Trump officials ratchet up drug pricing fight

The Trump administration is ratcheting up its fight with the drug industry, with a new proposal that would force drugmakers to disclose their prices in television advertising.

For months, officials have beat the drum over high drug prices but offered only minor tweaks to address the issue. With the latest proposal, which the industry is vowing to defeat, both sides are heading for a fierce clash.

It’s also a fight the administration appears to relish, with the proposal attracting some bipartisan support in Congress.

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Health and Human Services (HHS) Secretary Alex Azar says research shows giving the public more information about drug pricing will discourage manufacturers from raising prices.

But that idea is vigorously opposed by the pharmaceutical industry. If the plan is made final in the coming months, it appears likely to spark a legal fight between the administration and the drug lobby.

“If the government is compelling companies to speak, that violates the First Amendment,” Steven Ubl, CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA) said during a press call Monday.

Experts and analysts think the proposal is not likely to make much of a dent on the price of drugs. Some questioned why the administration has chosen to pick this issue to go after the drug industry over. 

“This is the first real fight that the administration is picking [with the pharmaceutical industry]. It’s also a strange one for them to pick,” said Rachel Sachs, a drug pricing policy expert and associate professor of law at Washington University. 

“This is a policy change whose impact is very uncertain. I’m not certain it will have an impact, and the administration can’t make a clear case it will do so,” added Sachs. “It’s not obvious to me why they’re [fighting] over this proposal rather than any that will have a greater impact on patients.”

The proposal would require companies to put their list prices into advertisements, detailing how much a patient would spend over 30 days for treatment.

Many warn that the proposal could lead to a damaging public relations nightmare for the drug industry, with high prices flashing across television screens.

According to Ubl, putting list prices directly into advertisements is misleading and doesn’t give patients the context they need to make informed decisions. 

He cautioned that it could also discourage patients from seeking medical treatment because list prices are often higher than what patients end up paying through Medicare or Medicaid. The list price is set by the manufacturer and impacts how much the drug costs for pharmacies and patients, but it is also rarely the final price that patients pay.

“The transparency aspect makes it an easier sell to the public,” Sachs said. “There’s an intuitive appeal.”

But Sachs added, “Disclosing prices doesn’t mean companies will choose to lower them.”

For supporters of the proposal it could be a political winner.

President Trump vowed on the 2016 campaign trail to take on high drug prices, and Azar’s proposal comes with just three weeks left before the November midterm elections.

Drug prices have spiked over the last decade, putting a pinch on consumers who have not seen wages keep pace with the hikes. Polls consistently show significant voter outrage over drug prices, and it’s a bipartisan issue. 

That support makes it a tougher fight for the drug industry.

Congress failed to pass a similar price transparency law earlier this year. The Senate approved the measure in a massive government funding bill, but House Republicans stripped it from their version at the last minute.

HHS officials said they don’t need congressional help to implement their proposal. Their action was met with applause by lawmakers in both parties, including Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa), the co-sponsors of the original Senate pricing amendment.

“More information gives transparency to the transaction, it empowers patients, and will help give American consumers a break and start to slow down the skyrocketing cost of prescription drugs,” Durbin said in a statement.

“Making drug prices available to consumers is a commonsense way to lower prices. No one buys a gallon of milk without knowing the price. Why should prescription drugs be any different?” Grassley added.  

One drug lobbyist said the proposal could still have an impact, even if it doesn’t result in lower prices.

“It will impact industry decisions about which drugs they decide to market,” the lobbyist said. “It’s not the same as direct government price setting … but companies will have to think about defending the list price.”

“I don’t think you’d see such an aggressive response from industry if it didn’t have an impact,” the lobbyist added. 

Trump has mainly used the power of his bully pulpit to try and shame the industry into price cuts. He’s met with CEOs of major drug companies and used his Twitter account to call out specific companies for pricing increases. He’s also rewarded companies by tweeting praise for temporary price freezes. 

Industry sources said that aside from efforts at the Food and Drug Administration, most of Trump’s public drug pricing actions have been more flash than substance.

“One problem is that the administration rhetoric around these individual policy changes is far larger than the impact of that particular policy change,” Sachs said. 

The pharmaceutical industry has taken some hits under Trump, but despite the president’s rhetoric, most of the measures to date have been fairly small, aimed mainly at boosting the negotiating powers of insurers and pharmacy benefit managers.

The industry also benefited from the GOP tax law, as some companies used the windfall from tax cuts to fund stock buybacks. 

But the proposal over drug prices in TV ads is the most concrete effort to date from the administration.

The industry tried to get ahead of the proposal on Monday. Before Azar’s announcement, PhRMA said its members would begin directing patients in advertisements to visit company websites where they could get more detailed information about drugs, including the list price, as well as potential out-of-pocket costs and other help.

Azar acknowledged PhRMA’s plan on Monday.

“It is no coincidence that the industry announced a new initiative today that will help make price and cost information more accessible. We appreciate their effort,” he said.

But he ultimately dismissed the proposal as not going far enough.

“Placing information on a website is not the same as putting it in an ad.”