The Trump administration today finalized a rule requiring pharmaceutical manufacturers to disclose list prices in TV ads – similar to how they disclose side effects – for every drug covered by Medicare or Medicaid. Here’s why this could be an important step toward a goal most Americans share: Reining in prescription drug prices so that people can get the medicines they need at a price they can afford.
1. Consumers and medical professionals shouldn’t be kept in the dark
Would you start negotiating what you pay for a new car without knowing the sticker price? And what if other pertinent information, like the average mileage or a model’s safety record, weren’t readily available? It’s hard to imagine consumers making their car-buying — or any other important purchasing decision — in the dark. Yet this lack of transparency is a hallmark of how drug companies advertise, and it’s one of the many reasons why the price of brand-name prescription drugs continues to climb. Patients and doctors need full information to help them best determine which drugs are most effective and efficient for treating an individual’s specific condition. Including the list price in TV ads may trigger conversations with a treating physician on the affordability of a medicine.
2. Drug advertising is at an all-time high
Today, the United States is only one of two countries in the world where direct-to-consumer advertising of prescription drugs is allowed. Last year alone, the drug industry spent $6 billion marketing to consumers. These ads often showcase high-priced drugs even when lower-cost alternatives are available – drugs which are, on average, 80 to 85 percent lower than the brand name product. Many drug makers spend as much as 50 percent more on marketing than on research.
3. Transparency may help keep drug prices down
Health insurers routinely negotiate to lower drug prices on behalf of patients, and in fact, the average out-of-pocket cost for a person who purchases prescription drugs is about $12 a month. But price negotiations with drug companies start with the list price. If the list price is set too high – as it often is with new and brand-name drugs – consumers ultimately bear the cost through higher insurance premiums.
Several states have enacted drug price transparency laws to require more sunshine on manufacturers’ pricing strategies. For example, a California law requires manufacturers to notify health insurers and government health insurance programs at least 60 days prior to raising prices more than 16 percent over a two-year period. This additional layer of transparency is forcing drug makers to justify big price hikes, which in turn, could lead to public pressure to keep prices down.
4. It’s what people want
Most Americans – 86 percent, according to the Kaiser Family Foundation – are in favor of requiring drug companies to disclose list price information in advertising. That’s because knowing a drug’s list price is a good starting point for doctors and patients to discuss which medication may be best for an individual’s unique circumstance.
Read more about BCBSA’s proposals to make prescription drugs more affordable.