Drug pricing ads: A pharma PR nightmare

KEY TAKEAWAY: Drug pricing in pharma DTC ads is not going to affect the prices of drugs. The list price doesn’t mean a damn thing to patients who have any health insurance. However, a lawsuit against pricing in ads is going to a PR nightmare for pharma companies.

The requirement to include list price in prescription drug ads is a vain attempt by this administration to show that it’s trying to lower drug prices. Because of our complex drug pricing layers, however, the list price of prescription drugs doesn’t mean a damn thing.

The reality is that very few people pay the list price, and the amount of money received by the drug company – the net price – is typically much lower. Discounts vary but can result in significant discounts of as much as 50% or greater depending on the program. When the government is the payer, the vast majority of purchases have mandated rebates and discounts of significant amounts.

Those pesky rebates..

Prescription drug manufacturers dole out billions of dollars in rebates every year, but these savings don’t usually trickle down directly to consumers.

Like most things in America’s health care system, it’s exceedingly difficult to know just how much a medication costs or what different players in the supply chain pay or earn along the way.

Insurers received $89 billion in rebates, reducing their spending on prescription drugs to $279 billion in 2016, according to estimates from Altarum. (This doesn’t include the portion of the rebate that pharmacy benefit managers keep, which isn’t disclosed.)

List prices could have a negative effect

Including the list price in drug, ads could harm patients. If, for example, a new drug is developed that help provide better outcomes, a patient might avoid it if they believe the list price is too high even though their insurance co-pay might be quite low.

Even with this information, the media is likely to make pharma once again out to be the villain even though drug pricing in ads is nothing more than a feel-good PR stunt by the Republicans in office.

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