The Trump administration has embarked on a new, ambitious angle to initiate healthcare reform, not by shifting who pays the costs, but by attempting to reduce the costs altogether. In a radical but economically obvious push for price transparency, the Centers for Medicare and Medicaid Services is now pushing to require prescription drug manufacturers to advertise prices alongside their products. Between the CMS policy passed in August mandating that hospitals post prices online and this new attempt to empower the elasticity of patient demand, President Trump and his Department of Health and Human Services have repositioned themselves as consumer champions, much to the ire of Big Pharma.
The populist Left and Right have long been skeptical of the pharmaceutical industry, and for good reason. Due to a myriad of patent laws, federal mandates, subsidies, loopholes in the Hatch-Waxman Act, and a chronic lack of transparency in drug quality and pricing between brand names and generics, the pharmaceutical industry resembles a cartel more than a free market. That could all change, thanks to Trump.
[More: Trump triggers fight over drugs with proposal to require price disclosures in ads]
Big Pharma’s largest lobbying firm, PhRMA, has already mobilized against the CMS’ push. They’re scared. And they should be.
The pharmaceutical industry’s profit margins have been buoyed by an awkward fact: Americans tend to not make healthcare decisions as rational, economic actors. Whereas we compare and carefully discern when choosing most consumer goods and services, we tend to forget that we’re not just healthcare recipients; we’re healthcare consumers.
In a press call this morning, PhRMA CEO Stephen Ubl rebuffed the price transparency mostly by equivocation.
“List prices are not a good indication of what patients pay since consumers’ various insurance benefits will determine their out-of-pocket costs,” Ubl said. “They also don’t include negotiated discounts with pharmacy benefits managers.”
Herein lies the bigotry of low expectations: the pharmaceutical industry both hopes and wants to convince the American consumer that they’re incapable of acting like, well, consumers.
While Congress seems as divided as even on how to legislate who must pay for the burden of healthcare costs, the Trump administration’s push to decrease prices altogether is an enormous step in the right direction.
PhRMA’s vice president of public affairs, Robbie Zirkelbach announced that they’ll propose an alternative plan to host their own website to direct consumers to view prices and out-of-cost prices.
HHS Secretary Alex Azar isn’t buying it. He says Trump’s plans do not “rely on voluntary action.”
Now that’s the bravado and winning that Republicans have been waiting for.
