The over complicated process of drug pricing

  • Black-box negotiation processes” between drugmakers, insurers and the middlemen who haggle behind closed doors over how much money changes hands are hidden from patients.
  • Drug companies set the list price of drugs at insanely high levels solely to ensure the highest possible payment by insurers once all the haggling is complete.
  • There are markups along the supply chain by wholesalers and retailers, which want as big a piece of the profits.

Drug companies, insurers, PBMs, and pharmacies do everything possible to shroud their transactions in secrecy. They claim this is for competitive reasons, and in part that’s true. But the bottom line is they don’t want anyone seeing how much cash is actually on the table.  Congress’ answer? List the price of the drug in DTC ads, which makes about as much sense as trying to nail jello to the wall.

The U.S. The health care system deliberately misleads patients about costs, and any move toward genuine transparency is a move in the right direction, but listing the price in DTC ads is an exercise in futility.

A recent survey by the Kaiser Family Foundation found that three-quarters of Americans favor specifying prices in drug ads. That includes 83% of Democrats and 72% of Republicans but that’s because the media has done a good job in really explaining who is taking a cut of the profits between the drug company and patient.

While most have seen or heard advertisements for prescription drugs, about one in seven say they have talked to their doctor as a result of seeing an advertisement for a prescription drug.

Yet, among the fourteen percent of the public who have talked to their doctor about a drug they saw advertised – more than half (55 percent, 11 percent of adults) say they were prescribed the drug they asked about and half (48 percent, 10 percent of adults) discussed the price of the drug with their doctor.

Health care continues to be one of the top issues that voters want to hear candidates talk about during their 2018 congressional campaigns. One-fourth of voters say health care is the “most important issue” for 2018 candidates to discuss during their campaigns, which is similar to the share who say the same about the economy and jobs (23 percent). While health care is a top issue for Democratic and independent voters, it remains a second tier issue for Republican voters.

You can be critical of drug company pricing, but until consumers really understand how pricing works the idea of inserting drug prices into ads is just as dumb as the idea that a for profit health care system saves us money.

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