Efforts to Improve Drug Price Transparency

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Abstract

In recent years a number of states have passed laws establishing prescription drug price comparison websites as steps toward improving cost transparency in the health care marketplace. Florida’s site, www.MyFloridaRx.com, was one of the earliest and is also one of the most widely known and used. The site has influenced other state’s efforts, just as experts have argued the development of such sites is often duplicative and not a cost-effective use of resources.

Purpose of health policy or idea

In 2004, the Florida state legislature passed a law requiring the Office of the Attorney General and the Agency for Health Care Administration (AHCA) to establish a website on which prescription drug price data from pharmacies across the state would be published. The objective of the website, www.MyFloridaRx.com, was to encourage consumers to comparison shop for the best prices for prescription drugs, and thereby drive down the prices of drugs in the state.

Each month, the AHCA, which administrates Florida's Medicaid program, collects prices on the 100 most commonly purchased prescription drugs from Medicaid claims forms submitted by pharmacies. The prices listed on the Medicaid forms are called the "usual and customary prices," and reflect the price that an uninsured customer could expect to be asked to pay for the drug. Because this data is readily available through the agency, the cost of the project is limited to the cost of creating and updating the website.

The 100 most commonly purchased prescription drugs in the state are available in more than 650 different drug formulations (formulations vary by manufacturer, for example); the site includes prices for all of these formulations, and prices are updated on a monthly basis. Using drop-down menus, consumers can pull up a list of all pharmacies in their city offering the drug they are looking for, and can compare the prices charged by each pharmacy. The site also contains links containing further information on state and private drug assistance programs for those who still cannot afford the price of necessary medications, even after searching for the best price within reach.

Main points

Main objectives

 

Type of incentives

 

Innovationsgrad	traditionell		innovativ
Kontroversität	unumstritten		kontrovers
Strukturelle Wirkung	marginal		fundamental
Medienpräsenz	sehr gering		sehr hoch
Übertragbarkeit	sehr systemabhängig		systemneutral

Laws to establish drug pricing comparison websites have not stirred much controversy, particularly as they have not placed added demands on pharmacists and have, in many cases, followed on other transparency improvement measures already underway. The sites themselves are theoretically highly visible to the public, although web access and language gaps remain barriers to their use by some segments of the public who could most benefit from them.

Political and economic background

A 2005 report by the Association for the Advancement of Retired People revealed that like other health care commodities, the cost of name-brand prescription drugs was increasing faster than inflation. States have passed a variety of measures to help consumers attain needed medications despite rising costs, but most such programs offer discounts or subsidies to indigent patients. In the mid-2000s, states began passing legislation to compile cost information on the prices of drugs in pharmacies across the state, as a fast and low-cost means of helping consumers to comparison shop for the best prices. The price transparency engendered by such sites, experts reasoned, would prompt pharmacies to lower their prices in an effort to draw customers away from competitors offering the same drugs at lower cost.  

The majority of the laws promoting increased drug price transparency established state run websites listing the prices of a selection of drugs at all pharmacies in the state. Like Florida's program, most of these programs cull price information from Medicaid claim forms, and typically post price information for the most commonly purchased drugs. The comprehensiveness of the websites varies; some states' sites include information for just a few dozen drugs, while others post prices for hundreds of drugs. Some include information for prescription drugs only, while others post information for prescription and over-the-counter medications.  Some update information as often as twice a month; others as infrequently as twice a year. Some sites omit frequently abused drugs and so-called lifestyle drugs (such as those for erectile dysfunction). The sorting options also vary from one site to another: some allow consumers to view price information for just one zip code or town at a time, while others allow consumers to view prices within a certain radius of a zip code, town or address. Florida's website is one of just two state sites that posts information in Spanish in addition to English. Only New York requires pharmacies to submit price information on request; all other states obtain the information from Medicaid claims forms, as Florida does.

The websites have been promoted as tools for the uninsured as well as those who carry insurance but still pay full-cost for prescription drugs. The number of people in the latter category has grown with the increasing popularity of high deductible health plans, in which individuals must pay for all health services at full cost up to a certain amount, as well as health savings accounts, which allow consumers to use pre-tax dollars for eligible health care expenses. Others paying full price for prescription drugs include those whose plans do not include prescription drug benefits, or whose benefits are minimal.

