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Disclosing drug prices won't drive down costs, JAMA says

Even if it's passed into law, proposed legislation to force price disclosures is unlikely to create the kind of competition that affect prices.

Jeff Lagasse, Associate Editor

The Trump administration's proposal to require pharmaceutical companies to publish drug prices in TV ads is unlikely to help control medication costs, according to a study published in JAMA Internal Medicine.

The research found that consumer demand for high-priced drugs declined unless the drug ads included language explaining that the medication would be low-cost or no-cost because of insurance coverage or other discounts.

IMPACT

Coupon programs are a common marketing practice aimed at building market share. While they decrease a consumer's out-of-pocket expense, they do not decrease the overall cost of the drug. The costs are passed along to insurance companies and, ultimately, find their way back to consumers in other channels.

Because of that, price disclosures are unlikely to create the kind of competition that can drive down prices, the authors found.

Researchers at Johns Hopkins University showed 580 participants one of five ads for a fictional diabetes prescription drug, Mayzerium. The study participants were not patients; they had been told to assume they had recently been diagnosed with type 2 diabetes.

The ad in the control condition made no mention of the drug's price while the other four disclosed either a low ($50 a month) or a high ($15,500 a month) price. In two "modified" ads, language was included indicating that eligible patients may be able to get the drug for as little as $0 a month because of insurance coverage or coupon availability.

For the high-priced drug ad, price disclosure significantly reduced the likelihood of participants asking their doctor about the drug, asking their insurance provider about the drug or researching the drug online, or taking the drug. The participants who saw ads with modifying language were still interested in the drugs.

For the Trump proposal to be effective, the administration would have to do something about pharmaceutical companies' use of copay assistance programs. A better tack, according to the study, would be to require pharmaceutical companies to provide equivalent discounts to all payers.

In other words, if the drug is marked down 90 percent for the patient, it should also be marked down 90 percent for their insurer, which would keep pharmaceutical companies from essentially gaming the system by forcing insurers to carry the full cost of drugs.

THE TREND

The Trump administration is not the first to try to combat skyrocketing pharmaceutical prices; previous administrations have done their best to address the issue, as have others in the medical and healthcare industries.

Exactly how Trump's Health and Human Services proposal will look is still unclear, and Big Pharma is already pushing back.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com

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