While pharmaceutical pricing has been a controversial topic for many years, a new spotlight was shone on it over the past 12 months.

During his first term, President Trump made some attempts to reduce drug prices. However, those efforts didn’t produce the results he says he was looking for and he’s taking a much more direct approach in his second term.

These actions include issuing an executive order directing pharma companies to treat the US as a most-favored nation when determining drug prices, along with the creation of TrumpRx, a direct-to-consumer (DTC) government-run website. Both initiatives represent broader trends in the pharma space when it comes to pricing and are directly impacting pricing strategies at companies of all sizes.

Push for transparency

When asked by Pharmaceutical Executive about the impact that the DTC trend might have on pricing, Chris O’Dell, senior vice president of market solutions at Turquoise Health, explains that it simplifies the process. According to O'Dell, the sheer complexity of drug pricing is a major factor in why public fervor over prices has reached the levels it has.

“There was a Senate Finance Committee hearing in 2019 where Sen. Chuck Grassley (R-IA) brought in all of the pharmaceutical executives,” he recalls. “One of my favorite snippets from the hearing was the CEO of Merck [at the time, Kenneth Frazier,] saying that the system prefers the higher price. It leaves more room along the way for people to get rebates and discounts. For the average consumer to understand that, it’s just too far gone. What they will understand is a concept that’s happened in other industries—the disruption of the supply chain. It brings that manufacturer of the product closer to the person that consumes it.”

Near-term impact

However, O’Dell also doesn’t expect drug pricing to be dramatically altered by the changes noted.

“In the near term, what was announced has limited impact," he believes. "At the end of the day, complexity is the enemy here. The fact that no one knows what a drug is going to cost them before they get it is clearly a problem in the US. Shining a light on that complexity and showing that list prices on drugs are way too high is something that everyone can get behind.”

He continues, “There’s a saying that consumers don’t care what a drug’s cost is; they care what it costs them. In that sense, the program (TrumpRx) will have a limited effect because no one pays these high list prices [at the point of care]. Through Medicare or Medicaid, people probably pay very little for these drugs, especially compared to the list price. People paying through commercial insurance plans are paying a copay based on what the list price could be. The idea that we are exposing that these markups are too high is a good thing. Consumers will start to scrutinize a dark corner of healthcare that leads to better and cheaper healthcare."

Jesse Mendelsohn, senior VP at Model N, agreed that DTC programs won’t have a major, immediate impact on prescription drug prices.

“Right now, this is just another venue or route for patients to get therapy as opposed to a sea change," he tells Pharm Exec. "Most people will typically use insurance for drugs. Since that’s the case, the things that impact how insurers reimburse for drugs and how manufacturers incentivize payers to list drugs aren’t going to change very much. There will be access expansion. As manufacturers get used to these types of platforms, get a better handle on the type of discounting, and understand the logistics, there might be more sets of patients they can target with DTC products. At this point, I don’t think it will have a broad impact on how drugs are listed and purchased.”

For the moment, drug pricing remains a complex topic. The current administration appears willing to tackle it head-on, but it’s unclear what impact these strategies will have. Multiple major pharmas have announced deals with Trump to offer certain products through the government’s DTC site. The prices, however, appear to include discounts based on list pricing, which may not result in less-expensive drugs.

Nevertheless, these actions may add transparency to the process for patients and result in drugs assigned a more direct price, as opposed to being based on pharmacy benefit manager and other provider discounts.