being readily detected. However, auditors tested 15 selected assessments and found those payments had been received and deposited intact.
Auditors recommended separating responsibility for processing collections, maintaining accounts receivable records and verifying deposits.
PDAB pushed back on the finding, pointing to its small staff and high vacancy rate during much of the audit period.
The agency was budgeted for five full-time positions, including an assistant attorney general, but for much of the period had only two staff members in addition to the attorney.
As of June 30, 2025, two of the agency’s five positions were vacant, a 40% vacancy rate. Auditors acknowledged those vacancies may have contributed to the problems identified in the report.
PDAB said it has since updated its policies and procedures and will work with the Maryland Comptroller’s Office to better separate financial duties.
The agency also agreed with auditors’ recommendation to independently verify collections against actual bank deposits and reported that change had already been completed.
Board Spent More Than $1 Million In 2025
The audit shows PDAB spent approximately $1.06 million during fiscal year 2025, all of it supported by the annual assessments it collects.
Of that amount, approximately $755,971 went toward salaries, wages and benefits, $108,645 toward technical and special fees and $199,831 toward operating expenses.
The Prescription Drug Affordability Fund had a balance of approximately $1.6 million as of June 30, 2025.
PDAB Executive Director Andrew York wrote in the agency’s response that the board recognizes opportunities to strengthen its fee-assessment process and internal controls but emphasized that PDAB is a small agency managing a labor-intensive collection system involving entities it does not directly regulate.
York said the agency has already implemented several improvements and initiated corrective action where necessary.
Auditors ultimately stood by their findings.
“PDAB’s response indicates disagreement with several recommendations,” the Office of Legislative Audits wrote. “However, the ensuing comments do not contradict our analysis and indicate that they agree to implement each of the recommendations.”
The auditors said they reassessed their documentation and “reaffirmed the validity” of the finding and recommendations.
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