Listing drug prices may be more helpful ifit is done conjunction with a larger counseling effort to help apatient understand the true cost of therapy and potential productoptions. (Photo: Shutterstock)

Transparency or not transparency? That is the question.

In October of 2018, the Trump administration issued a proposed rule to revise the Federal HealthInsurance Programs for the Aged and Disabled. This involvesamending the Medicare Parts A, B, C and D programs, as well as theMedicaid program, to require direct-to-consumer (DTC) televisionadvertisements of prescription drugs and biological products forwhich payment is available through or under Medicare or Medicaid toinclude the Wholesale Acquisition Cost (WAC, or “list price”) of that drug or biologicalproduct.

The question here is to what end? What is the goal of thisinformation as it relates to the end consumer (i.e. the patient)?

In today's insurance world, the responsibility for payment can varysignificantly based on the type of benefit structure (benefitdesign) of the individual and the type of “payer” — an employersponsored or government sponsored (VA, DoD, Medicaid, Medicare,Exchange) entity. However, in either case, typically once a patienthas surpassed a certain co-pay or co-insurance amount, thethird-party payer assumes responsibility for the majority of healthcare costs.

Related: Reference-based pricing: a panacea for high drugprices?

It is hypothesized in the proposed rule that by providing thislevel of detail, the patient will make a more informed decisionthat in theory will align information in a way whereby a patient(consumer) will select a more affordable medication. Many strugglewith this concept.

Here are some of the questions that arise:

• Will this information be impactful or depend upon what type ofhealth plan is accessed by the patient?
• If the patient has a very attractive plan where they may havean affordable out of pocket amount, will they look to enable accessto a more or less expensive product within a given category?
• Will they have an appreciation for the balance of the costborne by the employer?

On the other hand, if a patient has an expensive,high-deductible plan will the information impact any drug access decision, or will an expensivebiologic product be too expense at any price? At least until thepatient reaches their deductible, assuming they can afford to reachthat limit?

The other side of this argument is that clearly this informationcan helpful. But it may be more helpful if it is conjunction with alarger counseling effort to help a patient understand the true costof therapy and potential product options.

If a consumer sees a price on TV for a product that they mightbe taking, will they also be aware of a) generic alternatives b)other drug options within the therapeutic category that may be oflower price and c) site-of-care options (i.e., home infusion vs.clinic infusion) that may also impact the cost of care that isconsumed by that individual patient.

This also does not address the fact that the WAC price a) is notthe basis of reimbursement for the retail setting and b) may not bethe real “net price” in the market given discounts/rebates and c)may be subject to other utilization and outcomes levers dependingon the nature of any Value Based Contract that may be part of therelationship between a given manufacturer and a given payer.

While drug pricing is certainly getting a lot of attention, itwould be prudent to remember that drug spending (CY 2017)represents approximately 10 percent of the cost of health carespending in the US. Not insignificant, and certainly worthy ofconsideration, is the fact that lowering the cost curve in thepharmaceutical arena, while helpful, may not be incredibleimpactful to the overall cost of health care in the US.

As always it is not a straight path along the health care costpathway.

Read more:

• New bipartisan bill targets drug prices–andMylan
• Same old story? Dem leaders in Big Pharma'spockets
• Quick take: Key themes affecting pharma in2019

Dean Erhardt is president and CEO ofD2Consulting.