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Origins of health policy idea

The move to improve drug price transparency at the state level in the mid-2000s was related to a broader, federally supported, move to make the costs of hospital and physician services transparent in order to encourage greater competition, and, ultimately, lower costs. Some states have passed laws requiring hospitals or other providers to provide patients with cost estimates for various procedures. California, for example, requires hospitals to give patients cost estimates for the 25 most common outpatient procedures. Texas, recently, passed a law requiring a variety of providers and facilities to disclose cost information to patients upon request. Florida has approved two state programs to increase price transparency in the health care sector. At www.FloridaHealthFinder.gov, (a new site that now houses information formerly published on www.FloridaCompareCare.gov and www.FloridaHealthStat.gov) Florida consumers can compare quality of care ratings, mortality rates, infection rates, and other measures for hospitals, surgery centers, nursing homes and hospice centers in the state. For example, consumers can view the range of prices charged for "Level I breast procedures" in their county or statewide, for their age group or other groups.  

The ambiguity of such categories as "Level I breast procedures" (characterized by "Short treatment time in the operating room. Few laboratory tests or radiology procedures ordered. Few expensive disposable devices used, if any"), is indicative of the challenges faced by state efforts to increase the price transparency of hospital and physician services. Such services are difficult to estimate and compare, as they vary widely among providers and based on individual factors, such as age, underlying conditions, and severity of condition. Prescription drug prices, however, are inherently easier to compare. In fact, legislators and policy experts concluded that many of the challenges inherent to state programs to improve price transparency elsewhere in the industry would not be present in programs to improve drug price transparency. Maryland, Connecticut, Minnesota, New Hampshire, and New York all established state drug price comparison websites around the same time that Florida established its own site; programs in several other states followed in 2006 through 2008. The sites all follow roughly the same model with the exception of New York's, which relies on data collected by volunteers, not obtained through Medicaid claims forms.

Initiators of idea/main actors

• Regierung

• Patienten, Verbraucher

• Privatwirtschaft, privater Sektor

Stakeholder positions

Pharmacies have not resisted the laws in most states, but they have argued that mandatory price reporting, which some policy experts have recommended, would be a burden most pharmacies would not be able to support. The laws as currently written have enjoyed bipartisan support, as well as the support of consumers, who report that they generally appreciate the sites.

Actors and positions

Regierung
Legislators	sehr unterstützend		stark dagegen
Patienten, Verbraucher
Consumers	sehr unterstützend		stark dagegen
Privatwirtschaft, privater Sektor
Pharmacy associations	sehr unterstützend		stark dagegen

Influences in policy making and legislation

 

Actors and influence

Regierung
Legislators	sehr groß		kein
Patienten, Verbraucher
Consumers	sehr groß		kein
Privatwirtschaft, privater Sektor
Pharmacy associations	sehr groß		kein

Positions and Influences at a glance

Adoption and implementation

Data compilation and site design for MyFloridaRx began in 2005, and the site was launched in 2007. During its first year, the site received about 4,000 visitors a week. In spring of 2009, the AHCA launched a newly redesigned FloridaHealthFinder website, in order to create a centralized location for all health care quality comparison tools available in the state. While www.MyFloridaRx remains its own website, it is also featured as a main link on the new FloridaHealthFinder site, alongside links to other quality and price comparison tools. The centralized website now receives over 150,000 visits per month.

Monitoring and evaluation

In 2008, the Center for Studying Health System Change (CSHSC), an independent health research group, released a report examining drug comparison websites in operation in ten states, including Florida. The study, funded by the Robert Wood Johnson Foundation and the California HealthCare Foundation, began in 2007; since then, some states have added websites, whereas others, such as Ohio and Washington, have terminated their programs. The study compared the basic features of each of the active sites and came up with general recommendations for improved usability. The study singled out Florida's site in for examination in depth, analyzing and comparing price data across three types of markets-urban, suburban and rural-in order to assess the site's strengths and shortcomings. Results of this and other evaluations appear below.

