The Trump administration wants drug companies to put their list prices in television ads, but whether that policy is something it can actually enforce remains a major question.
Senior administration officials were firm on Monday that they don’t believe the Centers for Medicare & Medicaid Services needs Congressional approval to institute a mandate, and they disputed concerns that the proposed rule (PDF) could face a challenge on First Amendment grounds.
But the sweeping action likely leaves the door open for long and messy legal battle, said Chad Landmon, chair of Axinn, Veltrop & Harkrider’s intellectual property and Food and Drug Administration practice groups, in an interview with FierceHealthcare.
Whether CMS or the Department of Health and Human Services has authority to force pharmaceutical companies to comply is the “million- or multimillion-dollar question.”
“I think it’s highly questionable whether HHS has the statutory authority to do this,” Landmon said. “This is very ripe to a court challenge.”
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Pharmaceutical companies have already signaled a likely resistance, with the general counsel for the Pharmaceutical Research and Manufacturers of America (PhRMA) telling a STAT News reporter that a policy in this manner would not pass legal muster.
I just asked @PhRMA whether the administration could write a regulation requiring mandatory price disclosures in DTC ads without violating the First Amendment. Their general counsel responded unequivocally: No.
— Nicholas Florko (@NicholasFlorko) October 15, 2018
Landmon said a legal challenge would likely land into one of those two areas: whether or not HHS has authority to enact such a rule, or if it violates companies’ First Amendment speech. He said that from the latter perspective, the proposed rule likely goes too far in compelling drug companies to provide information.
Industry experts said they are skeptical about the value of the proposal since providing patients with the list prices of drugs is not necessarily arming them with the most useful data. Michael Abrams, managing partner and co-founder of Numerof & Associates, told FierceHealthcare that list prices could even deter patients from filling prescriptions entirely.
About half of prescriptions issued across the country go unfilled, he said, and seeing the list prices could grow as patients confuse that figure for what they may expect to pay. The list price, though it often serves a starting point for negotiations between insurers, pharmacy benefit managers and drug companies, is rarely what patients see at the pharmacy counter.
“People who misunderstand those commercials, who think the list price is what they will pay, may be less inclined to have those scripts filled,” Abrams said.
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Transparency in healthcare is a noble and valuable goal, Abrams said, but going about it in this manner is not likely to pay off in the long run. A better solution, he said, would be for insurers to provide readily accessible and easy-to-understand tools that patients can access to calculate drug costs, based on their specific benefits, deductibles and copayments.
A counterproposal from PhRMA, which was unveiled shortly before CMS’ rule, is getting closer to a transparency approach that would be most useful to consumers, he said. But it would still likely be overly complex.
PhRMA’s members voluntarily offered to include language in ads that would direct patients to online resources with more granular details on their likely drug costs. Insurers, however, make far more sense as a point of contact for this information, Abrams said.
“True transparency means making that complexity go away,” he said.
Though there are skeptics, the rule has drawn praise from some healthcare groups. The American Medical Association said in a statement that it is a “step in the right direction,” though the AMA added that it opposes direct-to-consumer ads for drugs more broadly.
“While this proposed rule alone won’t remove the often-misleading nature of prescription drug ads, it will give consumers a data point that is currently unavailable,” AMA President Barbara McAneney, M.D., said in a statement.
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Payer groups echoed the sentiment. Matt Eyles, CEO of America’s Health Insurance Plans, said the policy was “bold” and would empower patients to talk to their doctors about the medications they take.
The Pharmaceutical Care Management Association, which represents PBMs, said in a statement that it shares the White House’s goal of bringing down drug prices, and that the rule would allow patients to make informed choices.
“The most direct way to reduce costs and improve access to prescription drugs is for drugmakers to cut their prices, and we look forward to working with the administration and Congress to accomplish this goal,” PCMA CEO J.C. Scott said.
Though the rule, should it be finalized as-is, is likely to be mired in legal controversy, Landmon said that it could serve as a tool to bring pharmaceutical companies to the negotiating table. Their counterplan, he said, is evidence that they’d be willing to have this dialogue.
“If they can get pharma to voluntarily do something short of this, that would be interesting,” he said.