Trump Administration to Require Medicine Prices to Be Disclosed in TV Ads

Says the industry's attempts to include other info on TV ads isn't enough
October 15, 2018 Updated: October 15, 2018

A leading association of pharmaceutical companies has pledged to connect consumers with pricing information on TV drug advertisements, starting in the coming months.

But the Trump administration says this is too little, too late, and announced Oct. 15 that it plans to require drug companies to disclose drug list prices directly in ads.

Pharmaceutical Research and Manufacturers of America (PhRMA) put out a statement on Oct. 15, saying that it had amended its Guiding Principles on Direct-to-Consumer Advertisements About Prescription Medicines to specify that if a medicine is identified on a TV advertisement, the advertisement has to include info about where consumers can find pricing information.

“Information about the cost of the medicine, such as a company-developed website, including the list price and average, estimated, or typical patient out-of-pocket costs, or other context about the potential cost of the medicine [must be included],” the new guideline states.

The association, which counts Novartis Pharmaceuticals Corp., AbbVie, Pfizer Inc., and Johnson & Johnson among its members, said it was prompted by the introduction of the Trump administration’s drug-pricing blueprint in May, which put pressure on pharma companies to be more transparent about costs.

“The Administration and Congress have called on our industry to provide cost information in DTC [direct to consumer] advertisements, and our members are voluntarily stepping up to the plate,” said Stephen J. Ubl, president and chief executive officer of PhRMA. “It will require significant operational changes. … But we believe this is the right thing to do.”

But PhRMA has pushed back on putting the actual list price of the medicine in the advertisement, saying that what consumers really want to know is what it is going to cost them, which could be different from the list price, based on a person’s insurance coverage or whether someone qualifies for aid from the drug’s maker.

Instead, it wants companies to direct consumers to a new “patient affordability platform” that will be started in early 2019. The new platform will have a search tool to direct people to medicine-specific cost info, types of assistance available to them from drug makers, and to resources on how to navigate their insurance coverage. PhRMA says the new platform will have more info on financial aid than is currently available on its Partnership for Prescription Assistance (PPA) program website.

Health and Human Services Secretary (HHS) Alex Azar called the action a “small step in the right direction,” but announced later in the day that the administration is proposing a rule that would require manufacturers to put list prices on ads for all prescription drugs covered by Medicare and Medicaid.

“List prices are meaningful to every American senior on Medicare Part D, because they typically have to pay coinsurance, a share of list price for specialty and nonpreferred drugs,” he said in a speech at the annual meeting of the National Academy of Medicine in Washington. “List prices mean a lot to the almost half of Americans under age 65 who have a high-deductible health plan, meaning they often pay thousands of dollars toward the list price of an expensive drug before their insurance ever kicks in.”

He said the argument that people don’t care about list prices is the same as the argument that car dealerships made back in the 1950s when being forced to put sticker prices on cars.

“People still get discounts when they go to purchase a car, but sticker prices are considered an important piece of needed consumer information,” he said. “There’s no reason it should be any different for drugs.”

The rule will only require price disclosure for drugs that are over $35 for a full month’s supply, or the course of treatment for an acute condition such as an antibiotic.

The proposed rule would require the price be written on the screen at the end of the advertisement, but CMS will be seeking feedback on this and other aspects of the rule during a 60-day comment period, it said. It’s also seeking feedback on whether the rule should apply to other forms of advertising, such as on radio, in print or online.

To enforce the rule, HHS will make public a list of drugs that were advertised in violation of the rule; violators would open themselves up to legal action under Section 43(a) of the Lanham Act, which prevents advertisers from using false descriptions in their advertising.

Last week, President Donald Trump signed a bill that would prohibit pharmacy benefit managers from putting “gag” clauses in contracts with pharmacies that prevented them from telling customers if a drug would be cheaper if paid out of pocket than with their insurance. Azar warns that this and the proposed rule on drug pricing are just “the tip of the iceberg.”

“The American drug pricing market is already changing. It’s going to have to change a lot more until patients get the deal they deserve,” he said.

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