HHS Finalizes Rule to Require List Prices in Direct-to-Consumer TV Advertising

By Patricia Van Arnum - DCAT Editorial Director

May 8, 2019

US Health and Human Services (HHS) Secretary Alex Azar has announced a final rule from the Centers for Medicare & Medicaid Services (CMS) that will require direct-to-consumer television advertisements for prescription pharmaceuticals covered by Medicare or Medicaid to include the list price—the wholesale acquisition cost—if that price is equal to or greater than $35 for a month’s supply or the usual course of therapy.

The rule is part of an overall plan to address the cost of prescription drugs in the US. That plan, American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, was announced in May 2018 and laid out four strategies: boosting competition, enhancing negotiation, creating incentives for lower list prices, and bringing down out-of-pocket costs. To create better incentives for lower list prices, the plan called for HHS to consider requiring the inclusion of list prices in direct-to-consumer advertising.

The new rule will go into effect 60 days after publication in the Federal Register, scheduled for publication May 10, 2019.

In issuing the new rule, the HHS offered information on prescription drug pricing in the US. The HHS Office of the Assistant Secretary for Planning and Evaluation estimates that prescription drug spending in the US was about $457 billion in 2015, or 16.7% of overall personal healthcare services. Of that $457 billion, $328 billion (71.9%) was for retail drugs, and $128 billion (28.1%) was for non-retail drugs. It said that several factors underlying the rise in prescription drug spending from 2010 to 2014 can be roughly allocated as follows: 10% of that rise was due to population growth; 30% to an increase in prescriptions per person; 30% to overall, economy-wide inflation; and 30% to either changes in the composition of drugs prescribed toward higher-priced products or price increases for drugs that together drove average price increases in excess of general inflation.

The HHS said that this final rule is designed to address rising list prices by introducing price transparency that will help improve the efficiency of Medicare and Medicaid programs and provide consumers with more information.

In response to the final rule, Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Steven J. Ubl issued the following statement: “We are concerned that the administration’s rule requiring list prices in direct-to-consumer (DTC) television advertising could be confusing for patients and may discourage them from seeking needed medical care. 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."

To that end, PhRMA has launched  a new platform for patients, caregivers and healthcare providers called the Medicine Assistance Tool, or MAT. This tool links to the websites referenced in company DTC television advertising and includes a search tool to help patients connect to financial assistance programs. 

Ubl also raised concerns with the final rule. “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.”

Source: US Department of Health and Human Services and PhRMA