Trumpcare – Federal Government and Big Pharma Clash Over Price Transparency

Published 11/20/2018

The Trump administration has made no secret of its desire to whip pharmaceutical companies into shape. In July 2018, Trump suggested that “Pfizer & others should be ashamed” of their pricing methods and promised that there would be a response from his administration. Since the summer of 2018, the federal government and big pharma have been involved in something of a war of words over exactly how to address these drug pricing concerns. 

In an effort to placate the administration and get out in front of the situation, the 33 members of the Pharmaceutical Research and Manufacturers of America (PhRMA) trade association recently announced their plan to address the issue. PhRMA suggested that beginning in April 2019 all drug ads must contain the address for a website that consumers could visit to obtain pricing information.

This plan, however, was quickly shot down by the government. Health and Human Services Secretary Alex Azar rejected the idea of the pharmaceutical industry regulating itself. “We will not wait for an industry with so many conflicting and perverse incentives to reform itself,” he noted in a speech to the National Academy of Medicine. Azar argued that patients “deserve to know if the drug company has pushed their prices to abusive levels, and they deserve to know this every time they see a drug advertised to them on TV.”

This statement is broadly in line with the proposal released by the Centers for Medicare & Medicaid Services (CMS). The CMS has suggested that the following rules should be put in place: 

  • TV drug commercials should be required to clearly state the list pricing information for short-term and 30-day prescriptions of the medication.
  • The Department of Health and Human Services (HHS) should maintain a public list of all drugs that violate this rule.

Any medication with a list price of less than $35 per month would be exempt from the new rule. The CMS is also seeking guidance and comment on whether these same regulations should be applied to radio, print, social media and web advertising.

Though these new price transparency regulations will not directly lower consumer drug costs, the agency hopes that by forcing the major pharmaceutical companies to be more upfront about their pricing, they will be shamed into bringing the prices down.

For its part, the pharmaceutical industry believes that the proposed CMS regulations are unfair and ineffective. PhRMA President and CEO Stephen Ubl argued that putting drug prices in commercials without the proper context might actually scare patients away from their doctor and pharmacy.

Ubl further asserted that patients don’t care about list prices anyway, noting that patients only want to know how much they’ll have to pay for a drug, not its list cost.

Having already scored a victory by removing the much-maligned gag rules from the contracts of pharmacists, the Trump administration doesn’t appear to be backing down on the drug price transparency issue anytime soon.