Drug industry pledges more price transparency in ads, stops short of full disclosure

Drug industry pledges more price transparency in ads, stops short of full disclosure
© Greg Nash

Prescription drug advertisements on television will soon direct patients to more information about the cost of the drugs under new principles agreed to by members of the largest drug industry trade group.

But the move by the Pharmaceutical Research and Manufacturers of America (PhRMA) stops short of directly disclosing the actual list prices for drugs in the ads, a policy favored by the Trump administration.

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Drug companies have faced increasing pressure for a lack of transparency about the cost of medicines, and PhRMA President Steven Ubl on Monday acknowledged that the industry has a responsibility to educate patients while speaking on a press call on the announcement.

“The President challenged us to provide this information, policymakers on a bipartisan basis have ... and you’ll see robust action in the coming months,” Ubl said.

Every television ad from a PhRMA member that mentions a prescription drug by name will include a voiceover or text telling patients to go to a company-sponsored website where they can find information including the list price, as well as a range of potential out-of-pocket costs and potential patient assistance.  

“We think this kind of transparency is needed across the health-care system,” Ubl said. 

PhRMA later clarified that companies won't arbitrarily determine the list prices they disclose on their websites.

A spokeswoman told The Hill that the “list price” refers to the “wholesale acquisition cost,” the industry-standard publicly reported price. A given product may have different list prices depending on the dosage, and companies will have to determine how to report a list price if this is the case, she said.

The announcement from PhRMA appears to be an effort to pre-empt a potential new regulation from the Trump administration that would require companies to disclose list prices in direct-to-consumer advertising.

Health and Human Services Secretary Alex Azar is making a speech Monday afternoon that will reportedly focus on the issue, and the administration has been teasing a major policy announcement.

Ubl said putting list prices directly into advertisements is misleading and doesn’t give patients the context they need to make informed decisions. It could also discourage patients from seeking medical treatment because a high list price might make them think they will pay more than they really will.

The list price is set by the manufacturer and impacts how much the drug costs for pharmacies and patients, but it is rarely the final price that patients will pay.

According to Ubl, the list price doesn’t include rebates negotiated by insurance companies or pharmacy benefit managers. Deductibles also play a major role — a patient with high deductible insurance will pay more.  

“We want patients to have more cost information and support using direct-to-consumer advertising,” Ubl said, but “just including list prices is not sufficient and would be misleading.”

In a statement, Azar said the move is a “small step in the right direction” but said the administration’s drug pricing goals will not be voluntary.

“The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” Azar said. “So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further and continue to implement the President’s blueprint to deliver new transparency and put American patients first.”

The agreement will take effect on April 15, but Ubl said that companies might start making information available sooner. PhRMA is comprised of 33 companies.

However, PhRMA can’t tell companies how to present the information, and every company has a different definition of “list price,” which Ubl acknowledged might make it difficult for patients to compare between companies.

Updated at 3:06 p.m.