A federal district court judge on Monday stopped the Trump administration from requiring drug makers to disclose drug wholesale prices in TV ads.
Had the administration prevailed, a rule first proposed by the U.S. Department of Health and Human Services (HHS) in May 2018 would have mandated that TV ads for prescription drugs exceeding $35 and covered by Medicare and Medicaid state the wholesale price, or list price, for a 30-day supply.
To be sure, it’s not always easy to find wholesale drug prices. But last month while the district court’s decision was still pending, pharmaceutical lobbying organization, PhRMA, launched a website where consumers can locate prices for TV-advertised drugs called mat.org.
We used that tool to assess prices of prescription drugs made by drug makers, including those that sued over the administration’s rule.
Some of the world’s largest drug makers, Merck & Co., (MRK) Eli Lilly and Co. (LLY) and Amgen Inc. (AMGN), along with the National Association of Advertisers Inc., a drug marketing organization, were plaintiffs in the lawsuit challenging the rule.
HHS argued that transparency would reduce escalating prescription drug costs. In turn, the administration reasoned, the rule would further the federal government interest of efficiently administering Medicare and Medicaid under the Social Security Act. In its ruling, the court held that only Congress, and not the Trump administration or the HHS, has power to regulate such marketing.
How can patients find drug prices?
In order to learn wholesale prices for prescription drugs, consumers can visit the manufacturer's website or use the search engine launched by PhRMA to look for prices of drugs made by its members.
However, the price disclosures are not uniform, as MAT’s search feature sends users to external member company websites, where companies voluntarily provide prices. By following links, patients can access a drug’s wholesale cost, as well as the average costs for patients using commercial or employer-provided insurance, Medicaid, Medicare, and Medicare Part D. Commercial insurance includes those who enroll in healthcare through the Affordable Care Act.
For example, Amgen’s Prolia, prescribed for osteoporosis, has a wholesale price of $1,219.06 for a six-month supply. 77% of Medicare patients, those who pay for Part D pharmacy coverage, typically pay $0 out-of-pocket for a six-month supply. Medicare patients without Part D pay up to $212.99 out-of-pocket, every 6 months, depending on their plan. No information on insurance-based cost is listed for commercially-insured patients or patients using Medicaid.
Eli Lily’s Trulicity, used to treat Type 2 diabetes, wholesales for $759.40 per month. According to the company, approximately 94% of prescriptions cost between $0-$30 out-of-pocket per month. The remaining 6% pay an average of $195, per month, depending on insurance plan.
Merck, which was also involved in the lawsuit, currently has no listed drugs on the MAT website.
Other examples include AstraZeneca's (AZN) Symbicort, used to treat asthma or chronic obstructive pulmonary disease (COPD). Symbicort’s list price ranges from $303 to $346 for a 30-day supply, depending on dosage. Cost for those with employer-provided insurance is approximately $33 per month. Medicare beneficiaries pay approximately $31, and Medicaid recipients pay less than $2.
Meanwhile, Pfizer's (PFE) Chantix, used for smoking cessation, wholesales at $421 for a 28-day supply. Patient out-of-pocket cost for the drug ranges from less than $20 to more than $200, with a large majority of commercially- and Medicare Part D-insured patients paying less than $20. All Medicaid recipients pay less than $20.
Allergan's (AGN) Botox for chronic migraine treatment wholesales for $1,202 for a 200-unit vial, typically used for a single dose. An average dose of 155 units every 12 weeks costs an average of $164 for individuals with employer coverage, $219 for Medicare, and $67 for Medicaid enrollees.
Some drug makers note that uninsured consumers can expect to pay list price, plus additional pharmacy charges, depending on where they buy medicine. Some companies also offer alternative payment options and subsidies.
A PhRMA spokesperson told Yahoo Finance Tuesday that the drugs listed on the site are exclusive to those currently advertised on television. The website will be maintained, despite the court ruling, the organization said.
“We are concerned that the administration’s rule requiring list prices in direct-to-consumer (DTC) television advertising could be confusing for patients and may discourage them from seeking needed medical care,” PhRMA said in a separate press release. “We support providing patients with more transparency about medicine costs, which is why our member companies voluntarily began directing patients to links to comprehensive cost information in their DTC television advertising. After speaking with patients across the country, we learned that patients prefer this approach.”
In response to the industry’s position that price disclosures would confuse consumers, Michael Rea, CEO of Rx Savings Solutions, told Yahoo Finance, “The only thing that will truly fix the problem is an educated, informed market where people understand therapy options and corresponding cost to treat their medical conditions. When consumers know and understand what their options are, they make informed decisions that benefit themselves and their employer/health plan.”
According to Rea, required disclosures could move the ball in a consumer-friendly direction.
“Realistically this was a very minor disclosure in terms of expected effect,” Rea said. “That said, transparency in markets drives prices down due to competition. This is a very basic economics principle and an argument to the contrary is disingenuous.”
In his ruling siding with the pharmaceutical plaintiffs, U.S. District Court Judge Amit Mehta, who was appointed by President Barack Obama, wrote that “no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized.” The court failed to take up a separate argument posed by the drug companies claiming that the HHS rule amounted to an unconstitutional infringement on their First Amendment right to be free from compelled speech.
An attorney representing the drug manufacturers declined comment.
The U.S. Department of Health and Human Services has 60 days to file an appeal from the date of the ruling. The administration could also ask Congress to adopt a law requiring drug price disclosures. According to the New York Times, the Trump administration is consulting with the Justice Department on next steps.
Alexis Keenan is a New York-based reporter for Yahoo Finance. She previously produced and reported for CNN and is a former litigation attorney.
Follow Alexis Keenan on Twitter @alexiskweed.
Anjalee Khemlani is a New York-based reporter for Yahoo Finance. She covers all things health care.
Follow Anjalee Khemlani on Twitter @anjkhem.