Drug pricing transparency, DTC, and a look at the looming challenges
The passage of the Durbin-Grassley amendment to require drug price disclosure in ads marks the latest escalation in the drug price debate. If the amendment survives the health bill reconciliation with the House version, it will complicate pharmaceutical company marketing. As is often said by the industry, and largely true in reality, the list price is often not the actual price paid for a drug as it makes its way through the supply chain and to the consumer. However, a 30 second commercial won’t allow for a full discussion into the nuances of pharmaceutical pricing and net cost. In addition, the “sticker shock” that will come with rare disease and oncology products will add another layer of concern and confusion for patients already weighing the efficacy claims against long lists of adverse events.
Jeremy Schafer, senior VP, Precision for Value, answered some questions from Med Ad News as to what manufacturers can do if price disclosures in ads become a reality. Among his recommendations: get ready to shift focus in DTC ads from products to diseases; and prepare resources for patients to gain and afford coverage of these products, and discuss them with physicians and patients.
Med Ad News: What are the challenges the Durbin-Grassley Act will impose on pharmaceutical marketers if the amendment gets rolled into the overall health bill?
Jeremy Schafer: The primary challenge, especially for manufacturers of specialty and rare disease products, will be not only how to communicate the cost, but also to determine what will need to be communicated. Drug pricing is incredibly complex, so manufacturers will need clear guidance on what to communicate in DTC advertising. For example, will the list price be what is required as the legislation may suggest? If so, that may be accurate for an oncology drug with minimal competition, but what about a diabetes drug where rebates/discounts may be north of 50% of the list price?
For infused products with an average sales price (ASP), does list price still make sense when the ASP is generally what drives reimbursement? Is the communicated price to be per unit (pill, vial), per month, or per year? We do not know for sure yet. Manufacturers may face penalties if the information is not communicated in line with the legislation and regulatory guidance, so there is much at stake. In addition, if a drug is priced in the range of thousands of dollars per month, how can that be detailed to patients in a way that makes sense without the commercial being an hour long?
Med Ad News: Would these challenges mean the end of DTC advertising as we know it today?
Jeremy Schafer: I doubt it will be the end. Manufacturers gain significant value from DTC advertising on both the patient and provider side in terms of product awareness and sales. A marketer should not throw in the towel simply because the landscape becomes more complex. Manufacturers already have to communicate unpleasant side-effect information in DTC. The addition of cost information is just another element that marketers must communicate in a way that minimizes the negative impact.
Med Ad News: What could be a possible path forward for DTC?
Jeremy Schafer: The guidance provided by regulatory bodies will do the most in defining the path forward. I think once the guidance is available, manufacturers could consider focus groups of prospective patients, prescribers, and payers in which different messages and timing of messages (at the beginning or end of a DTC advertisement, etc.) could be tested to see which price messaging resonates the most with the desired customer group. Manufacturers could also look into what other language will be allowed in the commercial. For example, can manufacturers state that a patient’s actual cost may be lower depending on his/her insurance coverage? Can the manufacturer remind patients of copay support programs? These types of messages may lessen the negative impact of price disclosure.
Med Ad News: What tactics will marketers have to use instead of DTC?
Jeremy Schafer: I think we could see shifts in DTC focus. For example, we could potentially see reduced DTC on a specific product and more on the diseases themselves, along with a company logo and a website for more information. A disease-based campaign could be particularly effective for a manufacturer in a space with little competition. Manufacturers may also shift more resources back to detailing prescribers directly, although prescriber access for sales reps gets tighter every year.
Med Ad News: Should marketers be talking with physicians about pricing issues? How can marketers address these issues proactively?
Jeremy Schafer: The role of a pharmaceutical marketer is to convince the target audience that the value the product provides is worth the price. As the drug price debate rages, prescribers are likely to ask questions about pricing with manufacturers, especially if these prescribers have patients who have issues affording their medication. This discussion is an opportunity for the manufacturer to discuss, not only the price of the drug, but the services that are available to help patients gain coverage and afford therapy.
Med Ad News: How can marketers talk effectively with patients about pricing?
Jeremy Schafer: My recommendation would be to stay out of the weeds. Trying to describe the complex tapestry of the drug-pricing system in the United States to a patient will probably not be successful. Instead, I think a simpler approach of presenting a list price, but with the caveat that actual patient cost may vary depending on insurance and that support programs are available, will be most effective.
Med Ad News: What resources should marketers be helping develop when it comes to answering questions about pricing?
Jeremy Schafer: Resources on copay and financial support programs will be key. Some manufacturers have also developed transparency reports detailing the discounts that are available for different products. This kind of information may be helpful as well, especially if it can be simplified for a broader patient audience.