Putting drug prices on TV will cause unnecessary patient panic
By Sally C. Pipes
The Trump administration has proposed several reforms to drive down prescription drug prices.
One measure would force pharmaceutical companies to mention the sticker prices of their medicines in television advertisements. The new mandate covers all prescriptions drugs reimbursed by Medicare or Medicaid that cost more than $35 a month.
The administration hopes this change will empower patients to choose more affordable drugs and embarrass companies into reducing their prices.
But the rule won’t achieve those goals. Instead, it would mislead customers into thinking drug prices are higher than they actually are. It could deter patients from asking doctors about medicines that would improve or save their lives.
The rule would require advertisements to announce drugs’ “wholesale acquisition cost.” That’s the sticker price manufacturers set when they introduce products to market.
Pharmaceutical companies don’t actually receive this amount; it’s merely the starting point for pricing negotiations with health insurers, pharmacy benefit managers, and other middlemen in the supply chain. These negotiations result in substantial discounts. On average, manufacturers rebate one-third of a drug’s sticker price back to payers. Often, discounts can cut 60 percent or more off the sticker price. Last year alone, manufacturers offered more than $150 billion in discounts and rebates.
Manufacturer discounts wouldn’t be reflected in ads. So the price patients see on their screens would be substantially higher than the true, discounted price.
Even that discounted price doesn’t represent what people pay at the pharmacy counter. Patients’ out-of-pocket spending depends on their insurance plans, which detail their co-pays, co-insurance, deductibles, and so on. It’s entirely possible that a patient could pay just a few dollars for a drug with a sticker price of hundreds, or even thousands, of dollars.
Forcing drug companies to announce unrepresentative list prices could actively harm patients’ health. Beyond making patients anxious, sticker shock could prevent people from taking necessary medications.
As prices go up, patients are less likely to adhere to their prescriptions. Doubling patient copays reduces adherence by as much as 45 percent. If patients mistakenly believe they’re going to spend a small fortune, they may never inquire about medicines that could keep them healthy.
Patients ought to be better informed about drug costs. But there’s a better way to offer that transparency.
Drug manufacturers have proposed directing TV viewers to websites that provide detailed pricing breakdowns about drugs. Online, manufacturers have the space to provide essential details and more accurate price estimations that can’t be squished into 30-second commercials.
The Trump administration’s new advertising proposal is well-intentioned, but it’s likely to scare people away from needed medications. Officials would be wise to shelve the rule.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “The False Promise of Single-Payer Health Care.”
The viewpoints expressed above are those of the author and do not necessarily reflect those of The Independent.
How to submit an article, guest opinion piece, or letter to the editor to The Independent
Do you have something to say? Want your voice to be heard by thousands of readers? Send The Independent your letter to the editor or guest opinion piece. All submissions will be considered for publication by our editorial staff. If your letter or editorial is accepted, it will run on suindependent.com, and we’ll promote it through all of our social media channels. We may even decide to include it in our monthly print edition. Just follow our simple submission guidelines and make your voice heard:
—Submissions should be between 300 and 1,500 words.
—Submissions must be sent to editor@infowest.com as a .doc, .docx, .txt, or .rtf file.
—The subject line of the email containing your submission should read “Letter to the editor.”
—Attach your name to both the email and the document file (we don’t run anonymous letters).
—If you have a photo or image you’d like us to use and it’s in .jpg format, at least 1200 X 754 pixels large, and your intellectual property (you own the copyright), feel free to attach it as well, though we reserve the right to choose a different image.
—If you are on Twitter and would like a shout-out when your piece or letter is published, include that in your correspondence and we’ll give you a mention at the time of publication.
Articles related to “Putting drug prices on TV will cause unnecessary patient panic”
With prescription drug prices, private insurers haggle better than Uncle Sam
