The idea for putting drug prices in TV ads was part of the blueprint, American Patients First. The pharmaceutical industry opposes the plan on First Amendment grounds.
Heath officials from the Trump administration on Monday proposed requiring drug companies to feature prices in television ads, a move that seems likely to set off a fight with industry.
HHS Secretary Alex Azar announced the plan during a speech at the National Academy of Medicine, and CMS officials followed by unveiling the proposed rule that calls for posting the wholesale acquisition cost (WAC) of drugs that cost more than $35 a month in legible type. The rule does not require the price to be included in the ad voiceover.
“Patients deserve to know what a given drug could cost when they’re being told about the benefits and risks it may have,” Azar said in his prepared remarks. “They deserve to know if the drug company has pushed their prices to abusive levels. And they deserve to know this every time they see a drug advertised to them on TV.”
The pharmaceutical industry tried to pre-empt the news with its own plan: consumers watching drug ads would be directed to websites that has prices listed. But Azar said that did not go far enough.
“This historic proposal is an important way to create new incentives for drug companies to start lowering their list prices, rather than raising them,” Azar said in a statement. He called the industry concept, announced by Pharmaceutical Research and Manufacturing Association (PhRMA) President Stephen J. Ubl, “a small step in the right direction.”
“Our vision for a new, more transparent drug-pricing system does not rely on voluntary action,” Azar said in a statement released shortly before noon Monday. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay.”
The rule requires drug companies to post the cost of a typical course of treatment for an acute medication, such as an antibiotic, or a 30-day supply for a chronic condition.
PhRMA criticized the proposal on First Amendment grounds, a preview of the battle that is expected before drug prices would ever show up on a TV screen. A key reason that CMS is issuing the rule, instead of FDA, is that the agency that regulates Medicare and Medicaid has not lost a First Amendment case. Technically, the rule affects all drugs that are covered by Medicare and Medicaid, which means virtually all of them.
The WAC is not always disclosed, and drug companies note that for many consumers it is misleading, because what they pay at the counter depends on discounts for pharmacy benefit managers or their own health plan. But the WAC is relevant for cost sharing for Medicare patients.
For now, the proposal applies only to television ads, but CMS is taking comment on whether disclosure should extend to other forms of marketing, including social media.
Some questioned whether the enforcement provisions in the rule have any teeth. Federal regulators would post lists of violators and count on companies to sue each other.
But other stakeholders said the policy, which was part of Trump’s May blueprint to rein in drug prices, “American Patients First,” is a good start. Matt Eyles, president and CEO of America’s Health Insurance Plans, said, “There are three ways to meaningfully reduce drug prices: increase competition, increase visibility into manufacturer pricing practices, and focus on true value for patients and consumers. Giving consumers pricing information in drug advertising will empower them to have more informed conversations with their doctor about the best approach to improve their health and manage their medical conditions.”
And while the American Medical Association does not condone drug advertising, its president, Barbara McAneny, MD, said if ads are to appear, prices should be included. “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,” she said. “That is a step in the right direction.”