Drug companies would have to disclose in television ads how much a drug costs, under a proposal the Trump administration released this week. Officials say the move is an effort to prompt more transparency in drug pricing, but drug regulation experts and patients say the effort falls short in many ways.
In remarks announcing the proposal earlier this week, Health and Human Services Secretary Alex Azar said it would only apply to prescription drug advertising on television, and only to drugs that cost more than $35 before insurance.
“Patients deserve to know what a given drug will cost when being told about the risk or benefits it may have,” Azar tweeted on Oct. 15.
Patients deserve to know what a given drug could cost when they’re being told about the benefits and risks it may have. They deserve to know if the drug company has pushed their prices to abusive levels. And they deserve to know this every time they see a drug advertised on TV.
— Secretary Alex Azar (@SecAzar) October 15, 2018
At first, Louisville resident Sarah Ferguson was hopeful about the proposal’s potential to bring down drug prices. Ferguson has a 22-year-old daughter who is on Ferguson’s insurance plan but she worries about her daughter’s ability to afford her insulin after she turns 26 and can no longer be on Ferguson’s plan.
“At first I thought, oh, I think that’s a good idea. They’re going to run an ad for insulin and say this costs $300 a vial,” Ferguson said.
But then she said she realized that there are rarely ads for the older and more common type of insulin many diabetics rely on.
“It was kind of a joke that they would run an ad for insulin and say it was $300 because there are no ads for insulin,” she said.
“We’re already talking about a subset of products. Older products, even if they’re expensive products like insulin, typically they aren’t advertised in this way,” Sachs said. “So for those products, there won’t be even the kind of transparency that could be the benefit of this proposal.”
Ferguson also doubts price disclosures in ads would really empower patients to get cheaper drugs from their doctor, as America’s Health Insurance Plans President Matt Eyles suggested in a news release.
“Giving consumers pricing information in drug advertising will empower them [patients] to have more informed conversations with their doctor about the best approach to improve their health and manage their medical conditions,” Eyles said in the release.
Eliot Fishman, director of health policy at advocacy group Families USA, said few people would push back against a doctor based on price information seen in a television ad.
“It’s always been an ideological abstraction to imagine that people are going to challenge their doctors and be — with their lives at stake — going to be in a position to substitute a less expensive drug,” Fishman said.
The proposal also doesn’t include a way for the government to enforce the drug pricing rule. Sachs said the administration is proposing to post online a list of companies that are in violation of the proposal, but without fines or other penalties.
“A sign of how seriously the administration is taking this proposal is that there’s no real governmental enforcement mechanism for it,” Sachs said, adding that the proposal notes that drug companies would be the primary enforcers through suing each other for not having ads. “And they think that private lawsuits will sort out any violations. I’m not so sure.”
Fishman also said that drug companies usually have patents on the drugs they’re advertising, and don’t have competitors to drive down prices.
“These drugs generally have patent protections — to have an expectation that consumers are going to be armed with this price information in shopping is usually very unrealistic,” Fishman said.
Sachs with Washington University said drug companies use other strategies to knock out competition and keep prices high.
“Other strategies include entering into settlement agreements with potential generic competitors or filing sham citizen petitions with the FDA in an effort to stall generic competition,” Sachs said. “There are ways in which this administration and Congress could respond, but they’ve chosen not to do so.”
The pharmaceutical industry has already responded to Trump’s proposal with its own. Drug industry lobbyist the Pharmaceutical Research and Manufacturers of America said earlier this week that it will develop a website that lists the average out-of-pocket cost for prescription drugs and the price without insurance, according to reporting in the Washington Examiner.