HHS Proposes Pricing in DTC

In May the Administration released a plan called “America’s Patients First” , a blueprint to lower drug prices and reduce out-of-pocket costs. One of the items contained in that blueprint was to have the manufacturers of medicines include the list price of a drug in direct-to-consumer (DTC) advertisements for the product. Yesterday Health and Human Services (HHS) proposed a rule that would require just that for drugs that are reimbursed under Medicare or Medicaid. Much has and will be written on this idea. Here is some more.

Presumably the motivation for requiring the naming of the Wholesale Acquisition Cost (WAC) is that in doing so, manufacturers will be inclined to lower the cost of drugs given their appearance in such ads. Critics are dubious. The Food and Drug Administration is a highly evidence-based organization and in fact, today announced several studies on the impact of various aspects of DTC and its ability to inform or misinform viewers. (See here, here and here). In relationship to the proposed inclusion of pricing in DTC, no evidence has been put forward to demonstrate why this rationale might be sound, nor was any study announced. 

There is a lot for an interested viewer to pay attention to during the viewing of a DTC ad. There is information about the condition being treated, there is information about the benefits of taking the drug, about the risks associated with the taking of the drug for the condition, about who should be taking the drug and who should not, and about how it is administered. Adding a new element, the WAC which is one of the numbers associated with the price of the drug, but is not likely to be the actual cost to the patient, which is what the patient actually cares about adds a new element, but it does beg the question whether or not it will have the intended effect. 

When consumers get a prescription, they are often accompanied by medication guides – lengthy documents that explain a good deal of detail about the risks and benefits of the drug. A patient may read them once, or more likely to skim them, but not read them every time. The point is that providing information alone does not mean that the information will have the intended consequence.

The rule states that it is proposed so that consumers can make an “informed decision”. Further the proposed rule states that “[c]onsumers price shop when looking to purchase a new car, a new house, or even a new coffee maker”. But the price of a drug to a patient is not the same as the price of a cup of coffee maker. One can go to many places for the maker and shop and compare and make an informed decision about what you are paying for. However, when it comes to medicine it is an entirely different motivation for purchase. One needs a specific medicine to address a very specific need. Realities of need prevail over those of cost and a price label that is not directly relevant to what is actually paid by the patient may not inform, but merely confuse. 

There have been many proposals to address pricing, some of which may be more effective than others. Here relaying a price of a compound, without the context of what the consumer actually will pay out-of-pocket, in the pecking order of information that is contained in a drug ad, may likely have little consequence on the consumer/patient. The rule makes the case for the WAC as a valid indicator, but it is a speculative case. Ultimately if listing the WAC does not have an impact on patients, why should it have an impact on the manufacturer? At the very least, it could be a matter of study.

Photo by NeONBRAND on Unsplash







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