Drug pricing policy proposal

MARY REICHARD, HOST: Coming up next on The World and Everything in It: the Trump administration’s strategy for lowering drug prices.

JILL NELSON, HOST: Last spring, the administration introduced the blueprint for American Patients First. It outlined four strategies to lower prescription drug prices: boost competition, enhance negotiation, incentivize lower list prices, and decrease out-of-pocket drug costs.

REICHARD: As a part of the plan, Health and Human Services Secretary Alex Azar proposed a new regulation last week. It’s supposed to incentivize pharmaceutical companies to lower list prices for drugs. But critics question whether the plan would actually work.

WORLD Radio’s Sarah Schweinsberg reports.

SARAH SCHWEINSBERG, REPORTER: Americans are familiar with TV prescription drug advertisements.

TV SPOT: Eucrisa is an FDA approved prescription ointment for mild to moderate eczema. And it’s 100 percent steroid free.

Audiences have also come to expect a list of possible negative side effects at the end of these commercials.

TV SPOT: Do not use if you are allergic to Eucrisa or its ingredients. Allergic reactions may occur at or near the application sight.

Pharmaceutical companies include that list because federal regulation requires them too. Now a proposed Trump administration regulation would force drug companies to include one other detail: the drug’s price.

The proposal would require TV ads to include the list price of any drug that costs more than $35 a month. That’s the price of the drug before insurance. The price would have to be listed at the end of an ad in a way that’s easy to read.

Rachel Sachs is a professor at Washington University in St. Louis. She studies how pricing impacts access to prescriptions. She says while prescription cost reform is needed, adding list prices to commercials isn’t an effective strategy.

Why? First, because it could confuse consumers. Most Americans have some form of insurance that reduces the cost of drugs. But they may not realize the commercial list price isn’t what they’d actually pay.

SACHS: And for those patients it might be helpful for them to know not just the list price but expected out-of-pocket costs.

Sachs’ second criticism involves enforcement. The government doesn’t have an effective way to make drug companies comply. It would take a lot of resources to police every prescription TV add. Instead, the government might rely on private companies to hold each other accountable via litigation.

SACHS: So if a company is in violation of the rule, all HHS will do is put them on a list, on a website somewhere. And it’s not clear to me that that will be sufficient.

Finally, Sachs says no evidence shows pharmaceutical companies have ever lowered drug prices directly because of increased market transparency.

Instead, Sachs suggests there are other strategies she thinks would be more effective. Strategies like increasing competition between drug companies, introducing more generic medications, and reforming patent licensing.

Adrienne Faerber is a lecturer at the Dartmouth Institute. She specializes in how FDA regulation affects prescription drug marketing. She says the administration’s proposed regulation does tap into a consumer desire to know more about the prices of drugs.

FAERBER: But there might be better ways of getting consumers the information that they want rather than including it in drug advertising.

Faerber says the pharmaceutical companies themselves may be onto a better way.

In anticipation of the Trump administration’s proposed regulation, a coalition of PhRMA manufacturers went on the offensive. The companies said they’d start disclosing list prices on their own websites, along with estimates of what consumers can expect to pay after insurance.

But Faerber says, under PhRMA’s plan, drugmakers wouldn’t have to standardize pricing information. That could confuse consumers as they jump from website to website. She thinks a third party should host the information.

FAERBER: Possibly the FDA or, or other organizations that don’t have skin in the game provide neutral information that allows people to compare drug prices and also really importantly can compare how well these drugs work.

If the Trump administration moves ahead with imposing the regulation, pharmaceutical companies have promised a long legal battle.

Fred Eckel is the former president of the Christian Pharmacy Fellowship International. He says whether drug companies have to list prices in their commercials or end up giving information on their own websites, the regulation seems to be doing at least part of its job: causing a shakeup in Big PhRMA.

ECKEL: The administration’s proposal is creating and a new kind of openness from the industry that wasn’t there before. They could have done this a long time ago.

Reporting for WORLD Radio, I’m Sarah Schweinsberg.

(Photo/Jernej Furman, Flickr)

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