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The Pulse of the Pharmaceutical Industry

Agenda 2019: On pricing transparency

Written by: | | Dated: Wednesday, February 13th, 2019


By Wendy Blackburn, Executive VP, Intouch Group


Wendy Blackburn

For years and years, pharmaceutical pricing has been under attack by consumers, professionals, and payers. More recently, the U.S. government has dramatically stepped up its assault, with price reduction proposals from Congress and stern words from President Trump indicating that drug pricing is a major ongoing focus of the administration. The 2018 timeline was dotted with government jabs at pharma pricing, as well as some attempts to take real action. One most notable to the healthcare advertising industry, of course, was the CMS proposal in October to mandate that branded DTC television ads include the product’s list price.

But pharma companies haven’t seemed fazed by the pressure. The year 2018 saw the most spending yet by pharma on TV advertising. And on Jan. 1, manufacturers announced price hikes on more than 250 prescription medications. No doubt, the stage is set for 2019 to be a milestone year for drug pricing and pricing transparency.

Will pricing disclosure in ads happen? Yes – sooner or later, in one way or another – it will happen.

Already, PhRMA member organizations and those that choose to abide by their Guiding Principles have agreed to a certain level of transparency, if not as specific or dramatic as the CMS proposal. Announced the same day as the CMS proposal and with an effective date of April 15, PhRMA’s updated Guiding Principles state that branded drug TV ads must “include direction as to where patients can find information about the cost of the medicine, such as a company-developed website, including the list price and average, estimated or typical patient out-of-pocket costs, or other context about the potential cost of the medicine.” So instead of displaying the list price itself, branded TV ads would be required to point to more information about pricing.

When compared to the CMS provision, this seems a much more logical and consumer-friendly solution. There are a number of concerns with the governments’ proposed solution of displaying the list price:

• As Intouch VP of market access Peter Weissberg has noted, “Putting the list price on advertising is not really viable. It would be completely confusing for consumers. The ‘cost’ of medications is not what the consumer actually pays based upon the way the larger healthcare system works (e.g., employer-based health insurance, drug wholesalers, retail pharmacy, etc.).”

• In a twist of irony, including drug pricing in advertisements could actually result in what Boris Kushkuley, Intouch executive VP, calls “value bias.” More expensive drugs could be considered more desirable by patients, would be requested more often and utilized more. And setting increased costs aside, the most expensive choice may not even be the best choice for that particular patient.

• Then there’s the First Amendment. “Such a new requirement would probably face court challenges, as many ‘compelled speech’ provisions have been facing court challenges,” says industry expert Dale Cooke. “And as part of its deliberations, Congress would, I hope, clarify things such as exactly what ads this requirement applied to.”

While there are many questions yet to be answered, it’s clear that a focus on pricing and pricing transparency is here to stay. Will the situation create a new world where pharmaceutical companies turn away from television advertising altogether, as some predict? It doesn’t have to.

I believe the debate represents, in fact, an important opportunity to demonstrate patient centricity. For years, research has pointed to a desire from both consumers and HCPs for clearer pricing information. Now is the time to fill this need and demonstrate pharma’s commitment to transparency – going beyond, even, what the industry and government are mandating – to provide more clarity.

How? To note: the proposed CMS rule does not prevent manufacturers from, once disclosing the basic price information, providing additional context around product pricing. This additional context could be accomplished in a number of ways, from offering online co-pay lookups to a comprehensive, real-time benefits checker where consumers enter the product name and personal insurance coverage information to receive pricing specific to them. This data and technology to offer this already exists.

Yes – sooner or later – one way or another – some level of pricing disclosure in TV advertising will happen. My hope is that parties can agree on a sensible, consumer-centric solution.

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