Will HHS's drug price proposal impact pharma marketers?

It's no secret that Americans pay more for healthcare than citizens from other developed nations. According to the most recent data available from the Peterson-Kaiser Health System Tracker, the average American spends $10,348 on healthcare annually. Switzerland has the next highest rate, at $7,919 per person. The average non-American living in a developed country pays roughly $5,169 on healthcare annually.

As drug prices rise, physicians must consider patient responsibility for medication costs when making a prescription decision. Now, new potential regulations from the Department of Health and Human Services (HHS) could change things.

How drug prices influence physician decision making

In the examination room, doctors have a responsibility to prescribe the medication they believe will most help their patients. However, as drug prices increase, many physicians must take into account the affordability of medications, as well. For example, in 2014, The New York Times reported that the Society of Oncologists had developed a scorecard to evaluate cancer drugs based on their cost, value, efficacy and side effects.

When the difference between two effective drugs can be $50 vs $2,000, it becomes clear that doctors have no choice but to account for drug prices when writing a prescription. However, busy doctors may not have the time to research prices, especially as there can be many differences among private and government insurance plans.

Generic drugs can be much more affordable, but it's up to physicians to stay up to date regarding which generics are comparable to their branded counterparts. In 2017, a report published in The American Journal of Pharmacy Benefits revealed that 89 percent of all prescriptions are generic, yet they only account for 26 percent of all drug spending.

Pharmaceutical marketers may be able to help physicians make informed prescribing decisions by developing content that provides information about product costs and value. Marketers should also be aware of potential regulatory changes coming from HHS.

The average American spends over $10,000 a year on healthcare.

What HHS plans to address in 2018

In May, HHS released a blueprint of its plan to tackle to the rising costs of prescription drugs. According to HHS Secretary Alex Azar, the four main challenges addressed by the plan are:

• High list prices of medications.
• Senior and government programs overpaying for drugs.
• Consumer out-of-pocket costs.
• Foreign governments taking advantage of American investments in innovation.

By addressing these concerns, HHS wants to improve competition in the marketplace, equip the government to better negotiate with manufacturers, provide incentives for lower list prices and lower out-of-pocket costs for individuals.

Immediate action

HHS doesn't want to waste any time enacting change. The following are immediate actions HHS plans to take to further its goals:

• Prevent manufacturers from gaming regulatory processes such as Risk Evaluation and Mitigation Strategies.
• Develop proposals to stop Medicaid and Affordable Care Act programs from raising drug prices.
• Experiment with value-based purchasing programs.
• Update the Food and Drug Administration's dashboard to increase transparency of the pricing differences between generic and branded pharmaceutical products.
• Prohibit Medicare Part D contracts from preventing pharmacists from telling patients when they can save money by not using insurance.

Why pharma marketers need to keep an eye on possible regulations

Currently, it's unclear when these new regulations and guidelines will go into effect. Reuters reported that the Trump administration is still working with HHS to further develop their plans for reducing cost burdens on consumers.

Some experts believe HHS will try to enact some changes prior to November, but no firm dates have been set. Pharma marketers should keep an ear to the ground, however, as potential changes could impact how they display list prices to providers. Until HHS takes concrete action, however, it's a matter of waiting to see what will happen.

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