October 15, 2018
What You Need to Know about Putting Drug Prices in TV Ads
“If we want to have a real market for drugs, why not have [companies] disclose their prices in the ads, too? Consumers would have much more balanced information, and companies would have a very different set of incentives for setting their prices.” – HHS Secretary Alex Azar
In May 2018, President Trump and Secretary Azar introduced the American Patients First blueprint to bring down prescription drug prices.
- The blueprint laid out four strategies for solving the problems patients face: boosting competition, enhancing negotiation, creating incentives for lower list prices, and bringing down out-of-pocket costs.
- To create better incentives for list prices, the blueprint called for HHS to consider requiring the inclusion of list prices in direct-to-consumer advertising.
Right now, drug companies are required to disclose the major side effects a drug can have—but not the effect that buying the drug could have on your wallet. Patients deserve more transparency.
HHS is now proposing to require that TV ads for prescription drugs include their list price.
- The proposal will require direct-to-consumer television advertisements for prescription drug and biological products paid for by Medicare or Medicaid to include the list price if the list price—the Wholesale Acquisition Cost—is greater than $35 for a month’s supply or the usual course of therapy, with the prices updated quarterly.
- The 10 most commonly advertised drugs have list prices ranging from $535 to $11,000 per month or usual course of therapy.
Many patients either pay list price or pay prices calculated based on list price.
- 47 percent of Americans have high-deductible health plans, under which they often pay the list price of a drug until their insurance kicks in.
- All seniors on Medicare Part D have coinsurance for certain types of drugs, which means their out-of-pocket expenses are calculated as a share of list price.
- List prices are also what patients pay if a drug is not on their insurance formulary, and list prices help determine insurance plans’ placement of drugs on their formulary.
HHS is exploring additional ways to improve drug price transparency and inform consumer decision-making.
- As Secretary Azar has said, “You ought to know how much a drug costs and how much it’s going to cost you, long before you get to the pharmacy counter or get the bill in the mail.”
- Another area in need of more transparency, as laid out in the blueprint, is the opaque system of rebates, which drive list prices up and do not fully benefit patients.