The need for transparency in drug pricing is getting severe with increased spending on medications with each passing year. Drug spending in the US, without the discounts, has been reported to be $309.5 billion in the year 2015, which is about 8.5% higher than that reported in the preceding year. (1) As a result, undoubtedly, drug pricing transparency is a topic of debate across the worldwide healthcare industry.

There are several reasons for increasing drug prices. Firstly, ever increasing advancements in healthcare are leading to the production of more complex medications along with the subsequent clinical trials, both resulting in higher spending. Moreover, higher failure rates for drugs tested on human subjects can also lead to increased drug prices. Furthermore, greater clinical trial complexity along with larger clinical trial sizes results in higher out-of-pocket costs for individual drugs. Research and development targeting chronic and degenerative diseases also drives up the costs. (1)

Pharmaceutical industry has been working to find new ways to approach the drug pricing crisis. There are some proposals focusing on increasing transparency about- a) fixing drug prices, and b) the decisions that lead to increased prices. In the US, while one proposal compels drug manufacturers to submit reports to the State for drugs with annual costs exceeding $10,000; another proposal necessitates them to report price increases beyond a given percentage, for e.g., >10% annual increase. Having said that, the companies must be able to justify the decision about fixing those prices as well as the subsequent increases. (2)

Furthermore, the US government has compelled the pharmaceutical companies in US to mandatorily disclose not only the side effects, but also the prices of the prescription medicines in television commercials. It will be in effect within next couple of months and will apply to drugs costing more than $35 for a month’s supply. (3) Although the drug manufacturers are resisting to advertise the prices, the pharma executives are supporting this proposal. This resolution was later proposed in the World Health Assembly urging governments and others buying health products to share information on actual prices paid, thus pushing for greater transparency on patents, clinical trial results and other related factors. (4) However, the UK, Germany and Hungary have dissociated themselves from this global resolution promoting greater drug pricing transparency. (5)

Having said that, the impact of this resolution on patients must be of primary concern. PhRMA, the lobbying arm of US pharmaceutical manufacturers opines that the rule may confuse patients, thus making them not seek the necessary care. Moreover, patients seeing the price may feel exploited, while being completely unaware of the discounts provided to payers and other channels by the manufacturers. (6)

In terms of the overall impact on healthcare, encouraging drug pricing transparency, including reimbursements, would eventually allow payers to improve negotiation. This can further facilitate access for hospitals to pricing information, which can be used when communicating with manufacturers to establish rates. Similar to the transparency of hospital prices and costs, implementing drug pricing transparency would compel manufacturers to justify the prices being charged for medications. (1,7) Drug pricing transparency can also help in breaking down the current opaque pricing system, which forces consumers to pay higher prices while lining the pockets of pharmacy benefit managers (PBMs) and some health plans. Irrespective of the regulator demands, drug pricing transparency can be achieved by using technology to lower drug prices for consumers. (8)

To sum up, price transparency can both improve the workings of pharmaceutical and commodities markets as well as undermine them. Therefore, systems for demanding, evaluating, and acting on the price data are crucial. Since there isn’t enough evidence on improved access and efficiency by referencing publicly available prices from other countries, while some evidence showing exactly the opposite; (9) it would help healthcare systems to become smarter buyers of goods and services. (10) Moreover, the marketers are responsible for advertising a drug’s benefits and efficiency, and thus, they must be able to justify the drug pricing to the patients. The marketers are already equipped with ways to convince patients about drugs through direct-to-consumer (DTC) adverts, in spite of the challenging requirements ranging from side effects of a drug to complicated disease information. Therefore, disclosing drug prices will pose a new opportunity to the marketers to rise up to the challenge, and not run away.(6)

Prescription pricing transparency tools

In terms of value-driven healthcare delivery, tools enabling point-of-care drug pricing transparency have been observed to significantly impact the lives of clinicians as well as their patients in the past year. In 2018, more than 100,000 clinicians achieved access to patient-specific information at the point-of-care by avoiding lengthy procedures associated with prior authorization and retrospective prescription changes. With these tools at their fingertips, prescribers are reported to eliminate pharmacy call-backs, thereby improving medication adherence and reducing costs; while their patients get the needed medications at an affordable price, faster and with less hassle. (11,12)For instance, the use of the Real-Time Prescription Benefit tool, a price transparency technology, has grown by almost a 1000-fold between 2017 and 2018. (10) These tools enable prescription price transparency as well as automated prior authorization, which is why they will continue to make a measurable impact on clinicians and their patients. However, to determine the full potential of prescription price transparency, it’s essential to connect EHRs, clinicians and patients.(10)

References

[1] Dana KN, Hertig JB, Weber RJ. Drug Pricing Transparency: The New Retail Revolution. Hosp Pharm 2017; 52(2):155–159.

[2] America’s Health Insurance Plans. Why Prescription Drug Price Transparency Matters. Issue Brief: June 2018. Available at: https://www.ahip.org/wp-content/uploads/2018/06/AHIP_IssueBrief_RxTransparency_62018FINAL.pdf

[3] Lovelace B Jr. White House requires Big Pharma to list drug prices on TV ads as soon as this summer. May 2019. Available at: https://www.cnbc.com/2019/05/08/trump-administration-requires-drug-makers-to-list-prices-in-tv-ads.html

[4] Improving the transparency of markets for medicines, vaccines, and other health products. World Health Assembly. May 2019. Available at: http://apps.who.int/gb/ebwha/pdf_files/WHA72/A72_ACONF2Rev1-en.pdf

[5] Lamble L. UK refuses to back ‘game-changing’ resolution on drug pricing. May 2019. Available at: https://www.theguardian.com/global-development/2019/may/28/uk-refuses-to-back-game-changing-resolution-on-drug-pricing

[6] Schafer J. Drug prices in advertising: Threading a needle of transparency and confusion. June 2019. Available at: http://www.medadnews-digital.com/medadnews/june_2019/MobilePagedReplica.action?pm=2&folio=32#pg32

[7] Coukell A, Shih C. What’s driving increased pharmaceutical spending? The PEW Charitable Trusts. May 2016. Available at: http://www.pewtrusts.org/en/research-and-analysis/analysis/2016/05/26/whats-driving-increased-pharmaceutical-spending.

[8] Borzilleri T. Drug Pricing Transparency: Can Health IT Lower Drug Pricing for Patients? May, 2018. Available at: https://hitconsultant.net/2018/05/24/drug-pricing-transparency/#.XPowAIgzbIV

[9] Prada SI, Soto VE, Andia TS, et al. Higher pharmaceutical public expenditure after direct price control: improved access or induced demand? The Colombian case. Cost Eff Resour Alloc 2018; 16:8.

[10] Chalkidou K, Towse A. Can Transparency Lower Prices and Improve Access to Pharmaceuticals? It Depends. April 2019. Available at: https://www.cgdev.org/publication/can-transparency-lower-prices-and-improve-access-pharmaceuticals-it-depends

[11] Surescripts. 2018 Impact Report- Prescription Price Transparency. 2019. Available at: https://surescripts.com/docs/default-source/intelligence-in-action/prescription-accuracy/2_2019-price-transparency-impact-report-data-brief.pdf

[12] Heath S. 76% of Patients Benefit from Drug Price Transparency Technology. Available at: https://patientengagementhit.com/news/76-of-patients-benefit-from-drug-price-transparency-technology

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