Pricing Now Required for Inclusion in TV Advertising for Prescription Drugs

A final rule from the Centers for Medicare & Medicaid Services (CMS) will require the inclusion of wholesale acquisition cost, or list price, in direct-to-consumer (DTC) television advertisements for prescription pharmaceuticals covered by Medicaid or Medicare.

The rule applies to prices equal to or greater than $35 for a month’s supply or the usual course of therapy.¹

In announcing the requirement, US Department of Health and Human Services (HHS) Secretary Alex Azar said that people in the United States deserve to know the prices of the drugs they receive.¹

“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 Donald J. Trump’s] efforts to reform our prescription drug markets and put patients in charge of their own health care,” Azar said in a statement.¹

The final rule is an important step for lowering prescription drug prices through transparency, CMS Administrator Seema Verma said.¹

“Patients have the right to know the prices of health care services, and CMS is serious about empowering patients with this information across the board,” she said.¹ “Equipped with information on prescription drug prices, patients will be better able to make informed decisions and demand value from pharmaceutical companies.”

In a statement expressing concern about the new requirement, Pharmaceutical Research and Manufacturers of America (PhRMA) Chief Executive Officer and President Steven J. Ubl said that the inclusion of pricing in DTC television advertising could be confusing for patients and the inclusion of list prices could discourage them from seeking needed medical care.²

“We support providing patients with more transparency about medicine costs, which is why our member companies voluntarily began directing patients to links to comprehensive cost information in their DTC television advertising. After speaking with patients across the country, we learned that patients prefer this approach,” Ubl said.²

“While we are still reviewing the administration’s rule, we believe there are operational challenges, particularly the 60-day implementation timeframe and think the final rule raises First Amendment and statutory concerns,” he said.

In its statement, that PhRMA also announced the launch of a new platform for caregivers, health care providers, and patients. The Medicine Assistance Tool, or MAT links to websites referenced in DTC television advertising and includes a search tool to help patients connect to financial assistance programs.²

“This effort is just 1 of several ways our members are working to ensure patients have the information they need to make more informed health care decisions,” Ubl said.²

At least 1 drug maker is supporting transparency initiatives.

In a statement issued this year by Johnson & Johnson's Scott White, company group chairman of North America Pharmaceuticals, said that consumers deserve a clearer picture of what they can expect to pay for medications.

Prior to the CMS' final rule, the company vowed to begin including list prices in its television advertisements.³

“We spoke with many consumers and patients to understand what pricing information would be most relevant to them. Their input not only shaped how we responded to the administration’s DTC TV advertising proposal, it also suggested a common-sense path forward that we believe will give patients clearer and more valuable information about the cost of the medicines we advertise on TV,” White said.³

Johnson & Johnson is including both the list prices and potential out-of-pocket costs to patients in its advertising, according to White. I

t started the inclusion of list prices with its most frequently prescribed medication, an oral anticoagulant.³

In addition to addressing DTC television advertising, the Trump administration previously introduced the American Patients First - PDF blueprint aimed at bringing down prescription drug prices. Announced in May 2018, the blueprint laid out 4 strategies for solving the problems that patients face: boosting competition; bringing down out-of-pocket costs; creating incentives for lower list prices; and enhancing negotiation, .¹

To create better incentives for lower list prices, the blueprint called for HHS to consider requiring the inclusion of list prices in direct-to-consumer advertising. This final rule has been published to implement the vision laid out in the blueprint.¹

List prices matter to patients, many of whom either pay the list price or prices based on the list price, according to HHS officials.

They said that 47% of Americans have high-deductible health insurance plans, and the price these patients see in ads is essentially the price they pay, until a deductible is met.

All seniors on Medicare Part D have coinsurance for certain types of drugs, which means that their out-of-pocket expenses are calculated as a share of list price, and list prices are also what patients pay if a drug is not on their insurance formulary, according to the agency.¹

References

• HHS finalizes rule requiring manufacturers disclose drug prices in TV ads to increase drug pricing transparency [news release]. Washington, DC; May 8, 2019: US Department of Health and Human Serviceswebsite. hhs.gov/about/news/2019/05/08/hhs-finalizes-rule-requiring-manufacturers-disclose-drug-prices-in-tv-ads.html. Accessed May 2019.
• PhRMA responds to HHS DTC rule, launches website providing patients with cost information [news release]. Washington, DC; May 8, 2019: PhRMA website. Pharmaceutical Research and Manufacturers of America website. phrma.org/press-release/phrma-responds-to-hhs-dtc-rule-launches-website-providing-patients-with-cost-information. Accessed May 2019.
• White S. Our company: what cost information helps patients in a TV ad? We asked them. Johnson & Johnson website. jnj.com/our-company/what-cost-information-helps-patients-most-we-asked-them. Published February 7, 2019. Accessed May 2019.