HHS argues that their drug price transparency rules will empower patients and create market pressure to cut pharmaceutical costs.
Requiring drug price transparency in direct-to-consumer television advertisements is a common-sense step toward patient empowerment and cutting healthcare costs, HHS argued in a recent blog post.
The post, authored by John O’Brien, the senior advisor to the Secretary for Drug Pricing Reform, acknowledged the critiques of the Administration’s recent rulings to require drug price transparency.
In early May, HHS finalized rules that would require drug manufacturers to disclose the list price of medications in their direct-to-consumer television advertisements. The rule includes drugs that are priced at $30 or more.
This rule came with some industry outcry, specifically from pharmaceutical industry lobbyists who stated that the list price is not a helpful measure for patients to understand the true costs of drugs they will bear.
“We are concerned that the administration’s rule requiring list prices in direct-to-consumer television advertising could be confusing for patients and may discourage them from seeking needed medical care,” said Stephen J. Ubl, president and CEO of PhRMA, following the HHS rule publication. “We support providing patients with more transparency about medicine costs, which is why our member companies voluntarily began directing patients to links to comprehensive cost information in their DTC television advertising.”
But the list price does matter, O’Brien argued, especially for patients with flimsy or no insurance. Forty-seven percent of Americans are enrolled in a high-deductible health plan, meaning their healthcare costs must total at an exceptionally high amount before their insurance kicks in. If a drug price does not exceed the deductible, the patient will pay out-of-pocket.
Patients without payer coverage or who require medications that are not covered by their payers are also very seriously impacted by the list price of a drug, O’Brien stated.
And even when a patient does benefit from a drug subsidy or have comprehensive payer coverage that eliminates some of the price burden, they still see the impacts of high list prices. A patient’s subsidized drug costs are based off of the list price. If market competition creates downward pressure that reduces list prices, those subsidized prices may also go down, O’Brien explained.
“The vast majority of Americans struggling to afford their drugs are put in that position because they’re paying based on high list prices,” he noted. “It’s not an exaggeration to say that suggesting list prices don’t matter is essentially suggesting there is no problem with high drug costs at all. You don’t need a poll to know that very few American seniors or patients with serious illnesses would agree with that sentiment.”
Other actions taken around drug pricing will ideally also lower costs for patients. Recent rules about drug rebates call for more transparency and will require that rebate savings will directly benefit the patient, not a drug manufacturer or pharmacy benefits manager.
Drug rebates are a part of a system of kickbacks, O’Brien said. Arrangements between manufacturer and PBM cut the cost of the drug that the PBM incurs.
But those cost cuts do not usually get passed along to the patient. The patient is still responsible for copays and other cost sharing arrangements that are based off of the list price, not the rebate price, of the drug. PBMs and drug companies win, not patients, HHS said.
“That’s why we have proposed having the rebates in Part D, which in 2017 totaled more than $29 billion, turned into discounts that are provided to patients, right at the pharmacy counter,” O’Brien reported. “Ultimately, upfront discounts will create a fundamentally fairer, more predictable, and more transparent experience for any American who goes to the pharmacy for a prescription drug.”
HHS is taking additional steps to address drug price transparency for patients. The agency recently finalized a rule that would require Medicare Part D plans to provide drug price transparency lists to physicians within their EHRs. This will allow physicians to disclose drug prices to patients even before they prescribe the medication.
Patients and providers can discuss budget and find a medication that works better for them. Providing patients access to more affordable medications will ideally improve medication adherence, keeping the patient from skipping doses or filling prescriptions to cut their own costs.
These solutions are not perfect, O’Brien conceded. More work is needed to understand the root causes of complex drug pricing and the solutions to empower patients and cut costs. But the incremental approach the current Administration is taking represents progress toward more affordable healthcare.
“All of us who follow drug pricing closely can certainly agree on one thing: There is no silver bullet,” O’Brien said. “But each step taken by the Trump Administration, including the new ad requirement, is a meaningful step toward a simple goal: a drug-pricing market where there is more competition, better negotiation, real incentives for lower prices, and lower out-of-pocket costs for American patients.”
Date: May 29, 2019