Drugmakers Are Revealing Their Prices. Prepare to Be Confused and Outraged.

Yuval Rosenberg
The Trump administration on Wednesday finalized a rule requiring pharmaceutical companies to disclose drug prices in their television ads if the cost is greater than $35 a month. The requirement is set to take effect as early as this summer.This is “the most visible action the administration has taken so far to address the rising cost of prescription drugs,” The New York Times’s Glenn Thrush and Katie Thomas note.The big question: Will it work?Supporters of the move say it will increase transparency for patients and foster competition that will drive prices lower.“Requiring the inclusion of drugs’ list prices in TV ads is the single most significant step any administration has taken toward a simple commitment: American patients deserve to know the prices of the healthcare they receive,” said HHS Secretary Alex Azar. “Patients who are struggling with high drug costs are in that position because of the high list prices that drug companies set.”Critics of the proposed rule, including the pharmaceutical industry, contend that list prices are not a good indicator of what patients actually pay at the pharmacy counter since they don’t factor in the discounts and rebates that insurers and pharmacy benefit managers negotiate. They also argue that the mention of high list prices could create sticker shock that keeps patients from getting the medications they need.Azar pushed back against some of those concerns. "If a drug company is afraid that their prices are so excessive and abhorrent that they will scare patients away from using their drugs, well they ought to look inside themselves and think about whether they should be lowering their prices," he said.Many experts also say that it will take far more to get drugmakers to lower their prices.“Telling people what the price is doesn’t change the price,” Stacie B. Dusetzina, associate professor of health policy at the Vanderbilt University Medical Center, told NBC News. “Instead we would need reform to price setting or related to how patient payments are set.”The administration argued that list prices genuinely do matter to many patients, who either pay them or prices based on them. Still, the final rule will allow insurers to note that patients with insurance may pay different prices, a provisions pharmaceuticals companies wanted — and one that researchers found could undercut what the administration is trying to achieve.Like what you're reading? Sign up for our free newsletter.

Drug companies are revealing their list prices online for the first time, Bloomberg’s Riley Griffin and Anna Edney report, noting that the voluntary move is “a bid to stave off pressure from the Trump administration to make even more public disclosures” — and that, far from bringing clarity to the murky world of drug prices, the disclosures could lead to more confusion.

The background: After the Trump administration proposed nearly a year ago that drugmakers be required to put their list prices in television ads, the pharmaceutical industry argued that those list prices could mislead consumers, who aren’t usually required to pay those prices, and could cause people to skip filling their prescriptions. The industry also objected on First Amendment free speech grounds.

The Pharmaceutical Research and Manufacturers of America, the industry’s main trade group, instead adopted new advertising guidelines urging members to direct patients to company websites to find more information about drug pricing, including both the list price and average or estimated out-of-pocket costs. Those voluntary guidelines took effect on April 15.

What drugmakers have done: Some, like Pfizer and Amgen, have created “digital hubs” where patients can find pricing information, Bloomberg reports, while other companies have added pricing information to their sites for specific drugs.

The potential problem: “For consumers,” Bloomberg’s Griffin and Edney say, “the patchwork quilt of resources might not be so easy to navigate and could lead to more confusion in the already byzantine world of drug pricing, according to health-care cost experts.”

Why it matters: A Lilly spokesperson told Bloomberg that providing more personalized details about expected out-of-pocket costs is more meaningful for patients than posting list prices, and that’s likely true — but the detailed pricing data also highlights just how convoluted the drug pricing system is. “Prescription drug prices can be confusing,” the Eli Lilly drug pricing site says. “Two people may pay different prices for the same drug, depending on their insurance situation.”

For example, Lilly says that nine out of 10 prescriptions for its breast cancer treatment Verzenio cost less than $50 a month, while the remaining prescription costs an average $1,772 a month. Most Medicaid patients can expect to pay between $4 and $9 a month, while costs for patients on Medicare Part D can vary throughout the year, going from less than $30 a month to an average of $685 a month. Patients without insurance, meanwhile, can expect to pay the full list price of $11,732 a month.

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