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

Yuval Rosenberg
President Trump is considering issuing a broad executive order to slash the prices of brand-name prescription drugs covered by Medicare Part D and other government programs, Reuters reports:“The order under discussion would be much broader than the Administration’s previously disclosed proposal to lower prices on physician administered, or Part B, drugs by tying prices to lower costs in other countries.“The administration is now looking at ways to use this or a similar method to lower prices in Medicare’s much larger Part D, which is for widely used prescription drugs patients take at home, such as for cholesterol and blood pressure, the sources said.”The order reportedly could come within weeks, and it could cover the military health care plan as well as the Department of Veterans Affairs. But the administration may hold off if it looks like the drug pricing legislation put forth by Sens. Chuck Grassley (R-IA) and Ron Wyden (D-OR) gains bipartisan momentum (see below).The federal government spent nearly $100 billion on prescription drugs through Medicare Part D in 2016, Reuters says.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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