//Industry Insiders Skeptical on Trump’s Call for DTC Pricing Disclosures
May 15, 2018

Industry Insiders Skeptical on Trump’s Call for DTC Pricing Disclosures

By Penelope LaRocque | Category: Healthcare Marketing |

On Friday, May 11, 2018, President Trump announced his administration’s “blueprint”– titled American Patients First — to lower prescription drug prices. The 44-page document identified four areas of focus needed to reform the current system:

  • increase competition
  • improve government negotiation tools
  • create incentives for lower list prices
  • decrease out-of-pocket costs for consumers

In his speech, however, Trump focused heavily on eliminating the “middle men” – pharmacy benefits managers (PBMs) like CVS and Express Scripts – and suggested that drug advertisements should include pricing information.

Health and Human Services (HHS) Secretary Alex Azar stated that the blueprint is far from complete – there are 12 pages of questions that HHS seeks feedback on – and will take years to implement. But for now, what is the likelihood that brands will be required to display pricing information on advertisements, and when can we expect to see such reforms put into practice?

“Putting ‘drug prices’ on advertising is not really viable,” says Peter Weissberg, Intouch vice president of market access. “It would be completely confusing for consumers. The benefits are hard to see from my perspective.”

Weissberg believes that while possibly well-intentioned, the proposal to add drug pricing to advertising is stymied by at least two factors:

  • Lack of “price transparency” in the broader healthcare system. Do we know how much it costs to have open heart surgery, deliver a baby, get stitches? We don’t. What benefit, then, could be realized by knowing the price of a drug without any of these other prices as well?
  • The “cost” of medications is not what the consumer actually pays based upon the way the larger healthcare system works (e.g., employer-based health insurance, drug wholesalers, retail pharmacy, etc.). So those other prices would also need to be taken into consideration.

In the retail space, it often makes sense to include pricing in advertising, but in pharma, “listing the price of drugs only vilifies the pharma company, as opposed to helping patients make smarter decisions,” says Aaron Uydess, Intouch executive vice president of customer experience and analytics.

And in a twist of irony, including drug pricing in advertisements could actually result in what Boris Kushkuley, Intouch executive vice president, calls “value bias.” More expensive drugs could be considered more desirable by patients, would be requested more often and probably utilized more.

Is pharma feeling the burn after these recent announcements? On the contrary, stock prices rose for Pfizer, Merck, Gilead Sciences, and Amgen following the president’s speech, and even stocks for PBMs Express Scripts and CVS both rose by 2%.

Some in the industry speculate that perhaps last week’s announcement was designed to bolster the president’s support among his base, particularly since it would take years to implement the suggested changes. At this stage, the blueprint simply calls on the FDA to evaluate adding pricing information to drug advertisements, which will certainly take time. And then there’s the question of legality.

“Such a new requirement would probably face court challenges, as many ‘compelled speech’ provisions have been facing court challenges,” says industry expert Dale Cooke. “And as part of its deliberations, Congress would, I hope, clarify things such as exactly what ads this requirement applied to.”

While the proposal to add pricing disclosures to pharmaceutical advertising caught the attention of the pharmaceutical advertising industry, product management teams and their agencies hardly need to begin drafting pricing disclosure language. The consensus is that many questions remain. It’s not likely to happen anytime soon – if at all.

 

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