Author: Scott Mayer, Director of Data Analytics at AP Benefit Advisors
HHS Secretary, Alex Azar, informed the public this week that starting sometime during the summer of 2019, pharmaceutical companies will have to include pricing information in their television advertisements. This rule applies for any medication where the manufacturer set pricing is greater than $35 for one-month’s supply.
Johnson & Johnson has even been proactive, complying with the regulations on ads for their brand drug “Xarleto” starting this year. Here’s what their advertisement looks like: https://www.ispot.tv/ad/IXmo/xarelto-selective-cost
If this advertisement is any indication, then the new regulations will prove to be much ado about nothing. Just examine the image from the advertisement that includes the pricing disclosure and you will see why:
First and foremost, looking at this screen, is there really an indication of the cost of the medication to a specific member? The list price apparently is $448, yet most patients will pay between $0 and $47? What’s the difference and what’s my cost? That depends on my PBM arrangement, my plan design, my pharmacy or specialty pharmacy, possibly my provider, etc. There are so many variables and the manufacturers will be able to exploit this intentional opacity to provide no real clarity or insight into medication costs for the consumer.
Now take a look at Xarelto claims from a one-week period in AP Benefit Advisors’ book of business:
The ingredient costs are very much in line with the $448 disclosed in the advertisement, but member-paid amounts range from as low as $0 to as high as $441.47. The fact is, much like hospitals being required to publish their “chargemasters,” this disclosure of information is essentially worthless to the consumer with no additional context.
Hopefully, disclosing the list pricing will give the public some insight into the “true” cost of some of these medications compared to their actual out-of-pocket expenses. This may work to enhance the value perception that people have when it comes to their prescription drug benefits. And yes, perhaps this information will foster a growing push to come up with ways to better manage and possibly regulate prescription drug pricing practices. However, it is also possible that these disclosures will end up being just like the fast talk, ignored, unintelligible disclosures that we hear after car ads, financial planning ads, and so many others where we have already tuned out waiting for the TV program to resume.
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