Perspective: Drug price transparency in the Biden era

Regulatory NewsRegulatory News | 18 January 2021 |  By 

The Trump administration’s efforts to increase drug price transparency are likely to survive the transition to the Biden administration, according to a perspective piece published 13 January in the New England Journal of Medicine.

Included in the Transparency in Coverage final rule, issued in late October 2020, the drug price transparency provisions aim to require that health insurers publish list prices and historical net prices for prescription drugs. The information must be supplied so that patients and providers can access it both online or in paper format, and in real time.

“Unlike other Trump drug-pricing proposals” including importing drugs from Canada, eliminating Medicare Part D rebates and tying Part B prices to international indices, “efforts to promote health care pricing transparency might endure,” Aaron S. Kesselheim, MD, of Harvard Medical School, and colleagues wrote, pointing out that President-elect Biden voiced support for similar efforts during the presidential campaign.

While opponents of the final rule – chiefly health insurers and pharmacy benefit managers – are highly likely to challenge its legality in court, two recent appeals court decisions on price transparency indicate it has a good chance of surviving those challenges.
Merck & Co., Inc., et al. v. the US Department of Health and Human Services centered on a requirement that pharmaceutical manufacturers disclose list prices in television ads for products covered by federal health care programs. The appeals court sided with the manufacturers, noting that actual drug prices are rarely the same as list prices and that upholding the requirement could provide too-far-overreaching authority to take action to reduce spending for Medicare or Medicaid.

The second case, American Hospital Association et al. v. Azar, regarded the Trump administration’s effort to expand an Affordable Care Act requirement that hospitals set and publish lists charges to include not just standard charges but also negotiated insurer-specific charges and self-pay charges. In this case, the appeals court found the expansion did not exceed the department’s authority and that the increased information and transparency allowed patients to common-sense decisions about their health care.

“Nearly one third of US drug spending is for drugs dispensed in health care settings, so the American Hospital Association decision — unless overturned on further appeal — promises publicly available payer-specific negotiated drug prices for many drugs,” according to the authors. “Though this decision does not, by its terms, extend to retail prescription drugs, the Transparency in Coverage rule, which does, could be upheld on the basis of similar legal reasoning.”

Given the slim majorities in each House of Congress, the Biden administration could be challenged to get drug price reforms enacted, Kesselheim and associates wrote. “Amid inconclusive evidence about the effects of transparency, one thing remains clear: US prescription-drug prices are too high under the current, opaque system, and a new approach is needed.”


© 2022 Regulatory Affairs Professionals Society.

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