Should Pharma Advertise Price to Consumers?

How much does it cost? That is typically the first question a consumer asks before purchasing a product. And then second, third, fourth (and perhaps even more) questions also tend to revolve around price. For example: Where can I purchase that item for the lowest available price? Are there any discounts or coupons available to make the price even lower? Is there a similar product for a better price? When consumers shop, price is almost always the top of their mind. Of course, the process of purchasing prescription drugs is much different. But what if it wasn’t?

That seems to be the question that the FDA is asking as it prepares to launch a study to determine what would happen if consumers or doctors were made aware of the cost of treatments through advertising. The Office of Prescription Drug Promotion (OPDP) plans to investigate “the impact of price comparison information and additional contextual information on prescription drug product perceptions,” according to a notice in the Federal Register. Currently, as stated in the notice, companies are allowed to include “truthful, non-misleading information about the price of their products in promotion.” Yet, you rarely see pharma companies advertising price. Why is that? After all, even pharma companies know that a consumer’s most common question is “What will it cost me?”

“It seems like a simple question but it is not at all easy to answer,” explains Christina Blosser, EVP/Director of Insights and Strategy at GSW New York. “Insurance coverage, formulary, dosing, access/discount programs such as co-pay cards all play a role in determining price. It turns out the answer to the matter of cost is personal and different for every drug.”

And as Jay Carter, RPh, Senior Vice President and Director of Strategy Services at AbelsonTaylor, adds the price consumers pay for a pharmaceutical product is not the full price of the product. Rather, most branded drugs are paid for by some sort of third-party payer, such as a pharmacy benefit manager (PBM), Medicare or Medicaid. So even though price matters to the end user, advertising the price isn’t going to make much of a difference in the case of pharmaceutical products.

And yet the FDA is interested to see what would happen if consumers were given this information up front. As part of the OPDP’s planned study on the subject, they intend to show physician and consumer participants one of three possible versions of an ad (either DTC or professional, depending on the participant):

  • One version will have information about the price of the product relative to a competitor for the same indication.
  • Another will present this information with additional contextual information that states the two drugs may not be comparable in terms of efficacy and safety and that the costs do not necessarily reflect actual prices paid.
  • The third will act as the control and only include a claim about the price of the product but will not present information about the price relative to a competitor.

After viewing the ad they are presented with, participants will be asked to respond to questions that are designed to assess their perception and understanding of the product’s safety and efficacy, their perception and understanding of the additional contextual information; their perceptions of comparative safety and efficacy, and their intention to seek more information about the product. Bottom line, the FDA wants to see if consumers would choose a drug based on price over its safety and efficacy or a competitor’s safety and efficacy.

PM360 asked pharma marketers to weigh in on the FDA’s proposed study, the pros and cons of advertising price and what exactly should pharma be advertising to consumers in terms of price.

The Problems With Advertising Price

Ken Ribotsky, CEO and Owner of Brandkarma, LLC, believes if drug advertisements included pricing information, patients would always pick the cheaper option. He points out that a study published in the Archives of Internal Medicine shows that one-third of chronically ill patients underuse their prescriptions due to cost. Since these patients often are on multiple drug regimens, they are particularly affected by pricing. In fact, 14% of heart failure sufferers with insurance coverage still choose not to fill a prescription due to cost. So patients will probably welcome the choice of a cheaper option, the only problem is cheaper is not necessary better.

“The fact is not all drugs are created equally, even if they are the same active ingredient,” says Ribotsky. “The FDA requires generics to deposit anywhere from 80% to 125% of the brand name’s potency into the bloodstream. This means that in certain situations, a cheaper generic drug refill can contain a 45% stronger dose than the original brand name prescription, according to Tod Cooperman, MD, President of ConsumerLab.com. Doctors can’t be sure that the patient is getting exactly what they would have if they used the branded product.”

There is also an issue when it comes to brand name drugs that directly compete with each other. As Ribotsky explains, it is documented that drugs within the same class can be therapeutically substituted, yet have differing side effects. This can often take the control out of the physician’s hands. In these cases, it may just depend on which drug the patient reacts better to.

Another issue with disclosing price is that consumers may not understand where that number is coming from. Just look at the uproar over Gilead’s announcement that Sovaldi, a treatment for Hepatitis C, costs $84,000 for a typical 12-week treatment course.

“Transparency in healthcare is not only a good thing for consumers, it is a must for all stakeholders,” explains Andrew J. Watson, AVP Sales & Marketing, Wockhardt USA. “However, pricing is a complicated discussion. Unlike most goods, the cost to develop a medicine can often take many years and cost hundreds of millions of dollars. To fuel further innovation companies must recoup their investment and then some. By merely putting a price of a medicine in an ad, how well will the average consumer understand the value of that medicine? Will they understand that by taking it, they may be saving thousands of dollars downstream?”

That is why Watson has a hard time seeing pharma advertising prices to consumers. Instead he believes they will continue to limit specific pricing information to those who have the ability to understand the value that a medicine brings, such as payers, hospitals and ACOs.

