The Trump administration’s proposal to require drugmakers to disclose their prices in television ads would hit five companies especially hard: Pfizer, AbbVie, Eli Lilly, Amgen and Allergan, STAT reports.
“Just a few dozen drug companies run any TV ads at all, and those five companies alone were responsible for more than half of the drug ads customers saw on TV in the last 12 months, according to a STAT analysis of data provided by analytics company iSpot.tv,” writes Nicholas Florko.
Critics of the administration proposal, including the pharmaceutical industry itself, have questioned how effective the new policy might be, given that the advertised prices may differ dramatically from what patients often pay — and some have warned that patients may be scared away from necessary treatment by the list prices being advertised.
It’s not clear how much the new regulation would cost the largest advertisers, though the Department of Health and Human Services has reportedly estimated that the price-disclosure requirement will come with relatively modest costs — about $2,900, on average, for each company. Companies that run more ads would see higher costs. “Each ad would need to be updated every time the list price for that drug changes. Companies also often run multiple ads for each drug they’re marketing,” Florko explains.
More significantly, if the policy works, it could pressure companies to avoid price hikes, or suppress demand for the drugs. “If a drug company is scared off from taking a price hike that it’ll ultimately be forced to include in an ad, that’s lost profit,” Florko notes.
The bottom line: The projected costs are likely to be minimal relative to, say, the companies’ total ad budgets (Pfizer reportedly spent $600 million over the last 12 months) or their multibillion-dollar revenues and profits, but the long-term costs have the potential to be more substantial.