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Why disclosing drug prices in TV ads won't lower costs

Taylor Locke

A federal judge blocked President Donald Trump’s order to force drugmakers to disclose the list prices of medication in television ads. The ruling on Monday was a blow to the Trump administration’s efforts to pressure drugmakers to lower drug prices.

But it turns out what the Trump administration should consider doing is getting rid of drug TV ads in general, Tom Kottler, CEO of HealthPrize Technologies, told Yahoo Finance, adding that there’s only two countries that have drug ads — U.S. and New Zealand.

“The price people pay for their drugs is not the list price anyways,” Kottler told Yahoo Finance. “Putting out what they charge as a list price is actually more confusing than not. If you have a copay card for most of these drugs, you actually pay nothing, or maybe $20 a month... it's an incredibly confusing thing.”

Merck (MRK), Eli Lilly (LLY), and Amgen (AMGN) sued the administration after the Department of Health and Human Services finalized the rule in May, claiming the federal government does not have the legal power to enforce the proposed rule, and that doing so would mislead patients. Many big drugmakers argue that prices should only be disclosed on their website, stating including these prices in ads could scare patients from getting treatment.

“The only people who actually pay the list price are uninsured patients, which will be more [people] if the Trump administration gets its way on the Affordable Care Act,” Kottler said. “It's not even a band-aid on a bullet wound. It's really nothing of any real merit or value.”

Single-payer health care may be the answer

Kottler told Yahoo Finance that drug prices in countries with nationalized health care tend to be a lot less, because the government negotiates drug prices on behalf of that patients in that country.

“In this country, we have this broken, disaggregated system,” Kottler explained. “If you took the 1,000 smartest people on the planet and stuck them in a room for six months and said, ‘build the worst health care system you can build,’ that's what we have,” said Kottler, adding that “whether you politically believe in it or not” a single-payer model will lower drug prices.

“The largest insurer in the United States is the federal government. If they decided to negotiate drug prices, they would bring those prices down,” he said. “It's pretty simple.”

Taylor Locke is a producer for Yahoo Finance. You can follow her on Twitter@itstaylorlocke.

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