On Monday, the Trump Administration released a high-profile proposed rule that, if implemented, would require drug manufacturers to disclose the list prices of prescription drugs in their respective direct-to-consumer (DTC) advertisements (see AP’s summary of the proposal here). Trying to stay ahead of the curve, PhRMA also released voluntary guidelines for member companies in which companies would include links to information on patient assistance programs. What kind of impact can we expect such moves to have?

It is unclear whether either move will help meet the stated goal: to reduce prescription drug prices and spending. The goal of all of this is to lower prescription drug prices, a major goal of the administration and the public. However, it is not clear that requiring companies to disclose list prices will do that, for several reasons:

List prices don’t always have a relationship to what the patients pay at the pharmacy counter. About half of Americans are in a health plan that charges a flat copayment for prescription drugs. While this is lower than it had been in the past, a significant portion of Americans will pay $10, $20 or $50 regardless of the cost of the drug. But even for individuals subject to deductibles and coinsurance based on the cost of the drug, other drugs that the patient is taking, the point in the year in which the patient fills the prescription, and the pharmacy used can all impact out-of-pocket costs.

For example, BELSOMRA (suvorexant), one of the top prescribed single-source products in 2017, has a listed wholesale acquisition cost (WAC) of $331.50 for a 30-count blister pack of 10mg tablets. Using the Medicare Plan Finder, here are the negotiated prices and copayment ranges for a 30-day supply for selected Part D plans available in Alexandria, VA:

While the $331.50 WAC is close to the negotiated prices between the plan and pharmacy, the beneficiary will only pay close to that amount if they are subject to a deductible, and that would likely be only one time a year; for the remainder of the year, a beneficiary could pay as little as $16.31 a month.

How much say do patients have in prescription decisions? The proposed rule rightly points out that ultimately, health care providers are responsible for making the final decision on what products to prescribe. Also, some of the drugs that are advertised are for conditions in which patients and doctors may feel as if there are no, or few, treatment alternatives. If a prescriber feels that a particular drug is the best course of treatment, or perhaps only course of treatment if the patient has tried others and failed, will price disclosures on DTC ads make a difference? Would it make more sense to require companies to disclose list prices on the materials distributed to prescribers instead?

What is the “right” price for a certain drug? The premise of the transparency rule seems to be that requiring manufacturers to publicize list prices may put downward pressure on those prices. But how do manufacturers respond? If their strategy is to aggressively rebate off a high list price, does the manufacturer simply launch at the price that they were willing to rebate down to in the first place? Like car sales: the shift to “no haggle” pricing is nice, but did it really make cars cheaper at the end of the day, or did it just remove a step?

Finally, what is the “right” price for a drug? There seems to be agreement that drug prices are “high” but the majority of prescriptions filled in America are for generic products that represent a relatively small portion of overall drug spending. So that leaves us with the “big ticket” drugs. But what is the appropriate price for a drug that reduces multiple sclerosis relapses and may delay progression of disability? Helps rheumatoid arthritis patients be more active? Extends a cancer patient’s life? At the end of the day, that is the question that must be answered.