Drug Prices In TV Advertising

You’ve surely seen them. You can’t watch a prime time news or entertainment program on television without seeing ads for new medications. Now in addition to the litany of side effects tacked on to the end of the ad, drug companies will be required to include their drug prices in TV advertising.

Why would this be needed? The Department of Health and Human services is using publicity to draw awareness to drug prices. If you hadn’t noticed, drug prices are skyrocketing particularly for new brand-name drugs.

From the time a new medication is first developed and patented, no other company is allowed to use or sell the medication for 20 years. Now that doesn’t mean they get 20 full years of patent protection while the medication is being sold. However, while that drug is under patent protection the company can sell it for whatever the market will bear. There is no competition to drive down prices, especially if it is the first drug in the class.

In order for a new medication to be approved, it has to prove not only that it is safe and effective for the condition it treats, but also that it is different from and better than all the other medications in the class that have already been approved. Usually that means the side effects are less or there is a targeted group of patients for which a new medication works better or is safer. For instance, Byetta (a diabetes medication) can’t be used in patients with advanced kidney disease, but Victoza and Ozempic (newer medications in the same class) are safe.

Recently patient advocacy groups have been pushing the government to help rein in runaway drug prices. Especially when American patients pay 2-3 times what patients in other countries pay for their medication, they definitely have a point. While drug price fixing or control rubs me the wrong way (contrary to my libertarian leanings and the market freedoms that make America different from other countries) I am all for public disclosure of prices. I love the website GoodRx.com which provides retail drug prices at different pharmacies so patients can choose where to go to get their medications if they have to pay out of pocket.

When patients can’t choose for themselves what medication to take, direct-to-consumer marketing has never made any sense to me. Pharmaceutical companies spend almost $6 billion dollars annually on advertising, and 3/4 of that money is spent on TV ads. Every penny of that cost is passed on to patients.

Let’s talk about a specific example. A newer medication I have seen advertised recently is Trulicity. This is an injected once-weekly diabetes medication. According to GoodRx.com, 4 doses of this medication costs $863 at CVS. It’s more complicated than that, because this is not what the pharmaceutical company charges. There is a retail markup, and besides, almost no one pays retail cost for any of their medication. Between insurance and pharmaceutical discount cards there are many ways to reduce the cost of medications.

Part of me wants the government to ban direct-to-consumer TV advertising for pharmaceuticals altogether, like they did with tobacco advertising on TV. Requiring advertisers to disclose their prices is a great first step. Pharmaceutical companies are suing the government to block this rule. If health care providers have to provide transparency on the cost of testing (like CT scans and MRIs) then pharmaceutical companies should have to provide transparency on their charges too.

In addition, this will also shine light on just how much the retail pharmacies and pharmacy benefit managers (like Caremark and Optum Rx) are marking up prices to increase THEIR profits. Drug prices are complicated. Price control at the federal level is not the answer. Transparency and forcing the major players in the industry to justify THEIR piece of the pie? That just may be the answer we need.

QUESTION: Do you think companies should include their drug prices in their ads?

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