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HHS proposal: Big Pharma must divulge drug prices in TV ads

October 17, 2018

Americans nationwide are swallowing more prescription drugs than ever before—and in doing so, they also are “swallowing” the high prices of the drugs they take.

However, all of that is about to change in some specific ways. Drug companies now are promising to provide the list prices for their products in television ads, in compliance with a proposal released by the Trump administration on October 15. The new rule, which is open for discussion, would affect any drug covered by Medicare or Medicaid—bringing greater transparency to drug pricing in the United States.

Health and Human Services Secretary Alex Azar announced the new proposal on Monday, just hours after the Pharmaceutical Research and Manufacturers of America, or PhRMA—the advocacy group that represents big drug companies—said its members would start indirectly mentioning prices in their television ads.

In a press release, PhRMA, announced that its 33 member companies would point viewers to websites that cite the list prices of the drugs they advertise, and that also will clarify what consumers can expect to actually pay for the drugs.

“PhRMA member companies’ direct-to-consumer television advertisements will soon direct patients to information about medicine costs, including the list price of the medicine, out-of-pocket costs or other context about the potential cost of the medicine and available financial assistance,” the group said in its statement.

“The administration and Congress have called on our industry to provide cost information in DTC advertisements, and our members are voluntarily stepping up to the plate,” confirmed Stephen J. Ubl, president and CEO of PhRMA.

However, Azar said that the websites were insufficient. “We appreciate their effort. But placing information on a website is not the same as putting it right in an ad,” Azar commented in a speech at the National Academy of Medicine.

“For too long, drug pricing has been like no other market,'” he said. “We will not wait for an industry with so many conflicting and perverse incentives to reform itself.”

Under the proposed rule, a company would have to put in writing the price for a typical course of treatment for drugs such as antibiotics, or the 30-day cost for drugs taken for chronic conditions such as high blood pressure or diabetes.

Specifically, the proposal will require direct-to-consumer television advertisements for prescription drug and biological products paid for by Medicare or Medicaid to include the list price if the list price—the Wholesale Acquisition Cost—is greater than $35 for a month’s supply or the usual course of therapy, with the prices updated quarterly. Right now, the 10 most commonly advertised drugs have list prices ranging from $535 to $11,000 per month or usual course of therapy.

According to HHS, fully 47% of Americans have high-deductible health plans, under which they often pay the list price of a drug until their insurance kicks in. What’s more, all seniors on Medicare Part D have coinsurance for certain types of drugs, which means their out-of-pocket expenses are calculated as a share of list price.

PhRMA has said any attempt to force companies to publish prices would violate First Amendment rights of free speech.

Research contact: @HHSGov