Pharmaceutical companies spend billions of dollars each year advertising directly to consumers via catchy and convincing television commercials. The ads have one clear agenda: to get consumers to ask for medications – often very expensive medications – by name. New legislation seeks to force pharma to include prices in their commercials as part of a multi-pronged effort to lower the cost of prescription meds. But is it REALLY going to work as intended?
An Up-Close Look at the Legislation
In May of 2018, Health and Human Services (HHS) released a blueprint, entitled “American Patients First,” in an effort to lower prescription drug prices and out-of-pocket expenses. The plan outlines several strategies for lowering drug prices, one of which would require drug manufacturers to include the price of certain medication in television ads.
The HHS secretary recently announced that they were moving forward with this part of the plan. After a 60-day waiting period ,manufacturers must include prices in their ads, which means consumers can expect to see prices in ads as early as July. However, drug companies are poised to challenge the rule.
What can consumers expect? All advertisements featuring drugs that are covered by Medicare and Medicaid will include the price in the fine print if it is more than $35. The aim? Lawmakers hope that drug companies will want to lower their prices to appease consumers.
Consumer Confusion and the New Rule
An unanswered question remains: will exposing prices in ads REALLY lower drug prices? Opponents to the legislation say no. They argue that placing prices in ads will only serve to confuse consumers.
The truth is, prices for prescriptions vary wildly, depending on the region and pharmacy in question. What’s more, not all consumers shopping at the same store are charged the same rate. Buyers who pay cash can expect to pay more than those with insurance, and those with insurance may pay various amounts, depending on their coverage. Other factors can affect the cost as well, such as subsidies, promotions and method of purchase (in-store vs. mail order).
With all of these variables, how can manufacturers tell consumers how much they’ll spend? They simply can’t, which could lead to a lot of confusion for consumers. Additionally, some consumers may refuse certain medications, thinking that they cost too much when their cost would be much lower than that advertised.
Pharma Red Tape and Lawsuits on the Horizon
Pharma is poised to prevent this rule from going into effect. Shortly after the legislation was announced, the Pharmaceutical Research and Manufacturers of America (PhRMA) hinted that it would file a lawsuit to challenge the rule. What’s more, industry leaders fear that the legislation will result in endless red tape for pharmaceutical manufacturers, which could, in turn, force them to raise prices.
If the rule goes into effect as planned, lawmakers hope that manufacturers will regulate each other through lawsuits aimed at keeping each other in compliance. How? HHS plans to release a list of companies that violate the rule. Then, it will be up to the violators’ competitors to bring forth lawsuits for misleading advertising and unfair competition. All of this will serve to pit pharmaceutical companies against each other in court and may result in escalating prices, as drug companies seek to raise money to fund their legal battles.
Opponents claim that the law should not go into effect due to possible consumer confusion and an unenforceable compliance policy that relies on pharma companies to regulate each other through the court system. They want to block the rule in court. Only time will tell if they’ll be successful.