Oct 15, 2018

The main issue with prescription drug price transparency

HHS Secretary Alex Azar. Photo: Chip Somodevilla/Getty Images

Expect more big moves on prescription drug pricing today.

Driving the news: HHS Secretary Alex Azar is giving a "major policy address" on drug prices this afternoon.

  • Politico reported Friday that the administration would formally propose new regulations this week requiring drugmakers to include their sticker prices in their advertising, similar to the way they list side effects.
  • But the industry may preempt that: PhRMA, drugmakers' leading trade group, is planning a "major industry announcement" on direct-to-consumer advertising this morning.

Between the lines: Price transparency is popular, even bipartisan. But the specific weirdness of the health care system creates a situation in which more information may not actually be helpful.

  • Critics of the price-disclosure proposal note that most patients don't pay the full sticker price. If you have insurance, you pay a lower negotiated rate.
  • People familiar with the plan have told Axios previously that it would indeed focus on sticker prices.
  • Even though few people actually pay that price, there's no particularly good stand-in. Every insurance plan has different discounts, and each consumer's individual cost will depend on those negotiations as well as the structure of their plan (the size of their deductible and co-pays, for example) and where they are in their deductible.

The bottom line: There's no way to put a number on television that will be useful for everyone who sees it. Some critics even worry the disclosures could scare patients away from medicines that could help them, by giving them the impression they'll have to pay more than they really will.

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