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Administration’s Call for Drug Price Transparency Misses the Full Picture

May 14, 2018

By Christina Sandefur and Naomi Lopez
May 14, 2018

On the heels of President Trump’s Friday announcement of his plan to lower drug prices, U.S. Secretary of Health and Human Services Alex Azar revealed today that the Trump administration is seeking to require drug companies to share price information directly with patients. But while a move toward more sunlight in drug pricing is significant, patients are still being left in the dark when it comes to “off-label” prescriptions.

There are good reasons to be wary of mandatory price transparency. But most people agree that better informed patients are better equipped to make decisions about their medical treatment, and Secretary Azar echoed this sentiment, saying, “When patients hear about a wonderful new drug, they should know whether it costs $100 or $50,000. A patient might even pay for a doctor’s appointment to discuss a drug, not knowing that the price puts it totally out of reach, and that’s unfair.” But it’s equally unfair to patients that while pharmaceutical companies will be required to give patients this information, they’re still being legally prohibited from giving patients information about off-label uses.

“Off-label” means that a drug that the FDA has approved for use on one condition might also work for another condition that the FDA hasn’t approved it for. These other “off-label” uses are perfectly legal. It’s legal for patients to take a drug that’s approved for condition A to take it for condition B, instead—and it’s legal for doctors to prescribe it for condition B, also. Today, about one-in-five prescriptions are “off-label.” In fact, Medicare will even pay for off-label uses.

Yet under federal law, pharmaceutical companies can be charged with a crime  for telling doctors about these legal, alternative uses for legal, approved treatments.  As a result, doctors and patients may be unaware of these lawful treatment options, and, even if they are aware, the information they get may be out of date, or insurance companies may be unwilling to pay for them without more recent information.

This prohibition violates the First Amendment, which protects the right to communicate truthful information about legal things. In the seminal Supreme Court decision on this question, which, ironically enough, struck down a Virginia law that penalized pharmacists for communicating prescription drug prices to the public, the Supreme Court said it wasn’t the place of the state—or anyone else—to decide what information would be helpful to patients in making medical decisions. Instead, the Court rejected “this highly paternalistic approach” and recognized that “information is not in itself harmful, that people will perceive their own best interests if only they are well enough informed, and that the best means to that end is to open the channels of communication, rather than to close them.”

The Court thus turned away the state’s argument that it should be allowed to censor information about drug prices because sharing that information might encourage people to shop around for their medicines, which the state feared would discourage long-lasting relationships between pharmacists and patients and lead to commercialism. Yet these are the same reasons the FDA gives today when it penalizes pharmaceutical companies from telling doctors about legal off-label uses for medicines.

Secretary Azar said today that the administration is “calling on America’s pharmaceutical manufacturers to level with the American public” about drug prices. But it’s absurd to force companies to talk about the price of their drugs while prohibiting them from talking about how those drugs can improve—or even save—patients’ lives.

Patients—and their doctors and insurance providers—need more information about treatments than just their prices. Curbing the exchange of information about off-label treatments by those with the most knowledge about the drug’s uses, risks, and side effects precludes people from making fully informed medical decisions—and prevents patients from receiving the best possible care.

Although there may be some problems with the administration’s announcement that it wants to force companies to advertise prices (after all, in the same case about Virginia’s drug pricing law, the Supreme Court said, “freedom of speech presupposes a willing speaker”), the proposal seems to adopt the sentiment recognized by the Court in a more recent medical speech case that “in medicine, information is power. And the more you know, or anyone knows, the better decisions can be made.” That’s why it’s so puzzling that the federal government continues to outlaw the sharing of important information about medical treatments.

And that’s also why the Goldwater Institute developed the Free Speech in Medicine Act, a state-based model reform that protects the rights of doctors and pharmaceutical companies to freely share research and information about legal medical treatments. Arizona and Tennessee have already adopted laws based on the Institute’s model, and several more states have introduced. A new paper published by the Federalist Society’s Regulatory Transparency Project calls upon the FDA to follow the states’ lead and once and for all declare that truthful and non-misleading communications about off-label uses of approved treatments are permissible.

Christina Sandefur is the executive vice president and Naomi Lopez is the director of healthcare policy at the Goldwater Institute.



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