Reform in the pricing of prescription drugs has been one of the important goals of the Trump administration. As the president put it last year — in a manner guaranteed to have the executives of the big pharmaceutical companies reaching for any brand of painkiller — they have been “getting away with murder.”
On Monday, Health and Human Services Secretary Alex Azar took a major stride toward establishing a new norm of transparency: the requirement that companies disclose the list price of drugs in their direct-to-consumer advertising. This would apply to medications covered by Medicare or Medicaid that cost more than $35 a month.
“Patients deserve to know what a given drug could cost when they’re being told about the benefits and risks it may have,” Azar said in a speech to the National Academy of Medicine announcing the draft regulations. “They deserve to know if the drug company has pushed their prices to abusive levels. And they deserve to know this every time they see a drug advertised.”
This seems like a fairly straightforward proposal, in the interest of millions of Americans who depend for their health and wellbeing on medications whose price imposes upon them a tremendous financial burden.
Some of the high-profile drugs under discussion include: Eliquis, which is used to prevent strokes and blood clots, at $503 a month; Humira, for treating rheumatoid arthritis and Crohn’s Disease, for $5,800 a month; and Cosentyx, to treat plaque psoriasis and psoriatic arthritis, at a staggering $11,000 a month.
Before people go to their doctors asking — or demanding — any of these and other vaunted elixirs, they would undoubtedly appreciate knowing what it might cost them.
So the Trump administration, while ordinarily not enamored of adding to the regulatory glut, has found a worthy exception.
Yet, the reaction of the drug companies has been a curious combination of enthusiasm tempered with dismay.
Having gotten wind of what was coming, they were so enthusiastic about the idea that they couldn’t wait for Azar’s speech on Monday before rolling out their own version of truth in advertising.
They offered to disclose prices and co-payments of the drugs in their ads on a new website starting in the spring. The ads would refer consumers who wanted to know about the prices to the website for further information.
Azar, like everyone else not in the pay of Big Pharma, immediately saw through this transparent ploy, noting the timing of the proposal — just hours ahead of his — while until now they have been content to exclude any reference to pricing from their ads.
And he pointed out the difference between the draft regulation and the industry’s gambit, that “placing information on a website is not the same as putting it right in an ad.” Obvious, yes. But sometimes the obvious is worth saying.
Azar called the move a “small step in the right direction” but assured them that the time for voluntarism was over and his agency was stepping in.
Faced with the prospect of compulsory disclosure, the drug companies expressed dismay. The Pharmaceutical Research and Manufacturers of America (PhRMA) declared that inserting list prices in their ads would be “confusing, misleading” and not “what patients want or need.”
They argue that the listed prices the administration refers to are only a “starting point” for the true cost of a drug, which is brought down by insurers. Thus, being compelled to publicize the list price would actually harm the consumer.
This is indeed a novel concept in advertising: that withholding product information is for the good of the public, whereas disclosure is bad.
The proposition that transparency — the watchword of modern business and government — promotes honesty and fairness and works in favor of the consumer has been given a new twist. The behavior of the drug companies here implies that they think (or would have us think) that the consumer is best protected by keeping certain information away from him. And, failing that, to keep as much distance between advertising and pricing as regulators and public opinion will allow. They say that they, too, want sunlight in the selling of drugs — but not too much of it.
Presumably, the list-price issue could be resolved through good faith on both sides. The companies, for their part, haven’t said what the price information on that future website would be based on.
But if that argument won’t suffice, they have already unfurled the banner of freedom of speech.
“If the government is compelling companies to speak, that violates the First Amendment,” Steven Ubl, CEO of PhRMA, said on Monday.
In other words, compelling drug companies to reveal to consumers how much their products cost would be a violation of their constitutional rights.
We’ll leave that for the courts to decide.
In the meantime, the federal government seems to be on the right track. This in itself will not bring prices down, though it may — as Azar said — discourage the drug companies from charging outrageously.
If nothing else, it will give people a better chance of knowing what they’re being sold, and at what cost.