President Trump has done it again. He said he would. He laid the groundwork for delivering, then delivered. Prescription drugs are needed by 7-in-10 Americans, and more than half take at least two. Until recently, pricing was a mystery – almost a state secret. President Trump said “enough” – and is mandating transparency. Expect the effect to be measurable and positive for those who rely on prescription drugs – which is, at one point or another, all of us!
Here is the nutshell version. After innovating in other ways, the President’s team has turned to drug advertisements. Advertising tied to prescription drugs is typically costly, clever, compelling and – in gentle pastel colors and slow motion – remarkably inviting. But you never hear about costs. Those, one assumes, will be covered by others – so why bother mentioning them. Right?
Not so fast, says the White House. With or without ads, prescriptions flow from doctor to patient to pharmacy, tending to be covered in part or whole by insurance, either through an employer or the federal government. But how are costs of prescription medicines determined? By whom? On what basis? How often? With what inputs, mark-ups, incentives to sellers, rebates passed or withheld, what chance for savings – or added premiums – on consumers? In effect, this is what the Trump Administration asked. They are getting answers – for us.
In a manner of speaking, the Trump Administration is doing the bidding of consumers, trying to force transparency, greater clarity, and lower prices by shining a bright light on drug pricing. Specifically, as commercial prices recoup research costs and turn profits, there must also be a check on these prices.
That is where President Trump’s leadership comes in. Pursuant to executive directive, and led by his HHS Secretary, advertisements for drugs costing $35 dollars a month or more will soon have to include prices. Since the market is competitive, prices will fall.
Moreover, this innovation works in tandem with other elements creating increased price transparency, such as forcing accountability on distributor rebates – encouraging them to be passed to end-users. In this regard, the President has also accelerated bringing generics to market, and worked to fast-track life-saving treatments where possible.
In February, the President called on Congress to pass his ban on “backdoor deals” in which pharmacy benefit managers (PBM) require drug makers to pay fees to access their contracts of insured lives. If passed, an estimated $29 billion in “kickbacks” to PBMs would likely be passed to consumers.
Returning to the latest innovation, Secretary Alex Azar noted that beginning this summer all prescription drug advertising will include prices, injecting market competition into the oblique process, better informing consumers, and likely also lowering prices. Refreshing!
Are these pro-consumer efforts working? While early to say, the indications are good. Data coming in suggest progress. A report by the Council of Economic Advisers (CEA) last year found, for example, that “relative annual price growth for prescription drugs has slowed since January 2017.” In other words, surprise-surprise, the Trump White House has gotten another industry’s full attention – on behalf of consumers.
One side effect of greater price transparency may be greater consumer discernment, reflection and balancing of options, as well as better decision-making about choice of drugs, under limited insurance policies. Better information invariably leads to more informed decision-making by consumers, whether picking dinner, dogfood, of prescription drugs.
Perhaps most importantly, and offering renewed comfort, this administration is not looking the other way. It is not content with corporate overreach and is unwilling to ignore high-priced pharmaceuticals – which affect seniors, especially. This administration is not trying to line the pockets of drug-makers, distributors or federal bureaucrats. They are focused on the consumer, who in the end – is the voter. How refreshing!