Drug prices on TV ‘a step in the right direction’
Under a final rule announced by HHS, drug companies that make prescription pharmaceuticals covered by Medicare or Medicaid, including those for infectious diseases, will have to begin including the list price of the medicines — also known as the Wholesale Acquisition Cost — in television ads if the price is $35 or more for a month’s supply or the usual course of therapy.
“This is a very important day for patients in our country,” HHS Secretary Alex Azar said during a conference call with reporters when the rule was announced. “Patients have a right to know the price of the health care they are going to receive before they receive it. Companies who are ashamed of their drug prices should change their prices. It’s that simple.”
The rule will take effect on July 9. Azar said it will make drug prices “work much more like they do in any other market: more uniform, more predictable and more competitive.”
“Requiring drug companies to level with patients about their drug prices is about working toward a system where the patient — not the insurer, not the drug company, not the government but the patient — is in control. We are moving from a system that leaves patients in the dark, to one that puts them in the driver’s seat,” he said.
Drug companies that do not follow the rule can be accused by another company of violating the Lanham Act, a 1946 statute that oversees trademarks, service marks and unfair competition, Azar said.
ID experts respond
Colleen F. Kelley, MD, MPH, associate professor of medicine in the division of infectious diseases at Emory University, suggested that the intent of the rule may be to reduce drug prices by creating a public backlash about how much they cost.
HHS has consistently maintained that it is making progress in reducing drug prices, referencing several accomplishments, including four drug companies canceling announced price increases. But Kelley and Infectious Disease News Editorial Board member W. David Hardy, MD, adjunct professor of medicine in the division of infectious diseases at Johns Hopkins University School of Medicine and chair of the HIV Medicine Association, both noted that prices remain high for HIV and hepatitis C virus medications.
Hardy said the new rule may have an impact on patients with HIV and HCV because companies tend to advertise their most expensive drugs on TV, and patients may be surprised by how much they cost.
“The reality is, however, that for the great majority of patients who are HIV positive or hepatitis C positive, the way they are accessing their medications is through a third-party payer. Very rarely are any patients paying for the medications out of their own pocket,” Hardy told Infectious Disease News.
Consumers may not understand how the payment structure is set up for health care costs and that acquisition costs can be higher than what is actually paid out.
“It remains to be seen how the public is going to react,” Kelley said. “A savvy person who understands health insurance and Medicare and Medicaid will know that the price they are seeing on the television is not necessarily the price that the insurance company pays.”
Study findings published this year in JAMA Internal Medicine indicate that consumers may react differently to price disclosures for medication depending on the cost.
For low-priced drugs, researchers found that disclosing the price had “little influence” on consumers’ responses. Consumer interest substantially decreased when the price was disclosed for high-priced drugs, but the researchers found that if the advertisement noted that a patient’s out-of-pocket expense might be zero, the finding of substantially decreased consumer interest in high-priced drugs was weakened.
“I think there may be an initial sense of fear, because the patient is going to think, ‘How can I pay for that?’ And then as reality settles in and patients talk to their case manager or their medical care provider and are reassured that the government actually never pays wholesale acquisition cost, their initial fear will dissipate,” he explained.
Hardy is betting that companies will just put the price in small print, near the bottom of the ad.
“One of the results of it may in fact be that pharmaceutical companies will have fewer ads on television because they don’t want to disclose the high prices they’re putting on their drugs,” he said.
‘A step in the right direction’
Still, Hardy said the rule is an important step toward transparency that may open a discussion in the United States about why the government — the largest payer for HIV and HCV medicines — does not have any control over drug prices, as other countries do.
“Whether this policy decision is going to have the desired results of reducing drug prices overall remains to be seen because our payment systems are so complex, and the list prices don’t necessarily relate to what consumers pay, even though it definitely contributes to our overall health care costs as a country,” Kelley said.
The policy may even raise awareness among ID clinicians about drug prices, Hardy and Kelley said.
“The cost of medications is something we rarely know. It’s not part of infectious disease fellowship training, it’s not part of what the infectious disease societies talk about in terms of how much these products cost,” Hardy explained.
“I think it’s a step in the right direction,” Kelley said. “I think more should be done to regulate drug price costs as well as pharmaceutical company profits. I think that time will tell if those things follow.” – by Janel Miller and Marley Ghizzone
- Garrett JB, et al. JAMA Intern Med. 2019;doi: 10.1001/jamainternmed.2018.5976.
Disclosures: Azar reports no relevant financial disclosures. Hardy reports receiving clinical research funding through his institution from Amgen, Gilead Sciences, Janssen, Merck and ViiV Healthcare/GlaxoSmithKline, and serving as an advisor or on advisory boards for CSL Behring (Calimmune), Enochian, Gilead, Merck and ViiV Healthcare/GlaxoSmithKline. Kelley reports receiving research funding from Gilead.