If you are one of the 75% of Americans that uses prescription drugs, you know they cost a lot of money. Especially if you’re one of the 1 in 4 that can’t afford their medicine.
A few days ago the government announced that drug companies must include the price of their drugs in all television commercials if the drugs cost more than $35/month.
Which they will as Big Pharma only spends money on TV ads for their latest and greatest (and most expensive) products.
This new requirement should take effect later this summer.
But will it really bring down outrageously high drug prices?
The HHS secretary thinks it will.
“We are telling drug companies today: You’ve got to level with people [about] what your drugs cost,” Health and Human Services Secretary Alex Azar told reporters Wednesday. “Put it in the TV ads. Patients have a right to know, and if you’re ashamed of your drug prices, change your drug prices. It’s that simple.”
Hmm. I’m not so sure.
Big Pharma has been pretty immune to shaming.
When called out on prices or price increases, pharmaceutical CEOs act all persecuted and go on and on about the high cost of research and development. They also like to play the noble humanitarian card over and over again: We only want to do what’s best for our patients.
Yeah, right. Drug companies are businesses, and they want to do what is best for their stockholders. Period.
There are three reasons why I don’t think the HHS’s attempt at price transparency will work.
One, the prices won’t be that obvious. Many years ago, the drug companies were told they had to include risks and side effects in their commercials. They do this in super-fast dialogue at the end of the commercial, but what the viewer remembers is the overall picture of good-looking, youthful, healthy actors holding hands, walking the beach or dining with friends. Ad execs are clever and know how to craft a commercial with lots of subliminal messaging, like Buy this drug and you will be so happy….
These emotions override the more prosaic details. I’m sure any new commercials will find a way to diminish the impact of boring pricing information.
Two, most patients don’t pay the retail price of drugs. Depending on their insurance plan, they may pay a relatively affordable co-pay, typically $10-25 for a generic drug (first tier) and $25-50 for a brand name drug (second tier). Third tier drugs, the most expensive, are usually paid at a percentage of the cost until the deductible or out-of-pocket limit is met.
So a majority of patients in the US won’t pay much attention to the prices because they have “good” insurance. Of course, they or their employers will have to pay more every year in premiums. Drug costs are one of the biggest drivers of higher insurance premiums.
It’s the uninsured and the under-insured (those with very high deductibles) that are hurt the most by high prices, but they are the minority.
Three, the HHS naively believes the pricing information will empower patients to make smarter health care decisions.
“Today’s final rule is an important step toward achieving President Trump’s vision for lowering prescription drug prices by bringing much-needed pricing transparency to the convoluted market for prescription drugs,” CMS Administrator Seema Verma said in a press release. “Equipped with information on prescription drug prices, patients will be better able to make informed decisions and demand value from pharmaceutical companies.”
Um, no. For example, I keep an EpiPen for a bee sting allergy. For years I’ve watched Mylan Pharmaceuticals raise the price on this product until now it’s over $700. A generic version came on the market a few years ago, but it’s not that much cheaper, about $500 when I picked one up a few weeks ago. For a few cents worth of epinephrine! But even though I know the price, I can’t do anything about it. How am I supposed to “demand value from the pharmaceutical companies”?
Pharmaceutical companies don’t care what patients think, or prices would have come down years ago.
If you want to know more about how healthcare policy decisions over the last two decades have enabled the drug companies, read Drugs, Money, and Secret Handshakes: The Unstoppable Growth of Prescription Drug Prices.
While I believe it’s possible for companies—even drug companies—to be both profitable and a benefit to society, Big Pharma has lost the plot and will need much tougher regulations than this anemic advertising rule.