Drug Prices Could Start to be Announced in Television Ads
Under a major change announced by Health and Human Services (HHS) Secretary Alex Azar and drafted as a new federal rule, drug manufacturers would need to disclose in television advertisements the list price of a 30-day supply of any drug that is covered through Medicare and Medicaid and costs more than $35 a month. This change is part of a whole host of efforts by the Trump administration to curb rampant drug spending.
“Sometimes it takes government to make the first move, to disrupt a broken system, and to lay down new rules of the road,” Azar, who has a history of working with the pharmaceutical industry said. Azar has made it his mission to dispel any perception of alignment with his former colleagues.
The draft rule will now be debated through the fall, and its likelihood of becoming an actual requirement will depend on how hard the industry resists it. Pharmaceutical companies are currently required in ads to state side effects to drugs but what the medicine costs doesn’t yet need to be announced.
American Medical Association (AMA) commended the administration “for taking such bold action” to combat “out-of-control” drug prices. The AMA said that “as long as the practice [of advertising on T.V.] is allowed, the ads should come with at least a small dose of transparency.”
Proponents say that forcing drug companies to disclose list prices would prompt consumers to become more price sensitive, and in turn, slow spending.
The Pharmaceutical Research and Manufacturers of America (PhRMA), announced a new voluntary action that would, instead, direct consumers to company websites with pricing information. The move by the industry, to begin by April 15, would give patients a variety of pricing information, including the list price of a drug, the expected out-of-pocket costs of the drug and the patient assistance programs available. In his speech, Azar denounced the industry’s effort to blunt federal intervention.
“Despite the ample precedent for this common-sense measure, the pharmaceutical industry has resisted it fiercely,” the secretary said, adding that “placing information on a website is not the same as putting it right in an ad.”
Steve Ubl, president of PhRMA, argued that disclosing the list price of a medication in a television ad would be “very confusing, misleading, lacks appropriate context and isn’t what patients want or need.” Ubl indicated the administration’s proposed rule raised First Amendment concerns.
Officials said during a 60-day comment period they would welcome suggestions about whether to expand the price-disclosure requirement to drug ads beyond those on television. For now, the proposal calls for the price to be written in a type size that is legible to television watchers and would not require the price to be said aloud. Drug makers who violate the requirements would be named on a list issued by HHS and possibly punished by legal action.
Rachel Sachs, an associate professor of law at Washington University in St. Louis School of Law, is skeptical that the new rule will help keep costs down. “The administration has not yet advanced a theory for how that’s likely to happen, and we’ve seen many times that shaming companies for their high prices publicly doesn’t cause them to lower their prices,” she said.