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Drug prices in DTC ads invite consumer confusion, but administration can still require them

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The Trump administration wants to go further than the pharmaceutical industry in compelling drugmakers to include pricing information in ads, but an expert doubted whether the administration’s plan will yield lower drug prices. However, another expert said it could result in strong enforcement measures.

The Pharmaceutical Research and Manufacturers of America, or PhRMA, said Monday that it had updated its DTC advertising guidelines to urge members to include information about drug costs. The voluntary guidelines suggest directing consumers to information sources such as company-developed websites that include information about list prices, out-of-pocket costs and other contextual information. However, in a statement following the announcement, Health and Human Services Secretary Alex Azar said the move was welcome, but insufficient. Voluntary action, he said, was not enough, and he suggested the administration plans to go further, per proposals in its “American Patients First” blueprint for lowering drug costs.

But Sharon Suchotliff, a patient and consumer health expert with management consulting firm ZS, said in a phone interview that the drug industry proposal is probably wiser than having to include list prices in the ads themselves, as the aforementioned blueprint proposes. “People might see that and become afraid and potentially avoid taking medication that could save their life,” she said. “That would be my fear.”

While it is important to inform patients and be transparent about prices, especially given that around half of Americans have high-deductible plans, the list price will not give them the information they need, Suchotliff said. While price transparency could have a positive effect, the danger is that patients will get misinformation or insufficient information, depriving them of enough context to fully understand drug pricing.

Indeed, drug pricing is a highly complex topic, one about which even doctors are often in the dark. While the list price of a drug often gets the most attention, the amount that payers must fork over to manufacturers – let alone how much patients must pay out of pocket – is subject to negotiations, discounts and rebates, usually worked out by pharmacy benefit managers. PBMs’ confidential practices have also attracted the administration’s ire and factored heavily into its focus on drug pricing.

So far, members of the administration have touted its moves around drug pricing. “Under President Trump and Secretary Azar’s leadership to lower prescription drug prices, Americans are seeing results,” Centers for Medicare and Medicaid Services Administrator Seema Verma said in a statement in response to PhRMA’s statement and Azar’s response. However, Suchotliff said that while transparency is important, it is uncertain how it is going to lower drug prices. Moreover, she said, it’s unclear how much power the administration has to compel the industry to act, and it could also invite legal action from drugmakers.

But Robin Feldman, a professor of law at the University of California Hastings, wrote in an email that requiring pricing information exposes the companies to enforcement actions and civil fines, and that once they are required to provide information, doing so improperly has serious consequences. That could include the Federal Trade Commission to impose fines and jail time for anyone engaging in false advertising, she added.

In response, the industry could argue that its free speech rights are being violated, Suchotliff said. While saying this was likely, Feldman said this was a matter of commercial, not political speech, comparing it to food companies being required to put various kinds of labeling on their products. “I doubt the courts will have much sympathy,” Feldman said.

Photo: Devrimb, Getty Images

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