- The Trump administration on Wednesday moved to make good on one of its signature drug pricing proposals, finalizing a rule that would require pharmaceutical companies disclose the price of their products in television advertising as soon as this summer.
- "We're telling drug companies today that you've got to level with people what your drugs cost," HHS Secretary Alex Azar said on a call with reporters. "Patients have a right to know and, if you're ashamed of your drug prices, change your drug prices."
- Drugmakers have sought to head off the administration's proposal, with many of the largest last month beginning to direct patients to websites where more information on prices can be found. HHS, however, says such efforts are insufficient, arguing that since companies use television advertising to encourage patients to talk to their doctors about treatment, they should disclose costs in the same channel.
Drugmakers collectively spend billions of dollars each year on direct-to-consumer advertising, the bulk of which still comes in the form of the 30- or 60-second television spots familiar to many.
With its proposal, HHS aims to force greater transparency on how much those touted treatments cost. The now final rule requiring drugmakers disclose prices in TV ads is the first proposal to be finalized from the administration's drug pricing blueprint, which was issued last May.
While its implementation would mark a notable change in how drugs are marketed to Americans, the rule's actual impact remains uncertain.
"It's still not at all clear whether and how this rule will lower drug prices or spending," tweeted Rachel Sachs, an associate professor of law at Washington University in St. Louis. "HHS suggests that this is just part of a larger package — but the admin[istration]'s other proposals have yet to be finalized."
HHS acknowledges it's unable to quantify whether or how much disclosure would lead to lower prices, although the department expects the requirement would put pressure on pharma companies.
Practically, drugmakers would be required to include text in their television advertising that states the list price for either a 30-day supply or a typical course of treatment for the product being marketed. The statement would also note that costs may differ if a consumer has health insurance that covers drugs.
The rule would apply to prescription drugs and biologics which are reimbursed through Medicare or Medicaid and cost more than $35 per month.
Pharma has argued such an approach could be misleading, as many might not end up paying the list price included in the ad.
"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," said Stephen Ubl, president of the drug lobby PhRMA, in a statement.
Instead, members of the group last month began putting more information about the cost of their products in associated websites, an approach HHS and Azar dismissed.
"We believe it is necessary to the efficient administration of Medicare and Medicaid that this information be disclosed in DTC television advertisements," HHS wrote in the final rule. "Manufacturer websites are not an adequate alternative to the price disclosure requirement we are finalizing in this final rule."
Johnson & Johnson has moved beyond PhRMA's approach already, putting pricing information directly in advertising for its blood thinner Xarelto (rivaroxaban).
"It's one thing for us to do this voluntarily, and it's another to have the government tell you," said Liz Fowler, a vice president of global health policy at J&J, speaking at an event hosted by The Atlantic and underwritten by PhRMA in Washington, D.C. Wednesday.
HHS anticipates its rule will be published Friday in the Federal Register, which would start a 60-day clock before it's implemented — making July the soonest it could become effective.
Several questions remain, however.
Drug companies could challenge the rule legally, something PhRMA hinted at in its Wednesday statement.
"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," PhRMA wrote.
Many of the 147 comments submitted on the initially proposed rule — which the finalized version largely tracks — brought up concerns over whether HHS has the statutory authority to implement the rule. It's also uncertain how effectively HHS could ensure compliance.
The agency plans to publish a list of companies that are in violation of the requirement, and expects competitors would sue citing false and misleading advertising under the Lanham Act.
Essentially, Azar said, any company not disclosing prices in its TV advertisements would be implying their product costs less than $35 per month — the threshold for the rule to take effect. Rival companies could then pursue legal action for unfair competition.
"This will be a quite effective mechanism of enforcement," said Azar.
Others aren't so sure. "Lanham Act suits can only be brought by competitors (as the rule notes), and by definition many of these drugs won't have competitors," wrote Sachs on Twitter.
Rebecca Pifer contributed reporting to this article.