a pharmacist chooses from a wall of prescription drugs

In efforts to curb rising prescription drug prices, federal regulators have put forth proposals requiring “list prices” to be included in TV commercials for pharmaceuticals. But could price disclosure in drug ads make any difference? New research from Temple University suggests it might not. 

In a newly published collaborative study by researchers at the College of Public Health and the Klein College of Media and Communication, most people watching ads with price information included didn’t notice that the price information was there. Certain factors specific to prescription drugs diminish the impact of including list prices for drugs in ads—and might diminish viewers’ perceived need to pay attention, says Ilene Hollin, who focuses on health economics as assistant professor in the College of Public Health’s Department of Health Services Administration and Policy

“In theory, it makes sense that if we can increase price transparency, consumers may be more likely to take cost-saving measures, and it could curb some of the high cost of healthcare,” Hollin says. “But in this particular context, there are problems. The first is that ‘list price’ often isn’t representative of what patients actually pay for drugs. They don't really have an accurate assessment of what a drug will cost them until they're paying for it at the pharmacy counter. The second is that many new branded drugs are on patent and have exclusivity, so there aren’t alternatives. Comparison shopping isn't an option.”

Hollin conducted the study with Jennifer Ball, assistant professor in Klein’s Department of Advertising & Public Relations. Results from the study were published in Research in Social and Administrative Pharmacy in November. 

The genesis of their investigation was a 2019 mandate from the federal Department of Health and Human Services (HHS) that pharmaceutical advertisements disclose the list prices of certain drugs. The goal of the regulation was to “help improve the efficiency of Medicare and Medicaid programs by reducing wasteful and abusive increases in drug and biological product list prices.” The thought, according to the regulatory document, was that forced disclosure might spur drugmakers to reduce their prices “by exposing overly costly drugs to public scrutiny.” 

In 2020, a Washington, D.C., circuit court struck down that mandate, deciding that HHS overstepped its regulatory authority. But in 2021 the U.S. Senate took up the cause with a bipartisan bill that would require price disclosures in advertisements for prescription drugs. The pharma industry continues to spend more each year (now about $6.5 billion) on direct-to-consumer advertising, and the Government Accounting Office reported that the pharma ads may contribute to increased Medicare Part B and Part D spending.

“It's going to continually come up,” says Ball, for whom prescription drug advertising is a major area of research. Hollin and Ball met in a Temple grant-writing program around the time the HHS issued its rule, and they realized they had a shared interest in understanding its potential implications. “There wasn't really any evidence directly related to the effects of this type of price disclosure in prescription drug advertising. It was worth examining.”

For the study, the Temple researchers recruited a panel of 2,138 participants representing the general population. These panelists were shown real TV commercials for the drugs Invokana (type II diabetes), Eliquis (deep vein thrombosis/pulmonary embolism), and Xeljanz (rheumatoid arthritis). A control group saw the ads unaltered. Another group was shown versions edited to include what the original HHS rule has mandated: “a legible textual statement at the end of the advertisement” of the list price for a 30-day supply of the medication. A third group was given an additional sentence stating the more typical out-of-pocket cost, based on Medicare coverage rates.

Overall, about 41 percent of participants noticed when a price was disclosed. Around 8 percent of the control group thought they had seen a disclosure even though there was none. Recognition of the different elements of the price disclosure did vary by sociodemographic variables such as race, education and income as well as health characteristics. 

While it is possible that people didn’t notice the price information because it isn’t standard information to look for in these types of ads, “there's nothing about what we've seen so far that would demonstrate that this is necessarily an effective way to get people to pay attention to price,” Hollin says. “It calls the policy into question. Is this the best approach for lowering healthcare costs?” Including the high list price, Hollin adds, could have “unintended consequences of scaring people into thinking it is unaffordable.” That would undermine the public health value of the ads, she says.

Both researchers suggest that accurate price disclosure can be valuable to patients. “There’s value in directing patients to think about the price earlier in the decision-making process,” Ball says. “The best way to present that has yet to be determined. When you're going to be seeking treatments, that's a journey, a multi-stage process. The point when someone may be first learning about a drug, it may be that price just is not a key consideration.”

The researchers are preparing a follow-up paper to explore how price disclosures would affect the behavior of patients who do accurately notice them.