Editorial: Drug price information should help control costs

By The Herald Editorial Board

The pharmaceutical industry can be selective when it wants to talk about the role of “market forces” regarding the price of medications.

Drug makers are quick to explain that price increases are helping to continue the work of research and development that can lead to new and better medications, for example. Fair enough. But when it comes to the most basic of market forces — knowing what patients are paying for a particular medication and why the price keeps going up — there’s less interest in providing the transparency most of us expect for the goods and services we purchase.

Gradually, that may be changing, following recent advances on the state and national level.

Earlier this month, Alex Azar, the Trump administration’s Health and Human Services secretary, announced that his agency is finalizing regulations that will require drug companies to disclose the list price of medications in their television and other advertising for medications costing more than $35 for a month’s supply. So — along with the voice-over about side-effects and other warnings that play over scenes of boomers rocking guitars, riding bikes and playing with grandchildren — consumers will hear the list prices for the medications. Prices could begin showing up in advertisements as early as this summer.

Some pharmaceutical companies had protested the rule as infringing on their First Amendment rights, but Azar pointed out that the federal government has for decades required automakers to post their sticker prices.

Some of the most commonly advertised medications might remind consumers of car prices. Recent government reports showed the 10 most commonly advertised drugs have prices that range from $488 to $16,938 a month, the Associated Press reported.

In response to concerns that the information might be confusing to some consumers, the regulations allow for an added statement that many consumers don’t pay list prices, but again, that’s a concept most who have purchased a new car are long familiar with.

The hope is that patients who have a better idea of the price of medications can have an informed discussion with their doctors about the value of the medication and what alternatives might be available, gradually putting pressure on drug makers to keep costs reasonable.

The rule isn’t a cure-all. It applies only to those brand-name medications that are commonly advertised and not on generics and other medications that aren’t advertised, some of which are still subject to steep and seemingly inexplicable price increases.

Which is where a new state law could provide some relief.

Gov. Jay Inslee, earlier this month signed legislation originally sponsored by state Rep. June Robinson, D-Everett, that will require drug manufacturers, pharmacy benefit managers, suppliers and others to report prescription drug pricing data to the state Health Care Authority and provide 60-day prior notice before increasing the cost of certain drugs. The law also requires the state health care agency to submit a yearly report to the Legislature regarding the data it has collected.

Importantly, along with reporting the price increases, the justification for those increases also must be provided.

Industry lobbyists argued against the legislation in public hearings, objecting that much of the information already is provided to the federal Security and Exchange Commission and Food and Drug Administration, that the advanced notification requirement could create drug shortages, and that the focus on list prices doesn’t recognize rebates and price reductions provided to insurance providers and others.

If the information is already being gathered for federal agencies, supplying it to a state agency shouldn’t present many difficulties, and more transparency at state and federal levels is better than less. Some advance planning by drug makers on prices should limit drug shortages. And, as noted above, consumers understand that list prices often aren’t what they end up paying.

But consumers often do end up paying in the larger sense.

Yes, most of us are more familiar with how much we pay for co-pays rather than the list cost of the medication, itself. But patient co-pays often are based on list prices. And we’re less familiar with how drug prices affect our costs for insurance premiums and deductibles. More information on drug prices will inform our decisions and, again, should provide some downward pressure on prices.

Pharmaceutical companies and others in the industry might do well to encourage more transparency about drug prices. They’re getting unwanted attention over reports for the huge — but very real — increases for drugs that millions rely on, in particular insulin. But those reports are drowning out some recent good news about drug prices over all: The Consumer Price Index for prescription drugs showed a fairly modest 1.6 percent increase from December 2017 to December 2018. Recent projections have predicted a 3.8 percent increase in prescription drug prices for 2020, according to one health care analyst, still that’s slightly lower than its estimates from a year ago.

It’s difficult, however, for those price averages to register with most people when they hear reports of life-saving but simple generic drugs costing patients hundreds to thousands of dollars a month, alongside stories of people who are rationing or foregoing medication.

A recent poll by the nonprofit Kaiser Family Foundation, found that 3 in 10 Americans reported they hadn’t taken medications as prescribed because of drug costs; 19 percent had not filled a prescription, while 12 percent said they had cut pills in half or skipped doses.

These medications are key to protecting the health of Americans and preventing serious and even more costly complications down the road. Splitting pills and skipping prescriptions altogether will only add to our health care costs.

What the market force of price transparency — not just on drugs but on health care procedures and hospital services, too — can provide is fair pressure on the providers to keep drug prices reasonable and accessible.