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May 18, 2018 0

I was watching HHS Secretary Alex Azar during the White House press briefing unveil an idea we have heard pushed before. That is, DTC advertising should disclose the price of the advertised drug. That sounds fair but is a lot more difficult to implement than any other advertised category.

Most advertised retail prices have relevance to consumers. A car advertised at MSRP will sell for somewhere between 85-100% of that price. That is true for most products that disclose prices. Health care prices are wildly variable depending on the payer. Those prices can vary by as much as 50-75%. I understand the goal of HHS. It is to give consumers an idea about how expensive a drug is before they and their physician make the decisions to use it.

Bob Ehrlich
“I doubt a DTC ad is the right place to discuss price.”
-Bob Ehrlich

In my last column on this topic, which was written last July after the American Medical Association recommended that a drug’s price be required in DTC ads, I said prescription drugs are unique in that consumers have no idea what the advertised drug costs based on the ad itself. No other category has ads where its products range from $300 a year to $100,000. Consumers who are interested in an advertised drug may be in for sticker shock and depending on coverage may be paying a high out of pocket cost. Secretary Azar thinks that the consumer deserves to know that price information in advance. The issue is how to do that in the prescription market with its myriad of discounts. What consumers want to know is what they will pay, not what their insurer will pay. Given the numerous payers, all with different formulary coverage and individual discounts, that is hard to communicate.

Clearly drugs can be broadly categorized by cost, so perhaps an ad can say in what pricing category the drug fits. Maybe there are terms HHS can come up with to give consumers an idea in which cost category the drug belongs. Even if they do, consumers care what they pay not the listed retail price. It is possible a $100,000 drug costs them less than the $3000 drug based on reimbursement.

This price disclosure motive seems to be designed to put pressure on drug makers to be embarrassed advertising high priced drugs. That may mean those $100,000 cancer drugs prefer not to advertise if they had to list a high retail price in the ad. My recommendation would be to have ads refer to a link on their website or an HHS website that can discuss price in detail. In a 60 second spot HHS can only expect a super that discloses a list price or a voice over saying what the drug may cost. That would be totally insufficient for consumers and more likely confuse them.

OPDP likely will propose research studies on how best to convey price and we can expect a guidance several years out. I do not agree with the practical value of some of their research studies but this one deserves careful study. I doubt a DTC ad is the right place to discuss price but if it is mandated by FDA then it must be done to help consumers evaluate a drug on the cost/benefit context, and not just to generate public outrage that some drugs are very expensive.


July 7, 2017 0

Some state delegations are pushing the AMA to adopt a position to push drug makers to include the retail price in their ads. They feel full disclosure will inform consumers that some drugs are very expensive up front. The physicians pushing this idea feel drug makers will be held more accountable by the public if they disclosed prices in their ads.

Clearly these advocates hope that forcing drug makers to disclose price in ads will create pressure on drug makers to keep prices in check. The question I have is, is disclosing price a net positive or negative at the stage of awareness advertising? Consumers are entitled to know prices of what they are being prescribed. Does upfront price disclosure help them make a better decision or just add confusion?

Bob Ehrlich
“Advertising price…will not be a net positive for consumers.”
-Bob Ehrlich

In a world where the advertised price is what you pay, then disclosing it makes sense. In the drug world, however, consumers do not pay retail prices. There are many net prices to consumer depending on insurance, co-pays, formulary position, and discounts offered by drug makers. The retail price is only relevant if the consumer pays it. I understand that many expensive drugs are not a viable option unless the consumer has good reimbursement. That viability is rarely known by the consumer until they take that prescription in to be filled.

Advertising price generally will not be a net positive for consumers. An expensive drug that says it costs $100k a year may scare consumers away from asking about it even though it may in fact cost them nothing. A $20 a month drug may sound cheap but a consumer may be paying full price for it because of coverage. The only intent of this potential AMA policy is to embarrass drug makers of very high price drugs. Pressuring drug makers on price is fair game for insurance companies, PBMs, and government payers. Retail price disclosure will only cause angst and confusion among consumers.

I also have concerns that consumers are not experts on price/value of drugs. Does curing Hep C for $80,000 cost less than liver transplant, or long hospitalization? Does paying $100,000 for an extra year of life make sense for a cancer patient? These decisions are complex and required an informed factual basis. It makes sense to have independent medical third parties do research on drug price/value and have consumers and doctors made aware of those analyses. I can even support ads being required to have a web site posted that has those analyses.

I understand doctors are frustrated with drug prices. I also know some drug companies have gone too far in aggressive pricing. The solution is in self-restraint, tough negotiations by payers, and well done research on cost/benefit of drugs. Advertising retail price will not help consumers and in fact may discourage them from seeking treatment because they assume they cannot afford the drug.

Bob Ehrlich