FDA explores requiring drug price disclosures in commercials

Drug companies on Tuesday claimed the Trump administration may not have the legal authority to make them disclose their products' prices in consumer advertising.

Both President Donald Trump and HHS Secretary Alex Azar have cited the policy proposal as a key strategy to rein in drug prices.

The U.S. Constitution's free speech protections raise legal questions about whether the Food and Drug Administration can compel drugmakers to disclose prices in ads, said Lori Reilly, an executive vice president of the Pharmaceutical Research and Manufacturers of America, said at a health reform panel Tuesday.

FDA Commissioner Scott Gottlieb said at the event that his agency has formed a working group to delve into the legal issues and determine how to best implement the policy.

"That's the first question we're going to look at, is whether we have the ability to compel this kind of speech under our current regulations," Gottlieb said, adding it could take months to determine.

In addition, listing drug prices without context doesn't provide consumers with the full picture, Reilly said. Rebates, discounts or insurance coverage often prevent consumers from paying a drug's list price.

"Part of the fear is that if you're advertising the list price that no one is paying, does it serve as a deterrent for patients," Reilly said. "If they have insurance, they may be paying a co-pay for that and that's the price they're paying, but you wouldn't know that from watching a TV commercial."

Gottlieb conceded that the list price may not be the best barometer for what patients pay. The agency would need to figure out what price drug companies should disclose. The FDA is also exploring whether listing prices in ads should be part of a voluntary code of conduct for drugmakers to advertise directly to consumers.

Reilly also raised concerns about a Trump administration proposal to move some Medicare Part B drugs into Part D to increase the number that fall under the latter program's price negotiating process. The CMS contracts with private health insurance companies to manage Part D benefits and negotiate discounts with drugmakers.

"There are serious concerns with that as beneficiaries now access those medicines at relatively low cost-sharing," Reilly said. "Oftentimes in Part D, the same medicines are subject to 40% coinsurance, so we have concerns about patient affordability and access."

But Gottlieb defended the proposal, noting that times have changed since Medicare Part B reimbursement started paying 6% on top of the average sales price for medications administered by infusion or injection in doctors' offices and hospital outpatient departments.

The formula went into effect in 2006 in response to the Medicare Modernization Act. At that time, drugs in Part B categories didn't have competition, Gottlieb said.

"We're in a much different situation today," Gottlieb said. "I don't think anyone envisioned how competitive these categories would become."

At another event Tuesday, CMS Administrator Seema Verma also praised the idea of moving some drugs from Part B to D.

"Within the Medicare program there are some drugs that are in the Part B program but the competitor is in Part D," Verma said. "So, we are trying to figure out ways to bring these programs together. We know that when we have competition that's going to lower prices."

An edited version of this story can also be found in Modern Healthcare's May 21 print edition.