Drug Price Transparency

The Trump administration’s Centers for Medicare & Medicaid Services is taking steps to require pricing to be included in DTC TV pharmaceutical advertising. Under a veil of ‘transparency’ and in an effort to empower patients and lower prescription drug prices, the current proposal would require prescription drug manufacturers to post the Wholesale Acquisition Cost (WAC) for drugs covered in Medicare or Medicaid in direct-to-consumer television advertisements.

There are many hurdles for this effort to become reality. From intense industry lobbying efforts to enforcement complexities to potential ‘freedom of speech’ objections, the future is uncertain. However, as the saying goes "By failing to prepare, you are preparing to fail." 

Marketing Pros & Cons Should price disclosure move forward, marketers will be challenged. Confusion created by price transparency may cause patients who think the list price is what they pay in pharmacy or provider setting, which in most cases is not true, might cause patients delay or not seek treatment. For the highest priced pharmaceuticals, some tough decisions will have to be made, which may mean forgoing advertising altogether to reduce ‘sticker shock’.

Price transparency can also be a great marketing opportunity for pharma to put its ‘healthcare consumerism’ stake in the ground by helping customers navigate not only clinical complexities but also financial frustrations. Historically, drug marketers have always found a way...often quite creatively...to deal with the many regulatory disclosures and mandated caveats on requirements such as side effects. It’s also likely that new marketing opportunities will emerge for payer-provider-pharma collaboration. These partnerships could result in better education or comparison tools as well as drug adherence programs that reduce overall costs, help avoid more costly institutional care due to lack of compliance, and ultimately improve patient outcomes.

Price Shopping In the health insurance sector, when consumers have access to price information use is limited. Recent research on MRI scans, one of the easiest services to price compare, shows that if consumers shopped local MRI sites, price variation is significant and savings would be substantial. When there are clear low cost options visible to the patient, the MRI of choice is by far the one recommended by their physician, often at the high end of the price scale. The physician’s suggestion proves to carry more weight with patients than the potential for savings (with most doctors referring to only a single MRI provider, often higher-priced and operated by their affiliated hospital). Will drug price disclosure veer far from this norm?

If & When Should drug price transparency become reality, healthcare consumers will likely have a positive view on the gesture of open price lists, but may come away more confused, especially when they don’t have coverage. Overall the result may be better informed healthcare shoppers, for example, more people seeking out generic alternatives versus accepting branded drugs. But at the highest end of the drug price spectrum the challenge will be brand positioning and communicating treatment value while sounding credible, patient centric and able to answer ’what’s in it for me?’.

In an industry where consumer ‘trustability’ looms large, price transparency cuts both ways. New regulatory rules around price disclosure will mean communication, education and advertising will get even more complicated…and more scrutinized. Accuracy and clarity will be paramount, particularly since price hits home directly in the consumer’s wallet. That said, with drug prices in the political crosshairs these days, is a move away from the status quo so bad? Price disclosure may be key to moving the needle in improving big-pharma’s healthcare consumerism image.