List Prices in TV Ads: Will This Help?

Brady Bizarro, Esq.

Last May, we extensively covered the Trump administration’s American Patients First blueprint. That document outlined four strategies for tackling the problems Americans face with respect to high prescription drug prices: boosting competition, enhancing negotiation, creating incentives for lower list prices, and bringing down out-of-pocket costs. The strategies called for some specific, ambitious proposals, including considering fiduciary status for PBMs. One of those proposals was to require drug companies to disclose list prices in television ads. Nearly a year later, the Centers for Medicare and Medicaid Services (“CMS”) has published the first final rule on prescription drug price transparency.

Currently, drug manufacturers are only required to disclose potential, major side effects of their drugs in commercials, and as anyone who watches commercials knows, the list of potential side effects can be startling and absurdly long. Now, these companies will have to disclose to patients the list price for their drugs, and that is likely to cause even more consternation. An important question to ask, however, is whether or not this will achieve the desired result (bringing down drug prices in general). The reason for skepticism on the part of some industry analysts is because of what the list price actually represents.

List prices are not reflective of what a patient actually pays at the register for a prescription drug. For example, the blood thinner Xarelto, made by Johnson & Johnson, will show a list price of $448 a month. Most patients, however, will pay $0 for this drug because of manufacturers assistance. The pharmaceutical industry and its supporters claim that this confusion may cause patients to avoid seeking necessary care. Closer scrutiny of that position reveals that it is likely overblown and misguided. Drug makers are free to add information to their adds to show what a typical consumer of the drug pays, and we in the self-funded industry know, perhaps more than others, that while the patient may be paying $0 for a prescription drug, the patient’s health plan is most certainly not.

The Secretary of Health and Human Services has noted that drug companies are really pushing back on this rule because they are ashamed of their prices. One healthcare consultant noted, with an air of bemoaning, that this is health policy made through public humiliation. Given that effective legislation and regulation in this area has been scant, public humiliation may be our best bet. The final rule is scheduled to go into effect on July 9th (sixty days after it was published in the Federal Register). In the meantime, some manufacturers are fighting its implementation based on First Amendment concerns. We will be watching to see how those battles play out.