The Trump administration perennially has threatened to pull “levers” that would push the healthcare industry to become more transparent and lower overall costs.
Why would an industry that so often references value need a shove? Because hospitals and drugmakers still shy away from revealing what patients will pay for their services and products despite the near-deafening chorus from consumers begging for financial relief.
It wasn't completely surprising when HHS Secretary Alex Azar last week announced a proposed rule that would require drugmakers to disclose list prices in TV ads. Consumers would learn the cost wholesalers pay for most drugs covered by Medicare and Medicaid, minus any discounts. And that cost is often drastically lower than what consumers pay.
Almost immediately, policy experts bashed the idea. They said it would confuse patients who might not realize that the cost in the ad—the proposal suggests that the information be a “legible textual statement at the end of the ad,” likely appearing amid a long list of side effects—would not necessarily be what THEY would be required to pay out of pocket. They also weren't convinced it would shame any drugmaker into not raising prices. Remember Mylan?
The industry's largest pharmaceutical lobbying group, PhRMA, said it was worried about patient confusion and somewhat pre-empted the rule by announcing earlier that same day that its members would voluntarily make their own transparency move.
PhRMA CEO Stephen Ubl said the organization's members would provide links to information about list price, potential out-of-pocket costs and financial assistance available.
“We are the only sector in the healthcare system voluntarily disclosing our list prices,” Ubl proudly stated.
Indeed, while some hospitals disclose charges—again an often confusing number that doesn't reveal what they are actually paid by insurers—few have done it voluntarily. The Denver Post, combing through Colorado Department of Health Care Policy and Financing data, recently exposed state hospitals for raising prices by 76% over seven years. This at a time, as the Post reported, when some of the state's not-for-profit hospitals were reaping profits of 36%. A new state law went into effect this year requiring hospitals to post self-pay prices for common procedures.
Numbers like that underscore the need for some intervention to shed light into this black box.
Azar hopes the new TV ad rule will help lower costs for Medicaid and Medicare, which spent $174 billion on prescription drugs in 2016 alone, by shaming drugmakers to lower or at least maintain prices.
But if heart-wrenching stories like parents having to refinance their homes to pay $300,000 per year for drugs that will keep their children alive doesn't make a difference to drugmakers, would this rule do it?
The fact is, we live in a country where people make tough decisions every day about how to pay for healthcare. For some it's a choice between prescription drugs or food.
And then there's a news story that's haunted me in recent weeks: Nobel Prize winner Leon Lederman before he died this month sold his medal for $765,000 to pay for medical bills. Heartbreaking.
Spend enough time with leaders of the various sectors of healthcare and you'll inevitably see fingers always pointed at the other guy. It's never the fault of hospitals, payers, drugmakers, pharmacy benefit managers, or any of the countless other types of companies that negotiate endlessly with each other but leave the patients to fend for themselves.
“We will not wait for an industry with so many conflicting and perverse incentives to reform itself,” said Azar, the former president of Eli Lilly, which last year boasted $22 billion in revenue.
The healthcare industry, which has embraced a sea change in recent years at the behest of consumers, should now embrace the idea that price transparency is here to stay.