The cost of confusion: drug pricing in TV ads

Just when we thought we couldn’t further complicate the debate on healthcare policy in America any further, the government is preparing to amplify its voice to a level previously unattained. According to the New York Times, the White House is reviewing the text of a final rule to impose listing drug costs in TV ads, contending that the disclosures “will provide manufacturers with an incentive to reduce their list prices by exposing overly costly drugs to public scrutiny.” What’s most interesting is the phrase “overly costly,” which implies an ideal value in mind. No one really knows what these numbers should be. So how can both the industry and the regulatory authorities be certain they have hit the goal? Since people need these brands either to manage symptoms or extend life, doctors and patients will determine the cost of need: how to weigh treatment strategies against the price of wellness. This should be interesting.

Other industries have routinely listed their prices in TV ads. Car dealerships promote the monthly cost of leases. Bob’s discount furniture proudly proclaims what they offer for a bedroom set. And supermarkets inform us about what’s on sale in the produce department. Price is definitely a key factor here. Consumers are well informed by past experience to evaluate these purchase decisions accordingly. But the complexities of prescription drug pricing may make advertising Rx products impossible to accurately quantify. That is, will the new rules be able to achieve the stated goal of getting prices lowered?

The first question is what number do you promote? There’s the list price set by healthcare manufacturers. Then there’s the negotiated price with different insurance providers. Then there’s the different co-pay rules that vary depending on which plan you have.  Add all this to the industry practice of offering rebates, and you see the problem. 

Not surprisingly—given their position as an industry leader—Johnson & Johnson is the first to experiment with disclosed pricing to get ahead of the pending action. According to Fox News, Scott White, company chair for Jannsen’s North American pharmaceutical business, which makes Xarelto as a subsidiary of Johnson & Johnson, says “When this debate first started around the inclusion of price, we made a decision to conduct wide-spanned research into understanding what information is going to be most meaningful for the patients and consumers.” However, J&J has gone down a route that illustrates the abovementioned pricing dynamic. Its Xarelto ad says, most users will pay between $0 and $47 a month. A little less noticeable is the monthly list price: $448. I think this qualifies as compliance. But how should patients react to such information? They would have to call their insurance company to see how much their plan covers—an action they could do regardless of the government’s proposed regulation.

The second question is: What’s the competitive landscape look like? If you have psoriasis and view the ads for the bioengineered brands that treat it, then you can compare pricing between Humira, Stellara, Talz, Enbrel, Cosentyx, Otezla, and Simponi. However, when price shopping for, say, a monthly lease on a new Audi, there are many other factors to consider. The same is the case for the drugs listed above. What data do they have? What’s the route of administration? How often does one take it? Are there value-added services, such as a patient support program, the worth of which is in the eye of the beholder?

But what about drugs with no competitors? In the category of osteoporosis, the FDA just approved a new drug, romosozumab (brand name Evenity), developed by Amgen in collaboration with the Belgian drug company UCB, that restores bone without breaking it down, according to the findings of two large clinical trials. No other brand does this. How do you compare pricing when there’s only one option? Does the decision then become “buy it or get a less effective alternative?” How is advertising drug pricing in this example expected to get Amgen, in this case, to lower its costs?

Further, Evenity has a black box warning—a designation by the FDA for a safety profile that could be very dangerous. Evenity’s warning is that it may increase the incidence of heart attack, stroke and sudden death. The numbers are scary. There is a 2.5% incidence of these events, which means that for every 200 people that take Evenity, five will suffer them—and that’s not even counting patients who have a family history of, or a predisposition for these risks. How does one weigh the costs of solving one problem when causing another, more serious problem?

The third and last question is, where are the physicians in all of this? Will they allow price to factor into their prescribing expertise? Or will they be seen as the bad guys when they are forced to explain to patients why price is less important given all the other circumstances of their illness? And how will healthcare manufacturers promote this aspect of the transaction to doctors in communications and sales presentations? “My manager asks, ‘what will it take to put you behind the wheel of a shiny new Xarelto script?’”

As you can see, doctor and patient conversations will divert from discussing symptoms and conditions to laying out the price associated with each drug selection. Doctors—who are squeezed by time—spend an average of five-to-eight minutes per patient. Will they welcome the prospect of doubling that to venture into a subject for which they didn’t go to school?

Don’t get me wrong: I’m not against cost transparency in the drug industry. But it seems like no one will be able to practically use the information in determining which choice—if any—will be optimal. Advocacy groups are pressuring the government to do something about high drug prices, so they must do something. And when it comes to money, the Congress and our President seek popular answers to stubborn problems. Doing something doesn’t mean solving something. What’s the old saying: if you ask a committee to design a horse, you’ll get a camel. Clearly what we have here is a camel.

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