When President Trump unveiled his drug pricing agenda, pharma marketers and ad agencies were surprised by one proposal in particular—drug prices in TV ads. The administration has since doubled down on the idea, leaving marketers with a host of questions about how and why.
On Monday, HHS Secretary Alex Azar called on pharma companies to voluntarily add drug prices to ads.
“Be honest about what you’re trying to charge us, and put your list prices in your ads,” Azar said during a speech outlining details about the bigger plan, the Wall Street Journal reported.
Then, on Tuesday, FDA Commissioner Scott Gottlieb said his agency is already working on ways to implement the price-tag policy—and clear any legal hurdles that might be in its way. One of those legal issues is the risk that requiring price disclosures would be unconstitutional “compelled speech,” Gottlieb said at a forum in Washington D.C., according to FierceHealthcare.
Another problem outside the legal sphere: What price to disclose. Gottlieb acknowledged that a drug’s list price may not be the best number to use—given the discounts and rebates payers extract—but said the agency could find “better proxies.”
Industry sentiment among marketing pros ranged from (many) no comments to a series of “uns”—uncertain, unhelpful, unfeasible. While slapping prices into ads might seem to be a move toward transparency, an arbitrary sticker number doesn’t clear up a very murky and complicated drug pricing picture.
“Mandating the disclosure of medicine list prices in DTC ads would provide no meaningful benefit to patients given the significant negotiations occurring in the marketplace,” PhRMA wrote in a statement to FiercePharma.
The number wouldn’t enlighten consumers about their own bills, the trade group said.
“List prices are not the prices that insurers actually pay and are often not a good indicator of what the consumer will pay at the pharmacy counter since their insurer may charge a flat copayment or coinsurance,” the statements said. “Price comparison websites already exist to help consumers compare and look for the best retail prices, the price the consumer actually pays for their medicines at their pharmacy.”
Peter Weissberg, vice president of market access at Intouch Solutions, called the idea “potentially well-intentioned,” but said he doesn’t think it’ll work.
“Not only is it not practical, I don’t think it would actually drive much value to the system,” Weissberg said. “We’ve already seen from having to include fair balance in TV ads that just including information doesn’t make it valuable to consumers.”
A single number—list price or otherwise—wouldn’t show consumers the calculus behind that price, demonstrate the drug’s real clinical value or explain how some groups of patients could end up paying less. That sort of detail would likely require a sort of new “fair balance” laundry list about pricing, similar to the side effects disclosures that already pad every drug commercial. And that, in turn, could push pharma TV ads past the two-minute mark and confuse consumers even more.
Craig Martin, global principal with Ogilvy Red, said, “You have to be realistic about how much information you can convey in a 30- or 60-second ad, especially because the ad is already crowded with disclaimers. The issue of drug pricing doesn’t lend itself all that well to putting a sticker on an ad.”
He added, “It doesn’t seem like something that will bring greater transparency around how drug pricing is done—it will only put a price tag on something without any context to go with it.”
And then there’s the legality of requiring pricing in ads, as Gottlieb noted Tuesday. And FDA working group assigned to the price-tag idea will investigate that possible sticking point.
Credit Suisse analyst Vamil Divan was skeptical that this sort of disclosure would have any effect on drug prices, and noted that FDA might not have the power to require it anyway.
“It is not clear to us what the FDA can mandate on its own without Congressional action or how much this would impact how pharma companies price their drugs,” Divan noted, “without broader changes to [a] drug pricing system that significantly incentivize[s] pharma companies and other members of the pharma supply chain to maximize list prices.”
Ultimately, the complicated drug-pricing system is a bigger issue. One change, one single transparency move, probably won’t be effective. Sunlight on the whole pricing chain, manufacturer to consumer? Maybe.
Weissberg said, “If the goal is you want to have price transparency, I think that’s a wonderful pilot program. Let’s have a market-based fully transparent system. Let’s take a look at it.”