“But let’s not forget the importance of transparency!” exclaims Watson. “Should transparency in cost only be reserved for pharma? Should we not also demand that hospitals and doctors promote their prices for services to consumers of healthcare so they can be truly informed?”

As a healthcare consumer himself, Watson says that he would love to have all of the information available to him so that he can make intelligent decisions about the cost of his health. And this extends beyond the cost of retail medicines, which represent less than 10% of the overall cost of healthcare in the U.S. However, as a pharma marketer he recognizes the challenge in trying to share this information with consumers.

“The idea of getting this information vetted and approved by legal, medical and regulatory will represent major hurdles for brand marketers—ones that are unlikely to be overcome in the near term,” he says. “And without the ability to provide context around a price in the form of being able to communicate the value to an average consumer it is very unlikely that we see ads focusing on the price of medicines.”

But just because pharma companies cannot necessarily advertise price, doesn’t mean they can’t help consumers better understand the cost of their treatment.

The Alternatives to Advertising Price

None of the pharma marketers PM360 reached out to foresaw a future in which price became a regular component of DTC advertising, though they are interested to see the results of the FDA study. For now, however, they recommend these four tips to get around listing price, while still providing consumers with information about the cost of treatment.

1. Promote Co-pay Cards: As Carter explained earlier, patients don’t pay the full price of pharmaceutical products, but rather a co-pay. And, as Carter adds, a difference in co-pay of even $15 (from $35 for “tier 2” to $50 for “tier 3”) dramatically affects whether the product is purchased at the pharmacy shelf or “abandoned.” So while advertising price might not do much good, advertising a discounted co-pay could help.

“The ninth best-selling drug for 2013 was Crestor, which costs about $165 for a month’s therapy according to Drugs.com,” says Carter. “Does it help Crestor to compare that price with the price of generic Lipitor, at about $17 a month? Probably not. However, it does help to promote Crestor’s co-pay card, which can lower the co-pay to about $18 a month.”

2. Provide a Value Proposition: “Price wars are to be avoided in any industry if possible,” advises Terry Nugent, EVP at mms, an industry leader in healthcare lists and email marketing. “The emphasis should be on value. But, value is a function of efficacy, the benefits thereof (productivity, lifespan) and cost.”

Nugent suggests that a good consumer creative brief outline the benefit to the patient in terms of quality of life, productivity, full range of function, independence and relate it to ease of use and out of pocket expense, and avoidance of non-pharmaceutical treatment (tests, hospitalization, etc.) and its associated costs. Meanwhile, he says that HCP briefs should focus on patient benefits as they relate to the prescriber as well (e.g., patient satisfaction), and address affordability to the patient and the healthcare system.

3. Provide Tools That Help Explore Costs: Since one in four Americans admit that they struggle to pay for their medical costs, Blosser believes that pharma should try to make it easier for people to explore their individual costs through meaningful dialogue with their physicians.

“Many manufacturers already arm their sales forces with formulary tools to help doctors and office staff understand and compare the costs of drugs,” she adds. “But these tools often look at a single product in isolation—and this isn’t too helpful in addressing an individual patient’s medical or financial circumstance.”

Blosser says that it would be better to direct people to tools that would prompt questions and exploration of a person’s total healthcare costs, including all the other medications they may be taking. That way physicians and office staff can help patients understand available discounts or access programs to help them navigate cost concerns and increase the likelihood of them picking up their medication at the pharmacy.

“This sort of dialogue between physicians, staff and patients,” explains Blosser, “helps people understand the true costs of treatments, and such insight helps patients better manage costs and, ultimately, their health.”

4. Encourage Physicians to Provide Rational for Treatment: Patients fail to alert their doctors about cost issues due to one reason: They aren’t asked about them. In the same Archives of Internal Medicine study Ribotsky alluded to earlier, it was revealed that only 28% of patients report being asked if they could afford what was just prescribed to them. Additionally, most patients (58%) report that they do not think their physicians have the ability or time to reduce price, or they are simply too embarrassed (46%) to ask for help. The study also found that most physicians are unaware of the cost of the medication they prescribe and this holds true for medical devices as in another recent study, surgeons guessed the correct price of medical devices only one out of five times.

“Brand marketers should assist physicians with helping patients to understand why they are prescribing a specific product,” advises Ribotsky. “Physicians should provide rationale and make sure patients understand the implications of not adhering to the therapeutic course.”

Ribotsky says that some of the ways marketers are currently working to soften the impact of cost include:

  • Brand loyalty programs that offer discounts (such as the co-pay cards Carter mentioned above), which can increase the likelihood of repeat prescriptions, lessening the financial burden on the patient.
  • Partnering with patient support groups. By building programs that are designed to remind patients to take their medications, they can help increase adherence as well as access to financial programs.

In the end, however, Ribotsky believes the actual price of a pharmaceutical product should remain out of the picture.

“Making price the focus of healthcare is a slippery slope,” he says. “It opens up moral and ethical questions that have been challenged over the past decade, especially outside of the U.S. where social systems ask: Health at what price?”

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