The Trump administration last week hit a couple of major roadblocks in its effort to combat high drug prices. Attempts to increase price transparency are now in murky waters.
A federal judge ruled July 8 that HHS didn’t have the authority to mandate that drugmakers disclose list prices in TV ads. U.S. District Judge Amit Mehta said Congress must act first and give HHS permission to promulgate such a rule.
“Holding on to the status quo is what the pharmaceutical industry was hoping for and betting on. I don’t think anything really meaningful will occur,” said David Henka, CEO of ActiveRadar, a company that uses reference pricing to lower medical and pharmacy costs for employers and other plan sponsors.
HHS spokeswoman Caitlin Oakley said in an email that the department was “disappointed” in the court’s decision and will be working with the U.S. Justice Department on next steps. “President (Donald) Trump and Secretary (Alex) Azar remain focused on lowering drug prices and empowering patients through more transparency in healthcare costs … we are working on many different avenues for delivering transparency,” she said.
Some of those options include increasing patients’ access to data, requiring hospitals and insurers to reveal prices, preventing “surprise billing” and requiring a report from HHS on private and federal government impediments to price and quality transparency.
Trump is also considering an executive order mandating that the price for a prescription drug in the U.S. should be no higher than what is charged in the country paying the lowest price for that drug.
“The administration is clearly focused on figuring ways to lower drug costs,” said Dean Erhardt, CEO of D2 Consulting, a pharmaceutical consultancy.
The president even alluded to his continued fight against high drug prices when unveiling his new kidney disease initiative July 10, hinting that “we have some big moments coming up very shortly that will be very special.”
However, HHS late last week pulled back a proposed rule that would have eliminated drug rebates in Medicare and Medicaid plans, striking another blow in the administration’s attempt to slow the spike in drug prices and increase transparency.
It’s also unknown whether and how Congress will pick up the mantle. Lawmakers in both chambers have introduced various bills on drug pricing and transparency, such as making pharmacy benefit managers’ pricing methodologies public, publicizing the number and value of drug samples provided by manufacturers to providers, and banning gag clauses in contracts between providers and health plans.
“A lot of approaches not normally in the playbooks will be considered,” said Dr. David Blumenthal, president of the Commonwealth Fund.
However, it’s uncertain what, if anything, will be enacted. “I’ve not seen anything that indicates a clear direction where Congress is going,” Erhardt said. There’s also an underlying concern that transparency alone is not effective in cutting prices, and may even be misleading.
Some transparency might even be a disincentive; shown a wholesale price, a patient may opt not to obtain a drug because he may think he has to pay that price, Blumenthal warned.
“Transparency is still a little of a phantom. The consumer really doesn’t know what the cost of a drug is, so what is the value of transparency,” Erhardt said. He recommended focusing not only on transparency, but also on other factors, such as the length of drug patents and the time it takes to conduct clinical trials.
“If you want to lower prices you need to look at what’s driving costs,” he said.
More private sector buy-in is also needed. “The purchasers of healthcare have not fully reached the boiling point. For full reform to come to fruition, you need more involvement from the purchasers: the employers,” Henka said.
Marla Durben Hirsch is a freelance writer based in Potomac, Md.
