The Trump administration Monday unveiled its latest proposal for reining in the cost of pharmaceuticals: requiring television ads for prescription drugs to display the price tag of the medication being promoted. For the 10 drugs seen most often on TV, the administration says, those list prices range from $535 to a whopping $11,000 per month or per course of treatment.
The mandate is a small response to an enormous problem. The U.S. spends more per capita on prescription drugs – roughly half a trillion dollars a year – than any other country, and that spending has been increasing far faster than inflation, wages or the U.S. economy. The assumption behind the proposal is that forcing a pharmaceutical company to reveal the list price of the new cure it is touting will somehow shame it into keeping the price down.
Good luck with that. A handful of drugmakers have reduced or canceled price increases this year in response to President Trump’s criticism, but most have not. According to The Associated Press, prices went up on 4,412 brand-name drugs in the first seven months of 2018, and down on 46.
Some critics also argue that it would violate First Amendment free-speech protections to force drug companies to disclose their list prices. And drugmakers note correctly that very few people actually pay list prices.
The proposal would reveal little about how much those drugs ultimately sell for, or how much people with insurance will pay for them – directly (through deductibles and co-pays) and indirectly (through premiums).
To its credit, the administration has been actively trying to slow the rise of drug costs via an array of reforms. And in contrast to what it’s done on Obamacare, the administration’s efforts to boost competition and transparency and alter incentives have generally helped consumers.
But drugmakers are unusually well insulated from the market forces the administration is trying to marshal – they have patents that guarantee them temporary monopolies, products that are vital and customers whose bills are often paid by insurers. It will take much more dramatic changes to make a meaningful difference in drug prices.
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