New York, NY – Joining various state and federal policymakers who have voiced concerns this year about the rising cost of prescription drugs, U.S. Secretary of Health and Human Services Alex Azar recently announced that health care price transparency would be a major objective during his tenure. Although empowering consumers in their health care decisions is generally a worthy endeavor, a new Manhattan Institute report by Senior Fellow Chris Pope suggests that features specific to the prescription drug market prevent consumer-facing price transparency tools from improving its efficiency.
In “Cost-Sharing and Drug-Price Transparency in New York,” Pope argues that mandatory transparency in drug-pricing would do little to empower consumers and publicizing misleading list prices may result in inappropriate decision making. Instead, he suggests that insurers be allowed to take the lead on getting value for consumers buying prescription drugs, and be permitted to structure cost-sharing and price transparency tools accordingly.
- The high costs of branded prescription drugs are usually the result of temporary monopolies deliberately established by policy through the patent system. The market is to a large extent designed to avoid price competition.
- Physicians and insurers are better placed than individuals to evaluate the relative merits and value of different drugs by writing prescriptions and establishing step therapy arrangements. We do not allow individuals to shop for drugs the way we encourage them to choose hospitals or physicians.
- Even though 98 percent of health-insurance plans offer transparency tools, only 2 percent of enrollees use them, which suggest that price transparency tools do little to solve the cost challenges facing consumers of prescription drugs.
- Individuals pay different amounts for the same drugs depending on their insurance plan, and many of the uninsured are eligible for patient assistance discounts from manufacturers. As a result, public disclosure of a singular list price may mislead rather than enlighten policy debates.
Click here to read the full report.