When a pharmaceutical company launches a new product, pricing and reimbursement would be established in order for the product to come into the market. The price of a product comes from the negotiation between manufacturers and payers. Payers make decisions on what drugs and devices are made available to patients and at what cost. Products are categorized and differentiated for payers to make those decisions on what drugs and devices they will cover.
There are several reimbursement strategies, starting with clinical research, that are needed to show the benefits a drug or device has on a patient. Next, developing codes for products to be submitted in which the FDA needs to specify indications to submit to centers of Medicaid and Medicare services (CMS) for approval of reimbursement. Medicare is the largest third-party payer, but reason and necessity for the product are crucial for them to provide payment (Stark).
After the drug is put onto the market, a retailer then needs to negotiate a price with the wholesaler. This is called average wholesale price (AWP) which determines pricing and reimbursement for the retailer and wholesaler. AWP is not always realistic because the generic and brand drug products are usually inflated by 20%. The AWP is not government regulated and is calculated by the publisher based on the manufacturer. The wholesale acquisition cost (WAC) which is the manufacturer’s price listed to non-wholesalers.
The manufacturer uses WAC and DIRP (direct price) to calculate the AWP. Direct price refers to the estimated cost for a retailer to purchase a drug directly from the manufacturer. The publishers sell the published AWPs to private insurance, government, and any other buyers of prescription drugs. These entities use the data from the publisher to determine retail prices and reimbursements (Anderson).
Digital analytics is the process of gathering data from websites, mobile application, etc. and analyzing it. It gives companies feedback on how to improve by seeing how the users behave with their own products. Through digital analytics, pharmaceutical companies can view how patients are responding to their drugs and devices. Through measurements used to monitor, analyze, and optimize healthcare processes, otherwise known as metrics in healthcare, positive patient feedback can be determined which can be used to learn how to further satisfy the patient. This makes it clear where patient satisfaction issues lie regarding products and services, and ways that these issues can be resolved by the healthcare organization.
A modern example expressing the use of a digital analytic method would be this blog post created by the National Community Pharmacists Association (NCPA) that is promoting information on the effects of PBM’s on drug pricing. This blog post is available to see on Twitter and Facebook, it emphasizes the importance of joining the fight against PBM’s, as they have a major effect on drug pricing. While there is some basic information which serves as just knowledge to the general public, the analytic aspect comes from the “fight4Rx” project that is being sponsored throughout the blog.
The “fight4Rx” project “is a national coalition of patients, caregivers, and pharmacists concerned with pharmacy benefit managers (PBMs) increasing patients’ out of pocket costs and decreasing local access to medication. PBMs manage their own profits by determining pharmacy networks, covered medications or formularies, and patient co-pays” (NCPA). This general overview is right on the main screen on the website and is right beside the “sign up” section “Then sign-up and join your fellow patient advocates at Fight4Rx. As a patient advocate, you will unite your voice with thousands of other patients, caregivers, and pharmacists who believe it is time to shine a light on corporate PBMs” (NCPA).
There are no limitations on signups, but when you do sign up you need to mention whether you are a patient or a pharmacist/provider. The NCPA uses this data to see what the majority population is, and then they tailor their project advertisements to those specific groups. Using this method to collect information, to identify the types of people the “fight4Rx” project influences, can also be used as more evidence to support their claim if there are a substantial amount of signups.
How does social media come into the mix of pricing and reimbursement? Social media has a role in helping pharmaceutical companies in healthcare business. There have become more open forums for new forms of communication to promote products. This helps save costs for marketing initiatives which can ultimately shift to price reductions of the products since not as much money goes into marketing. Since there are more outlets of information on social media and other online resources, patients are educating themselves more and requiring honesty which can lead to more concise and exact reasons for pricing and reimbursements of drugs and devices.
Social media has already impacted the pharmaceutical landscape in terms of medication costs. A prime example is former President Donald Trump as he used social media, specifically Twitter, as a means to move his political agenda. Of those topics, Trump combatted drug prices in which he “twitter-shamed several leading drug manufacturers for implementing annual prices hikes” (Ralph). After Trump released this statement, many pharmaceutical companies conceded and decided they were not going to increase drug prices. In fact, “10 companies released statements that they would hold off on annual increases until at least 2019” (Ralph).
The actual effect this tweet had on the industry was staggering as it could amass to millions of dollars lost in potential revenue. Although the tweet came from a current president at the time, the effect social media had on pharmaceutical companies completed reverted a system that already existed in terms of steady price increases. Companies may have also been swayed by the tweet since Donald Trump had roughly 80 million followers on his Twitter that saw the post, which can seriously damage any company’s public relations if they fought back.
Another example in which social media has impacted drug prices is through advocacy on all various platforms such as Facebook, Twitter, Instagram, etc. As spoken about previously, “fight4Rx” is on two social media platforms and is promoted through a national pharmacy organization, NCPA. With those aspects in mind, the blog has a far outreach in the country and is actively promoting the decrease of drug prices. This group specifically would advocate for the decrease in medication costs since it directly impacts their own pharmacies and their profit margins that may also just be a loss.
A PBM “sets the prices it pays to your pharmacy for filling your prescription—often paying the pharmacy less than the pharmacy’s cost for acquiring the medication” (NCPA). As people can be forced to close their pharmacy, depending on how severe losses may be, there is a clear reason why so many people would join the “fight4Rx” effort. After this blog is shared over time, it may grab the attention of a pharmaceutical company and cause positive change after seeing how many individuals support it.
Overall, social media has a large impact on the modern world. There are over one billion yearly users on the social media site “Instagram” alone. That means that you can reach out to a seventh of the world just by uploading to that website. Gaining exposure through the internet is the number one way to do it nowadays, so all in all it’s no surprise that a website can have a significant effect on drug pricing.
Anderson, Leigh Ann. “AWP: What Does This Price Really Mean?” Drugs.com, 2020, www.drugs.com/article/average-wholesale-price-awp.html.
NCPA. “PBM Issue Social Media Guide.” https://ncpa.org/sites/default/files/2021-01/PBM-Social-Media-Guide.pdf
Ralph, Leah. “The Drug Pricing Debate Gets Real.” ACCC-Cancer, Sept. 2018, www.accc-cancer.org/docs/documents/oncology-issues/articles/so18/so18- issues.pdf?fbclid=IwAR0JV2IWluVDZRiVvtxCLGe6cLcQehCkki8r4VSPYOEGBF_0wH3yExokerU.
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