With consumers feeling the pinch of healthcare costs more intensely than ever, the debate over cost transparency is only getting more heated. Nobody is feeling that heat more than pharma.
Prescription drugs are an ever-increasing share of our out-of-pocket medical costs. And by all accounts, it’s going to get worse.
The CMS Office of the Actuary estimates that prescription drug spending is going to grow faster than all other major sectors of health care, averaging 6.3 percent for 2017-2026. That’s all the more concerning when you consider that one-third of Americans report that they were either unable to fill a prescription due to cost, or took less of it to save money.
The price transparency debate came to a head in May, when the U.S. Department of Health and Human Services (HHS) Secretary Alex Azar announced that drug companies will now be required to include the price of prescription drugs in their TV ads. The rule applies only to drugs that cost more than $35 per month.
The assumption behind this new requirement is that consumers will make different choices if they know in advance what their out-of-pocket costs are likely to be – and if other, lower-cost options are available.
Because price transparency is of great concern to patient advocates, we recently conducted some quick-strike research to see what Patient Leaders in the WEGO Health network think of the new HHS rule. We asked five questions and received 550 responses from Patient Leaders across a broad range of chronic and complex conditions. Here’s what we learned:
First, nearly seven in ten Patient Leaders say that pharma companies are “not at all” transparent about the out-of-pocket costs of their drugs. That could explain why there is more of an appetite among policymakers in Washington and in the states to mandate some degree of transparency.
Second, we wanted to know how important transparency is to the average consumer. Here, too, Patient Leaders did not equivocate. More than 95 percent said it is either “somewhat” or “extremely” important, with the vast majority falling into the latter group. This helps explain why patient advocacy organizations were pushing for the new federal rule.
Third, the vast majority of Patient Leaders believe that greater transparency will encourage patients to be more proactive in seeking out less expensive therapies – or find other ways to reduce out-of-pocket costs, such as use of co-pay card.
Advocates of price transparency say this is a key goal. There’s plenty of research that shows that consumers armed with better information regarding quality and cost enables them to seek out better value.
Our fourth question reinforced this point, as did the response. Eight in ten Patient Leaders say the new HHS rule will help consumers make choices that minimize their out-of-pocket costs for prescription drugs.
Lastly, we asked Patient Leaders whether they were familiar with the new HHS rule mandating disclosure of drug costs. We found that only about one-third of the respondents were. While we don’t know how that compares to the broader public, it suggests that news about the law and its potential impact has been slow to reach the patient community itself.
With 23.3 cents of every health care dollar spent on prescription drugs, there’s every reason to believe more people will start clamoring for increased transparency. Whether pharma will see it as a threat or an opportunity remains to be seen. But one thing is for sure: this issue is not going away. The sooner pharma marketers get out in front of it, the better.