CMS will require drugmakers to list prices in ads

(Updated at 6 p.m. ET)

The CMS plans to require prescription drug manufacturers to their list prices in direct-to-consumer television advertisements, according to a proposed rule released Monday.

Under the proposed rule, drugmakers will have to post the price of a typical course of treatment for acute medications like antibiotics or for a 30-day supply of medications for chronic conditions. Consumer ads will have to have a readable, text statement at the end to comply with the mandate.

"This historic proposal is an important way to create new incentives for drug companies to start lowering their list prices, rather than raising them," HHS Secretary Alex Azar said in a statement. "President Trump's drug-pricing blueprint called for HHS to consider how to accomplish this goal, and now we are following through on this measure to better inform patients, help them lower their drug costs, and reduce unreasonable spending in Medicare and Medicaid."

The rule requires the HHS secretary to maintain a public list of drugs that violate the rule. Drugs with list prices under $35 per month will be exempt from the requirement.

The CMS requested comments on whether the regulation should apply to radio, web, print or social networking advertising as well.

The agency estimates that 25 pharmaceutical companies will be affected by this rule, and they run an estimated 300 distinct pharmaceutical ads on television each quarter. Complying with the rule will cost drugmakers $5.2 million in its first year and $2.4 million in subsequent years.

Pharmaceutical Research and Manufacturers of America (PhRMA) executives on Monday morning pre-empted the Trump administration's announcement by outlining their own voluntary plan to direct people to online drug price information through their direct advertising, and hinted they would sue if they are required to do anything further.

On a call with reporters, PhRMA executives made it clear they believed a government mandate on drugmakers to disclose only the full list prices directly in their television ads would violate the First Amendment as "compelled speech." They announced that PhRMA member companies have agreed to direct consumers who are watching their ads to a website that would include the specific drug's list price as well as a range of the potential out-of-pocket costs people would actually pay depending on their insurance plan or eligibility for financial help. That website would have been up by April 15, 2019.

PhRMA President Stephen Ubl wouldn't specify whether companies would need to follow a template for this pricing information, use a large font size or allot a certain amount of time to give website information. He was unequivocal that manufacturers do not want to advertise their list prices alone because it could "discourage patients" from seeking the right drug.

He noted that many patients don't necessarily pay the list price at the counter. Patients said in focus groups that they preferred to be know their actual out-of-pocket costs up front. But anti-trust regulations limit how specific drugmakers can be when it comes to those price details and will offer a range of what the out-of-pocket costs might be, Ubl said.

Robbie Zirkelbach, PhRMA's vice president of public affairs, said each company will have to determine which list price to include on the website since manufacturers may have different numbers for a drug's wholesale acquisition cost depending on the medicine's dosage.

"Companies will determine today what they will determine as the prices," Zirkelbach said. "We as an association can't direct them on how they should list their own prices."

While PhRMA hinted that a government mandate about list price disclosure in consumer advertising would lead to litigation, but declined to confirm whether the association would spearhead a lawsuit.

Azar quickly responded to the PhRMA announcement, stating that the administration would not back off its plan. He said that the White House vision "does not rely on voluntary action."

"The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay," Azar said. "So while the pharmaceutical industry's action today is a small step in the right direction, we will go further and continue to implement the president's blueprint to deliver new transparency and put American patients first."

The American Medical Association praised the Trump administration's move, but AMA President Dr. Barbara McAneny said it won't fix the "often-misleading nature of prescription drug ads" on its own.

"It will give consumers a data point that is currently unavailable. That is a step in the right direction," she said in a statement.

Earlier this summer, major drugmakers slammed the idea of revealing their prices in TV ads after Trump revealed his blueprint to lower drug prices.

"Compelling disclosure of list prices in (direct-to-consumer advertising) likely serves to confuse rather than further inform patients and other stakeholders," Christie Bloomquist vice president of corporate affairs, for AstraZeneca Pharmaceuticals said in a comment letter. "The majority of patients with insurance coverage are not subject to the list price, and patient costsharing is highly variable across individuals who may have different types of healthcare coverage."

Her comments were echoed by other drugmakers. They argue that misleading pricing information may discourage consumers from using medications that could help them or may be affordable thanks to insurance coverage or other factors.

But insurance companies say price transparency provides some benefits.

"Giving consumers pricing information in drug advertising will empower them to have more informed conversations with their doctor about the best approach to improve their health and manage their medical conditions," Matt Eyles, president and CEO of America's Health Insurance Plans said in a comment.