The Trump administration is planning to force drug companies to include the list price of their products in direct-to-consumer advertising as part of its ongoing efforts to bring down the cost of drugs.
The Centers for Medicare & Medicaid Services issued a proposed rule (PDF) on Monday evening that would require drug manufacturers that sell drugs covered by Medicare and Medicaid to include the cost for a typical course of treatment, such as a 30-day supply of medication for a chronic condition.
The rule would apply to drugs that cost $35 or more and would be required to be included in a “legible textual statement” at the end of a television ad.
“We will not wait for an industry with so many conflicting and perverse incentives to fix itself,” Department of Health and Human Services Secretary Alex Azar told reporters at an event hosted by the National Academy of Medicine.
Azar will maintain and publish a list of drug companies that violate the rule, officials said.
“We are committed to price transparency across the board, and prescription drugs are no different,” CMS Administrator Seema Verma said in a statement.
.@POTUS & @SecAzar are committed to lowering drug prices & driving drug pricing transparency. Today, we took another step towards our goal by proposing that drug manufacturers post the Wholesale Acquisition Cost for drugs covered in #Medicare or #Medicaid: https://t.co/9L5YovQyk5— Administrator Seema Verma (@SeemaCMS) October 15, 2018
“Patients often pay their cost-sharing or deductible off of a drug’s list price,” she added. “Today’s proposed rule would ensure that those list prices are included in television advertisements, so patients have the information they need to make informed decisions.”
The administration first revealed that it intended to pursue policies to include prices in advertising as part of the “American Patients First” drug pricing blueprint released in May.
1/3 FDA supports efforts by @SecAzar and @SeemaCMS to enhance transparency around drug prices and provide consumers with greater access to information to help patients make more informed decisions. https://t.co/PVdBHo8EvO— Scott Gottlieb, M.D. (@SGottliebFDA) October 15, 2018
The proposed rule will be open for comments for 60 days. Senior officials said that the agencies hope the comment period can be a springboard for potentially expanding the rule to other forms of advertising, such as print and radio.
CMS is starting with TV ads, which make up a significant bulk of pharmaceutical advertising—about $4.2 billion of drug companies’ $5.5 billion spend on direct-to-consumer ads.
CMS unveiled the proposed rule hours after the Pharmaceutical Research and Manufacturers of American (PhRMA) announced that its members had voluntarily agreed to include messaging in ads that would direct consumers to online pricing data. Their plan fell far short, however, of actually listing prices in their ads. Pharmaceutical companies had successfully lobbied against congressional action that would require prices to be included in advertising.
“Today’s announcement represents a big change for our companies and it will require significant operational changes for individual companies to implement,” Stephen Ubl, PhRMA CEO, said in a statement. “But we believe this is the right thing to do, and is an important step toward providing patients with the information they want.”
Our member companies are taking a new approach to how they communicate about medicines in DTC television advertisements in order to make it easier for patients to access information about medicine costs. 1/3 pic.twitter.com/hfJd9yO1Gd— Stephen J. Ubl (@steveubl) October 15, 2018
Azar said that officials “appreciate” the drug companies’ efforts, but that their plan doesn’t go far enough to meet the needs of patients. Drug companies, he said, have known for months that HHS was looking into this policy, but they “took months to skate to where the puck was going.”
Lindsay Bealor Greenleaf, director of healthcare consulting firm ADVI, told FierceHealthcare that simply providing the list price to patients could cause confusion because relatively few people deal with that price at the pharmacy counter. What patients pay varies based on benefit design, and list prices would fail to account for any rebates negotiated with pharmacy benefit managers, she said.
“PhRMA’s plan for advertisements to direct patients to online resources about a prescription drug’s cost and available financial assistance will make it easier for patients to access information that is most relevant to them and their pocketbooks,” Greenleaf said.
Azar dismissed that common argument against the practice from drug companies. That’s not fair, Azar said, since the list price is valuable to patients on Medicare who may have coinsurance payments, or people enrolled in high-deductible health plans, for example. “List prices matter to American patients,” Azar said.
But there may yet be another wrinkle, Bealor Greenleaf said. CMS may not have the authority to make such a rule.
It is “unclear at present” if the agency does, she said; PhRMA for its part believes that the rule would violate drug companies’ First Amendment rights, while the senior administration officials said they do not believe congressional action is required to finalize the proposal.
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