People Care about Their Cost for Medicine, Not Pricing

The Kaiser Family Foundation released a poll showing that most Americans of all political persuasions support requiring prices in prescription drug ads, as supported by President Trump.

Ed Silverman of Stat News wrote a story about this poll, including a few comments from me. Later, I mentioned on Twitter that there was at least one important point I didn't tell Ed.

The poll didn't ask people what price to include (WAC, AMP, NADAC, FUL, AAC, SWP, etc.), and that's not surprising, since most people don't realize that there are so many different prices for prescription drugs.

That's an important point. There are tons of prices for prescription drugs, and at the end of the day, none of them correlates with what consumers actually care about.

Consumers care about how much THEY will pay for their prescriptions, but there's no way to determine that for all consumers, so any price that is presented is AT BEST deeply misleading.

What actually determines the price paid by the consumer at the pharmacy counter is a combination of: 1) what insurance (if any) they have, 2) which pharmacy they're using, 3) where they are in terms of their personal/family deductible for the year (or progress toward the prescription drug donut hole for those with Part D coverage), and 4) whether the manufacturer has any sort of copay or patient assistance program.

The WAC for Drug A might be $100, but if my copay is $4, then that's what matters to me. And if Drug B has a WAC of $50, but my copay is $25 for Drug B, then I'm not going to prefer Drug B despite the lower WAC.

I didn't conduct the Kaiser survey, and it would be difficult to ask the right questions to get at this issue, but if the pollsters were to include questions about things such as which price matters to a consumer, or what consumers mean when they say they want the "price" included in the drug ads, I suspect that what they'll find is that when pollsters ask, "Do you want pricing in drug ads?" what consumers hear is, "Do you want the ad to include how much you'll have to pay out of pocket for the drug?"

And unfortunately (or fortunately), there's no way to do that. I don't mean it's very hard to do that. I mean it's impossible to do that. Because the factors (as discussed above) are deeply personal, there's no way a manufacturer can include that information in their ads.

As Peter Pitts noted in a recent column, one factor driving the recent emphasis on drug pricing is the transition to high-deductible plans. As Americans are being asked to shoulder more of the costs out of pocket, they're becoming more aware of the high cost of some prescription drugs.

A few years ago, I learned just how much variety there is among pharmacies even for generic drugs, when I was buying medicine for a family member who did not have health insurance. I called several different pharmacies because the price was solely coming out of my pocket, and I was shocked to learn that the price varied from more than $150 to $10 for a 30-day supply. Needless to say, I chose the pharmacy with the $10 prescription.

All of this is to say that in addition to the issues I've previously discussed on how unlikely it is for FDA to mandate the inclusion of drug pricing in ads, consumers really don't understand what is being proposed, and as a consequence, they're unlikely to be happy with anything that results.

As I said to Ed during our phone call discussing this in comments that wound up on the cutting room floor, this is a situation where consumers are angry at pharmaceutical companies and I suspect that a significant part of the bipartisan support for including pricing in ads is along the lines of, "if pharma companies are against it, then it must be a good idea."