HHS finalizes plan to require drug prices in TV ads

The Trump administration has finalized its plan to require drug companies to include the list prices of their products in television ads.

The final rule (PDF) was released early Wednesday. The Department of Health and Human Services (HHS) will now force companies to include the wholesale acquisition price of a drug in an ad if it exceeds $35 for a monthly supply.

Pharmaceutical companies pushed back against this plan, arguing that the list price is not particularly valuable to patients as it is not reflective of what they typically pay at the pharmacy counter.

Federal health officials, however, counter that list prices do directly impact a number of people, such as those who have yet to meet their deductibles or Medicare Part D members, whose coinsurance is based on the list price.

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Patients may also be faced with a drug's list price if it's not included in their plans' formularies, HHS said in an announcement. In addition, HHS will require the ads to include a note saying for people with insurance coverage, their costs may be lower than the list price.

“Patients who are struggling with high drug costs are in that position because of the high list prices that drug companies set,” HHS Secretary Alex Azar said in the announcement. “Making those prices more transparent is a significant step in President Trump’s efforts to reform our prescription drug markets and put patients in charge of their own healthcare.”

This transparency will offer greater incentive for drug companies to lower their list prices, Azar said on a call with reporters Wednesday morning.

Some pharmaceutical companies, such as Johnson & Johnson, have already begun to include their pricing in television spots.

The plan, he said, is just one key part of the administration's broader approach to drug pricing. On the call, he also touted HHS' proposal to end legal protections for drug rebates in Part D.

"The information we're requiring in ads is just one piece," Azar said. "We believe it can be a starting point."

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Azar said the rule will take effect 60 days after publication on the Federal Register, which the agency expects to be on Friday. He said that HHS is planning to monitor the impacts of requiring the pricing data in television ads and then consider if it's worth expanding to other types of pharmaceutical advertisements.

Providers such as Kaiser Permanente and Cleveland Clinic have backed the plan, with some even suggesting further restrictions.

Policy experts warn that the rule is likely to face a significant legal fight from drug companies, who argue it infringes their First Amendment rights. Azar said on the call that HHS doesn't believe there is a conflict there, however.

It's an "important part of consumer fairness," he said.

Azar also dismissed a counterproposal from the Pharmaceutical Research and Manufacturers of America that would instead require drug companies to tell patients to seek out pricing information online.

"Pricing information should be in a place where they're also pitching the patient," Azar said.