Health and Science

Trump administration wants to shame Big Pharma into lowering drug prices

Key Points
  • The Trump administration will require drug companies to disclose the price of drugs in television ads.
  • An industry group argues people won't seek necessary medical care if they see list prices.
  • HHS Secretary Alex Azar says that should encourage companies to lower their drug prices.
Health and Human Services Secretary Alex Azar
Kevin Lamarque | Reuters

The Trump administration wants to shame pharmaceutical companies into lowering prescription drug prices, Health and Human Services Secretary Alex Azar told CNBC in an interview Thursday.

Pharmaceutical companies will be required to disclose the list price of their prescription medicines in television commercials under a new Trump administration policy. The Pharmaceutical Research and Manufacturers of America, an industry group, argues list prices could be confusing and may discourage people from seeking medical care.

"If the drug companies are embarrassed or if they're afraid that patients will be scared off by their drug prices, reduce your prices. It's that simple," Azar said in an interview with CNBC's "Squawk Box."

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Prescription drugs are typically more expensive in the U.S. than in other countries and account for a greater share of spending, for both individuals and the broader economy.

Prescription medications accounted for roughly 12% of total health-care spending in the U.S. in 2016, eating up about 2.1% of the national GDP — placing the U.S. fourth behind Hungary, Japan and Greece, according to the most recent data from the Organization for Economic Co-operation and Development. The U.S., however, ranks No. 1 in the amount of money individuals spend on drugs each year — an estimated $1,208 per person, according to the data.

The Trump administration has called for drug companies to lower costs and to simplify the way medications are priced and paid for. The new requirement is set to take effect as soon as this summer and will apply to drugs that cost more than $35 for a month's supply, the administration said. Until now, drug companies were required to disclose the major side effects a drug can have in TV ads but not the price.

Azar compares the move to regulators for decades requiring cars display sticker prices and does not necessarily want to dissuade pharma companies from advertising their drugs.

"What I'm trying to do right now is get more transparency into these advertisements," he said. "These ads can provoke important discussions, people can recognize conditions they may have, but the important thing is there's got to be a fair, balanced and informed discussion with the doctor. Without the pricing information, that's not an informed discussion."

Drug makers forced to reveal prices on television ads

— CNBC's Berkeley Lovelace Jr. contributed to this story.