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The Pulse of the Pharmaceutical Industry

Drug prices in advertising: Threading a needle of transparency and confusion

Written by: | | Dated: Thursday, June 6th, 2019


By Jeremy Schafer, senior VP, director, Access Experience Team, Precision for Value


Jeremy Schafer

Consider this scenario: While you’re watching the latest sporting event, a commercial for a pharmaceutical comes on. It starts with an intro of patients suffering from a debilitating illness that is significantly impacting their lives, preventing them from activities they enjoy – possibly even threatening their lives. But just as hope is waning, the brand name flashes on the screen, followed by details of encouraging efficacy data. The narrative then hits a few bumps as a voice rattles off a litany of adverse events that sound unsettling and, in some cases, life threatening as well. Then, just when it seems the commercial will wrap up with the customary reminder to “talk to your doctor,” a line appears on the bottom: “Drug X costs $7,000 per month. If you have insurance that covers drugs, your cost may be different.” End of commercial.

Hardly the best way to cap a story of hope, but this is the challenge that pharmaceutical marketers – and their agencies – soon will be faced with, thanks to a finalized rule requiring price disclosure in DTC advertisements. (This is assuming that successful legal challenges do not emerge.) The question now is two-fold: What will the impact be and how can the requirement be accommodated while minimizing any confusion that may result?


The Rule

The final rule, to be implemented by HHS this summer, requires that all pharmaceuticals reimbursable under Medicare/Medicaid (which is almost all pharmaceuticals) with a cost greater than $35 per month disclose the list price in television advertisements. A disclaimer stating, “If you have insurance that covers drugs, your cost may be different” is allowed as well. The price, reflective of a month of therapy or a typical course of therapy for nonchronic drugs, must be displayed in legible text at the end of the advertisement.

Marketers will need to stay on their toes as prices must be updated quarterly – which may be an issue given that annual or even more frequent price increases have occurred with pharmaceuticals. The rule’s requirements are clear. Its impact on other healthcare stakeholders? Much less so.


The Patient

How the cost message will impact the patient should be of primary concern to pharmaceutical marketers. PhRMA, the lobbying arm of pharmaceutical manufacturers, has expressed concern that the rule will cause confusion for patients and may lead them to not seek necessary care. That concern may not be unfounded.

During my own time working at a pharmacy benefits manager, we conducted an analysis on whether higher patient cost sharing was associated with patients not picking up prescriptions, a phenomenon we dubbed “prescription abandonment.” The analysis looked at whether pharmacies ran a prescription through the insurance and then reversed the claim shortly thereafter.

The theory was that the claim was reversed after the patient was told the cost and the patient opted not to pick up the medication. Our study found that once patient cost share increased more than $200, the risk of abandonment increased markedly. This result has been found repeatedly over the years in categories ranging from arthritis to oncology.

Patient abandonment due to DTC prices presents a significantly greater challenge. In the case of abandonment at the pharmacy, the insurer can identify that the patient did not pick up the prescription and then possibly intervene. At my previous employer, we implemented just such a program that notified the patient’s doctor and connected the patient with assistance programs. However, the important component was that we knew the patient walked away from therapy because we saw the issue in the pharmacy claims system. For DTC, a patient may see the price of the drug and decide that he/she cannot afford it, or that improving his/her illness is simply not worth it. The result is that the patient never bothers to take a prescription to the pharmacy and no one knows about it, except the patient. Therapy is truly abandoned and an illness progresses.

The patient may be upset as well. Heated drug pricing rhetoric has caught patients’ attention, particularly as election season gets under way. Patients seeing the price may feel exploited or taken advantage of, while being completely unaware of the discounts manufacturers often provide to payers and the channel. Manufacturer credibility and image may be harmed unless patients can be convinced the price is justified.


The Responsibility

The role of the pharmaceutical marketer is to detail patients, providers, and other healthcare stakeholders in making medications understandable and accessible. The arrival of price information in DTC will test the marketer’s role further. On the first front, the marketer must help customers understand why a drug is priced the way it is. HHS Secretary Azar threw down the gauntlet by challenging the industry: “If you’re ashamed of your drug prices, change your drug prices.” The marketer has the responsibility to respond with tailored messaging that highlights the innovation a drug brings, the suffering it relieves, and the benefits to society of a healthier population.

Patient accessibility is the other test. In an era when patients have high deductibles and growing premiums, the communication of price in advertisements may provide just enough disincentive for patients to walk away. The marketer needs to develop messaging to minimize the risk and highlight that patients have ways to access the drug, regardless of his or her financial situation. Messaging on therapy abandonment should not be limited only to patients. Marketers can also bring targeted messaging to providers, hospitals, and payers on the consequences of worsening disease and how to identify the at-risk patient.


The Future of DTC

Cost inclusion in DTC means that messaging priorities may need to shift even as they stay within the 30-second window of the average commercial. More emphasis on patient support programs would be beneficial. On the non-DTC side of the business, marketers should reinforce patient support programs to pharmacies and providers. Hub programs – common with specialty pharmaceuticals – could be an avenue for providers to send prescriptions directly, ensuring that support programs are accessed and thereby lessening the risk of patient abandonment.

There have been questions on whether the requirement to communicate cost in DTC will mean the end of pharmaceutical television advertisements. This concern is likely unfounded and underestimates creativity of the marketer. Some pharmaceutical manufacturers have already begun disclosing cost information to varying degrees of success. A recent article detailed these attempts by creating award categories such as best fine print, most blatant attempt to play down a sticker price, best explanation of why insurance is confusing, it’s not that simple, pushiest copay card advocate, and you missed the point. We will undoubtedly see a diversity of new angles in the months to come.

Marketers have found ways to weave compelling stories in DTC despite challenging requirements – everything from addressing side effects to communicating complicated disease information. Price disclosure represents a new opportunity for marketers to rise to the challenge, not run away.


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