HHS Sets Details of Finalized Rule Requiring List Prices to Be Disclosed in DTC Ads

In an effort to improve price transparency, the Trump administration on Wednesday announced a final rule requiring drug manufacturers to disclose their list prices for pharmaceutical products or biologics in television ads for drugs covered by Medicare or Medicaid if the wholesale acquisition cost (WAC) is $35 or more for a month’s supply.

HHS said the rule, part of the administration’s blueprint to lower drug prices, aims to improve the quality, accessibility, and affordability of government healthcare programs.

In its document explaining the rule, HHS said the lack of price information leads to “to inefficient utilization of prescription drugs or biological products.” However, the department also acknowledged that, while it expects the change “to put downward pressure on the list prices of drugs, we cannot quantify the level of this impact because there is not data or examples that we can use.”

Instead, the department is relying on the idea that disclosing prices in television ads—but not other media, such as magazine or internet ads—would correct what it calls a market failure and induce greater competition.

It also said that patients, once they know more about the price of their treatments, might discuss less expensive alternatives with their doctor or pharmacist.

The department included a table of the 20 drugs with the highest television advertising expenditures in 2016. The average WAC for the drugs is $3473 (range: $189.00-$16,937.91) per month.

Included on the list are palbociclib (Ibrance), a Pfizer drug for HR-positive and HER2-negative breast cancer, with a WAC of $16,938 a month; originator adalimumab (Humira), with a WAC of $5174 per month; and originator etanercept (Enbrel), with a WAC of $5174 per month.

In comments he made Wednesday, HHS Secretary Alex Azar said while some patients might pay less for certain drugs, others, especially for those with high-deductible health plans or on Medicare Part D, the list price is the price they will pay. This also applies to people who must take high-cost, specialty pharmaceuticals, where they are responsible for coinsurance as well as copays.

Since prices will vary depending on health insurance, the television ads must include a statement that costs may differ based on coverage. By just listing the price in the ad, it will not require review by the FDA Office of Prescription Drug Promotion.

If a drug company fails to include the required information in their ad, therefore suggesting their drug is under the $35 threshold, a competitor can bring forward a lawsuit under the Lanham Act, also known as the Trademark Act of 1946, which bars false advertising.

Responding to claims from manufacturers that the rule will infringe on First Amendment rights, Azar emphasized that the administration believes there is no problem with requiring prices in ads that are telling patients to go to their doctor and ask about a drug.

However, the Biotechnology Innovation Organization thinks the move is not enough to help patients have informed discussions about price and access and instead will likely confuse them. A spokesman from the organization said, "We continue to believe that more comprehensive and meaningful transparency measures, ones which provide patients with contextualized prescription drug cost information that is relevant to them, rather than simply a list price that is not reflective of most patients' likely out-of-pocket costs, will best meet the administration's goals of helping patients become better informed and empowered in their healthcare decision making."

But Matt Eyles, president and chief executive officer of America’s Health Insurance Plans, issued a statement praising the decision. “We commend the administration for taking an important step to shed some light on the ‘black box’ of drug pricing. When patients have a clear view into list prices, which are set and controlled solely by drug makers, they are better empowered to make healthcare decisions that are right for them,” he said.

The rule will go into effect 60 days after being published in the Federal Register.