Results of evaluation

Administrators of the MyFloridaRx website conducted analyses of price spreads on the website in 2007 and 2008, and found that the price range for specific individual drugs narrowed over time. The analysts concluded that the price spreads narrowed once pharmacies were able to compare their own prices to those in other pharmacies and then lowered them to match; the analysts, that is, credited the state initiative with driving the prices of prescription drugs down in the state.

The CSHSC study, by contrast, came to less favorable conclusions. The study found that on Florida's website, for the top 10 most commonly used drugs, price data was missing for nearly 30% of the urban pharmacies and 50% of the suburban pharmacies. In the rural market, data gaps were less frequent because of a larger population of Medicaid patients. Price information, the study found, was most accurate for chain pharmacies, and least accurate for independent pharmacies, although the latter, when telephoned directly, usually offered a lower price than that quoted in the website.

The study also evaluated the site's usefulness for a variety of hypothetical consumers with varied prescription drug needs. Because of data gaps, the site's usefulness varied greatly, depending on which drug or drugs the consumer needed, which pharmacies had submitted claims forms for those drugs, and where the consumer lived. "The substantial degree of missing price data," the study authors concluded, "…means that it is not possible to use the Web site to assess the extent of drug price variations in a definitive manner."

Finally, the study found several data errors, and revealed that the program had no system for automatically identifying such errors. The study authors recommended that the Florida site add features to inform consumers of the date price information was last collected for each drug at each pharmacy; allow consumers to specify a search area of a specific radius; and provide consumers with lists of pharmacies offering price matching and discounts on generics.

Expected outcome

In general, drug price comparison websites have received a fair bit of criticism from policy experts. Some say the sites may encourage consumers with multiple prescriptions to shop at several different pharmacies at once - in order to get each drug at the lowest price - with the end result that no one pharmacist would be able to alert the consumer to his or her risk of adverse drug interactions. Others point out that the prices on claims forms reflect prices relevant only to the uninsured, since most insured patients-including those on high deductible plans or with health savings accounts-often pay the lower prices negotiated by their plans' pharmacy benefit managers. The websites, critics argue, are therefore useful only for uninsured consumers - even though those consumers may be the least likely to use the sites because of language barriers or lack of access to the internet.   

Because Florida, like most other states with such laws, obtains price data from Medicaid claims, data can be updated only when claims are submitted. As a result, as the CSHSC study found, information is often missing from state drug price comparison websites, or is not updated as frequently as the laws allow. The CSHSC study recommended that future state efforts require pharmacies to submit price data regularly and frequently. The report also recommended expanding sites to include information from local in addition to online and foreign pharmacies, and adding several tools to make the sites more user-friendly, such as lists of pharmacies that match other pharmacies' prices, and lists of pharmacies offering deep discounts on generic drugs. The authors advised states to consider whether they were duplicating each others' efforts in constructing such sites-particularly for sites including price information from chain or online outlets-and concluded that overall, the sites do little to generate "meaningful price reductions for prescription drugs."

Impact of this policy

Qualität	kaum Einfluss		starker Einfluss
Gerechtigkeit	System weniger gerecht		System gerechter
Kosteneffizienz	sehr gering		sehr hoch

Although drug price comparison sites aim to reduce discrepancies in drug prices and drive down prices by enhancing competition, there is little good evidence to date that Florida's website, or any other state's site, has had such effects.

References

Sources of Information

Florida Health Finder: www.FloridaHealthFinder.gov

Agency for Health Care Administration: http://www.fdhc.state.fl.us/

Tu, Ha and Catherine Corey. "State Prescription Drug Price Web Sites: How Useful to Consumers?" Center for Studying Health System Change. Research Brief No. 1, February 2008.

Author/s and/or contributors to this survey

Elena Conis

 

Empfohlene Zitierweise für diesen Online-Artikel:

Elena Conis. "Efforts to Improve Drug Price Transparency". Health Policy Monitor, October 2009. Available at http://www.hpm.org/survey/us/a14/1