President Trump announced late last month that his administration will push back on high drug costs through a number of proposals, including linking Medicare Part B prices to an international pricing index that includes 16 other countries and by requiring pharmaceutical companies to include drugs’ list prices in TV ads, the second of which later passed the Senate as an amendment to the latest appropriations package of $1 million to the Department of Health and Human Services.
While the first idea is a potential solution to high drug prices, displaying the list price of a drug on every TV ad will be ineffective in terms of reducing drug prices — and is likely to backfire. Though it sounds beneficial to force accountability on drug companies right before the midterm elections, this rule would ultimately do more harm than good.
The Trump administration is pushing for list prices of drugs to be included in ads. That means consumers would see dauntingly high prices for pharmaceuticals, prices they would not be paying. That’s because list prices are used by drug companies as the starting point for negotiations with pharmacy benefit managers and insurers. Consumers usually pay much less than the list price, often just a copayment at the pharmacy. The rule also provides no real mechanism by which it can reduce prices other than by shaming drug companies into reducing costs — or scaring consumers into avoiding necessary treatments.
Most consumers don’t worry about what their insurance company is paying for their prescription drugs. But the constant threat that one’s insurance may not cover a high-priced drug is what makes this policy so dangerous.
While transparency is generally a good thing, showing consumers list prices out of context repeats what I call the “percent daily value problem.” You’ve likely seen this bit of information countless times. Percent daily values are printed on nutrition labels by law. They represent the minimum amounts of nutrients (total fat, potassium, carbohydrates, and the like) that a “standard person” on a daily diet of 2,000 calories should consume. Rarely defined or explained, percent daily values are supposed to help people stay healthy by understanding what they are eating and modifying their diets accordingly.
But they probably don’t. In a study of more than 3,000 U.S. adults, 41 percent could not determine the percent daily value of calories in a single serving of ice cream. To make matters worse, at least two of these values, for potassium and calcium, are based on outdated or misleading evidence. Yet there they are, printed on every nutrition label.
The point is that percent daily values are presented to consumers on every food item without any context of the consumer’s own unique nutritional needs and without any instruction on how to interpret them, or even any evidence base for doing so. That renders them almost useless.
I believe that the same fate will befall list prices on drug ads.
Perhaps there’s a lesson to be learned from consumers’ responses to including side effects in ads for prescription medications. Jeff Rothstein, the chief executive officer of Cult Health, an ad agency that specializes in health care, told the New York Times, “It’s counter-intuitive, but everything in our research suggests that hearing about the risks [of unexpected side effects of medications] increases consumers’ belief in the advertising.” This suggests that consumers who see list prices in drug ads on TV may avoid medications they need over fear of high costs they constantly see even though they don’t correspond to their personal out-of-pocket costs.
If the Trump administration insists on including drug prices in ads, it would be wiser to include the average estimated out-of-pocket cost for consumers who have insurance. But even that would have to account for the extreme variation in what different health insurance plans pay for the same medication. Including drug pricing information on ads is further complicated by the matter of deciding which doses of the medication to provide prices for.
Drug companies have been fighting the proposed changes by stating that their ads will include a link to their websites so consumers can check drug prices beginning next spring, but this is a voluntary offer that can be easily retracted at any point.
Health care in the U.S. is already notorious for its high costs, which often catch patients by surprise. Adding unsubstantiated fear of personal expense for prescription drugs by replicating the percent daily value problem in drug ads runs the risk of deterring patients from using medications they truly need and would be detrimental to public health efforts for years to come.
Syed Kaleem is a first-year medical student at Drexel University College of Medicine.