The Trump administration told the drug industry this week that it wants the prices of prescription meds included in TV ads.
The drug industry said no.
I could end this column right there. But why let either side off the hook?
For all of President Trump’s bluster about drug companies’ scandalous behavior — he says they’re “getting away with murder” — he’s largely tiptoed around the well-heeled, generous-to-Republicans industry. Trump hasn’t announced a single meaningful move to address runaway drug prices.
Drug companies, for their part, keep testing what price points the market will bear, and then pushing even higher.
As it turns out, pharmaceutical companies are among the biggest beneficiaries of Trump’s tax cuts, pocketing a windfall of billions of dollars and using the money not to reduce patients’ medical expenses but to enrich shareholders through stock buybacks.
The tax-policy advocacy group Americans for Tax Fairness estimated in a recent report that five of the biggest drug companies will save a combined $6.3 billion this year as a result of lower taxes, and 10 of the leading drugmakers will enjoy a $76-billion tax break on offshore profits.
“And contrary to ‘trickle down’ claims that huge tax cuts will benefit the employees of these pharmaceutical giants, evidence so far shows the companies are sharing relatively little with their workers,” the report found.
But drug companies don’t want people to think they’re just a bunch of greedy, unfeeling bloodsuckers.
So they told the White House that even though they won’t put prices in their TV ads, they’re willing to create a website and post drug prices there.
A whole website!
Drug companies patted themselves on the back for being such stand-up guys.
“The administration and Congress have called on our industry to provide cost information in [direct-to-consumer] advertisements, and our members are voluntarily stepping up to the plate,” said Stephen J. Ubl, president of Pharmaceutical Research and Manufacturers of America, a trade group.
This website thing won’t be easy, he declared.
“Today’s announcement represents a big change for our companies and it will require significant operational changes for individual companies to implement,” Ubl said. “But we believe this is the right thing to do and is an important step toward providing patients with the information they want.”
Meanwhile, back in the real world, a recent review of brand-name prescription drug prices by the Associated Press found that, over the first seven months of the year, there were 96 price hikes for every one announcement of a reduced drug price.
The Trump administration believes it can shame pharmaceutical companies into behaving more humanely by requiring them to include list prices in commercials for any drug that costs more than $35 a month and is covered by Medicare or Medicaid.
“Patients deserve to know what a given drug could cost when they’re being told about the benefits and risks it may have,” Health and Human Services Secretary Alex Azar said in a speech.
“They deserve to know if the drug company has pushed their prices to abusive levels,” he said. “And they deserve to know this every time they see a drug advertised to them on TV.”
Here’s why that won’t happen.
If the White House follows through on its proposal, drug companies will argue on 1st Amendment grounds that the government can’t compel them to say things they don’t want.
They will say currently having to list side effects in ads is different because there are safety considerations covered by federal law.
The industry will argue this all the way to the Supreme Court, and it will probably win, many experts believe.
“We’re living in the Citizens United era, where the rights of corporations have been inflated to the size of a blimp,” said Jamie Raskin, a Democratic congressman and former constitutional law professor at American University.
“The government will struggle to define what the precise public interest is in this case and how a brief flash of a price on a TV screen advances that interest,” he told me.
Timothy Zick, a professor at William & Mary Law School, noted that “the government only has the authority to mandate speech when it advances the government’s interest in preventing consumer deception, conveys purely factual information and is not unduly burdensome.”
“As far as I can tell,” he said, “there is no allegation that the pharmaceutical ads are deceptive or confusing. Nor is the government’s interest related to the safety of the drugs. Further, mandating list prices versus actual costs to the consumer would arguably itself be misleading.”
That’s an important point. Relatively few people pay the list price of drugs because of haggling by insurers and discount programs. These bogus list prices are intended to inflate insurance reimbursement levels and patient copays, rather than reflect a drug’s true costs.
This too is an issue. It highlights the complete lack of transparency in the drug market, which gives pharmaceutical companies free rein to raise prices as much and as often as they desire.
There’s an easier solution: Ban the wasteful and unethical practice of advertising prescription drugs directly to consumers — something that wasn’t even allowed by federal authorities until 1997.
We’re one of only two countries worldwide that permits this (the other being New Zealand). Everyone else has concluded, correctly, that you do more harm than good by encouraging people to buy costly meds, rather than leaving such decisions to trained, licensed healthcare professionals.
The American Medical Assn. called for a ban on such ads in 2015, arguing that the billions of dollars drug companies spend on marketing pushes prices higher and “inflates demand for new and more expensive drugs.”
The National Academy of Sciences has called on Congress to “disallow direct-to-consumer advertising of prescription drugs as a tax-deductible business expense” to refocus manufacturers' priorities.
If the Trump administration truly wanted to bring down drug prices, it would allow Medicare to use the full weight of its 57 million beneficiaries to negotiate lower costs with manufacturers. The administration also would allow Americans to legally import lower-priced drugs from abroad.
Barring these common-sense steps, an end to direct-to-consumer ads would mean drug companies no longer would spend more on marketing than they do on research, and once again would be in the business primarily of fighting illness rather than selling product.
With his proposal for including prices in TV ads, Trump is simply picking a meaningless fight that he won’t win.