Price Transparency: Does the Pharmaceutical Industry Need to Prepare Today for the Implications of Price Transparency on Commercialization and Market Access?

Because there are staggering costs in developing innovative therapies and bringing them to market, it is imperative that we correctly launch new drugs. Payer influence is growing, and the market is shifting toward targeting smaller patient populations with multifaceted needs, so developing and executing a strategy that showcases a product’s accessibility and profitability is key. The established price of a therapy across fragmented markets and payers is not just the foundation of a successful global launch. It is also the culmination of demand analysis based on market and customer needs, product differentiation, account segmentation, health outcomes, and regulatory constraints—all of which directly impact market access and can affect price.

Some argue that net price transparency will reduce the cost of medicines and encourage an uptick in access to therapies. Knowing what prices have been established in a given country and what prices have been established with a given payer in the United States can provide a reference point to ensure the former does not exceed the latter. The likely economic consequences of commercializing a therapy driven by price transparency have been widely modeled, but different conclusions have been drawn on the possible impact to patients and to payers. What is clear, however, is that as laws and regulations continue to change regarding price transparency, pharmaceutical manufacturers need to become more versed in the implications of nondifferential pricing and prepare for a future in which their control over payers could be more limited.

In the United States, a number of states have enacted drug pricing transparency laws that require drug supply chain entities—such as manufacturers, pharmacy benefit managers, and health plans—to report the launch prices of therapies and subsequent price increases. Those laws, however, do not unmask the true net price, an amount known only by the payer and the manufacturer.

Group health plan sponsors could face new disclosure and transparency requirements under multiple laws and regulations, such as the No Surprises Act; the Consolidated Appropriations Act, 2021; and the Transparency in Coverage Final Rule, should the regulation and reporting requirements be finalized and implemented. Furthermore, it is well known that Health and Human Services (HHS) Secretary Xavier Becerra wants to lower drug prices, in part by allowing the HHS head to negotiate Medicare drug prices directly with manufacturers, and then make those prices available to other purchasers.

Possibly as early as July 2022, plans in the United States might have to report, for example, prescription drug expenditures and the impact of any rebates on expenditures. Manufacturers should be prepared to expose the net price and understand what the gross-to-net implications could be if other payers seek to have the same lowest price available to them.

The political push toward net price transparency does not end at the border of the United States. In 2020, the World Health Organization published the Oslo Medicines Initiative, which outlines an approach between governments and industry to provide equitable access to therapies across the European Union (EU). That same year, a survey published by the European Integrated Price Information Database noted that 22 EU member states reported the use of confidential discounts. That survey led some EU states to ask that manufacturers provide price information across EU countries and to report negotiated discounts. The implementation of a joint EU health technology assessment (HTA) could turn this request into a requirement. Although the joint HTA submission is not scheduled until 2025, pharmaceutical companies seeking to launch therapies in the next three years should evaluate their evidence generation strategy to substantiate a pricing position that has broader implications than currently planned.