May 9, 2019

It's official: Rx drug prices are coming to your TV

Daily Briefing

    HHS on Wednesday released a final rule that will require drugmakers to disclose their products' list prices in consumer-directed television advertisements.

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    Final rule details

    The final rule will require drugmakers to include list prices in television advertisements for Medicare- and Medicaid-covered drugs if the price for a typical course of treatment or a 30-day supply is greater than $35. The final rule state that the prices should appear in text that is large enough for most people to read. The text also must include a statement noting that patients with health insurance might pay a different sum for the treatment.

    HHS under the rule will maintain and publish a list of pharmaceutical companies that do not comply with the new requirements. Those companies also could be subject to litigation under the final rule, The Hill reports.

    The final rule will take effect 60 days after it is published in the Federal Register. CMS has estimated that the final rule currently will affect 25 pharmaceutical companies that run approximately 300 different drug ads on television each quarter. The agency projected that complying with the proposed rule would cost drugmakers $5.2 million during the first year of implementation and $2.4 million in subsequent years.

    So far, at least one drugmaker, Johnson & Johnson (J&J), has aired a national television advertisement featuring the drug's list price. J&J said it will begin including list prices in ads for some of the company's other drugs later this year.

    Azar touts rule as a 'significant step' to bolster price transparency, but experts are wary

    HHS Alex Azar in a release called the final rule "the single most significant step any administration has taken" to increase transparency of prescription drug prices. "Patients who are struggling with high drug costs are in that position because of the high list prices that drug companies set. 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 health care," he said.

    But health policy experts have been skeptical over whether the new requirements will affect drug prices, as well as whether the requirements will help consumers to understand their drug costs.

    For instance, experts have said the requirement to advertise a drug's list price could confuse consumers, because consumers often do not pay a drug's full list price. Clifford Hudis, CEO of the American Society of Clinical Oncology, when the requirement was first proposed said, "What an individual pays for a given drug is driven by lots of hidden and some obvious factors," adding, "So it could be a challenge to disclose prices in a uniform and consistent fashion."

    Further, David Mitchell, founder of Patients for Affordable Drugs, when the requirement was first proposed said, "It's good to make information available to patients and consumers, but a disclosure requirement is not going to lower the prices of prescription drugs. The numbers could be so big—$10,000 a month—that at some point people could become inured to it."

    Similarly, Blase Polite, a cancer specialist at the University of Chicago Medical Center, at the time said, "To the individual consumer, the list price is often a fantasy number. When a doctor tells a cancer patient that this therapy potentially has a cure rate of 10% or 15%, people don't care that the drug costs $120,000 because the costs are usually covered by third parties."

    Industry group could challenge rule in court

    According to Politico, Pharmaceutical Research and Manufacturers of America, which has launched an alternative effort to have its members post their drug prices online, has said it would consider challenging the final rule in court, saying the regulation might violate the First Amendment of the Constitution.

    However, HHS has said it believes the final rule is in line with Supreme Court precedent, Politico reports (Karlin-Smith, Politico, 5/8; HHS release, 5/8; CMS fact sheet, 5/8; Weixel, The Hill, 5/8; Lovelace, CNBC, 5/8).

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