HHS to Require Drug List Prices in Ads, PhRMA Poised to Respond

“When we change the rules, the market players will reorganize their businesses to fit the new world. And it will be a very different world for American drug pricing," said HHS Secretary Alex Azar.

During a speech given yesterday to the National Academy of Medicine, HHS Secretary Alex Azar proposed requiring drug companies to include the list price of a drug paid for by Medicare or Medicaid in direct-to-consumer television advertising.

“Patients deserve to know what a given drug could cost when they’re being told about the benefits and risks it may have. They deserve to know if the drug company has pushed their prices to abusive levels. And they deserve to know this every time they see a drug advertised on TV,” said Azar.

The proposal, first mentioned in the release of the American Patients First blueprint back in May 2018, comes on the heels of President Trump’s signing 2 pieces of legislation last week aimed creating transparency around drug pricing for consumers at the pharmacy.

Azar went on to say that pharmaceutical companies often argue that disclosing the list price would be unhelpful, given that “list prices are often meaningless” due to the price not accounting for any discounts a patient may get, not to mention any coverage from his or her insurance plan.

Azar took issue with this claim, explaining that “List prices are meaningful to every American senior on Medicare Part D, who pay coinsurance for drugs as a share of list price for specialty and non-preferred drugs,” he said. “They mean a lot to the almost half of Americans under age 65 who have a high-deductible health plan…list prices matter to American patients. I’ve heard it personally from patients myself, and so has the president.”

Prior to the speech, industry trade group the Pharmaceutical Research and Manufacturers of America (PhRMA) announced that it will launch “a new platform that will provide patients, caregivers, and providers with cost and financial assistance information for brand-name medicines, as well as other patient support resources.” Specifically, PhRMA has stated that all TV advertisements will include a link to a website with financial information about the product, rather than the list price itself.

“The administration and Congress have called on our industry to provide cost information in [direct-to-consumer] advertisements, and our members are voluntarily stepping up to the plate,” said Stephen Ubl, president and CEO of PhRMA.

Azar, for his part, does not believe PhRMA’s solution is enough. “It is no coincidence that the industry announced a new initiative, today, that will help make price and cost information more accessible. We appreciate their effort,” said Azar. “But placing information on a website is not the same as putting it right in an ad, and it’s taken them 5 months since the president’s blueprint [to act].

According to Ubl, disclosing the list price in TV advertisements may discourage patients from seeking needed medical care. He also noted that if a requirement was implemented to disclose such information it would “raise significant legal issues, including First Amendment concerns.”

Azar was firm in his point that HHS will take action and will not wait for an industry with “conflicting” and “perverse” incentives to implement its own reform. Instead, “When we change the rules, the market players will reorganize their businesses to fit the new world. And it will be a very different world for American drug pricing.”