Transparency Push in Pharma: Will it Result in Lower Prices to Patients?

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Pharmaceutical industry price transparency has been a hot topic since even before the 2016 presidential election. Now, just over two years into his term in office, President Donald Trump has been making moves when it comes to transparency regulations. We previously wrote about his recent executive order wherein he directed the United States Department of Health and Human Services (HHS) and other federal agencies to begin several rulemaking processes, including one focused on requiring hospitals and payers to release information on their privately negotiated rates.

Industry experts, though, are skeptical that his efforts will actually result in lower prices to patients. While this action by President Trump – coupled with other actions taken by Congress – may work to assuage public frustration over high prescription drug prices, it is unlikely to actually work to lower any prices in a meaningful way.

Many policy analysts and economists said that while price transparency is good in theory, current evidence shows patients don’t take advantage of pricing information now available, said Ateev Mehrotra, associate policy of healthcare policy and Harvard Medical School. Mehrotra noted that because the healthcare system has so many moving parts, understanding the medical bill patients receive and how the price was calculated can be very difficult, “[t]hat complexity hinders the ability of people to effectively shop for care. It’s not like going to Amazon and buying a toothbrush or whatever.”

Industry Reaction

While the American Hospital Association understands the details are still being worked out, it did release a statement recognizing that “publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.”

The Federation of American Hospitals also released a statement, “FAH believes that American consumers should have actionable out-of-pocket cost information to assist them in making important health care decisions. We appreciate the administration’s executive order where it will meet consumer transparency needs. If implementing regulations take the wrong course, however, it may undercut the way insurers pay for hospital services resulting in higher spending. The Federal Trade Commission has said that spending would likely increase if hospital-insurer payment arrangements were published.”

Mollie Gelburd, the associate director of government affairs at Medical Group Management Association (MGMA), said doctors don’t want to be in the position of explaining complex insurance terms and rules to a patient, noting, “While physicians should be encouraged to talk to patients about costs, to unnecessarily have them be doing all this education when they should be doing clinical care, that sort of gets concerning.”

 

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