HHS Finalizes Rule Requiring Disclosure of Drug Prices in TV Ads

The Trump administration on Wednesday announced a final rule requiring drug manufacturers to disclose drug prices in television ads for drugs covered by Medicare or Medicaid if the wholesale acquisition cost is $35 or more for a month’s supply. According to HHS, the 10 most commonly advertised drugs come with list prices ranging from $488 to $16,938 per month or usual course of therapy. The rule will go into effect 60 days after being published in the Federal Register.

“Requiring the inclusion of drugs’ list prices in TV ads is the single most significant step any administration has taken toward a simple commitment: American patients deserve to know the prices of the healthcare they receive,” said HHS Secretary Alex Azar in a statement.

The administration first introduced the proposal almost exactly a year ago when President Donald Trump revealed his blueprint for bringing down drug costs. Today’s finalized rule marks the first rule implementing a portion of the blueprint.

“If there’s one thing I want you to remember about the action we took today, it’s that requiring drug companies to level with American patients about their prices is about working toward a system where the patient—not the insurer, not the drug company, not the government, but the patient—is the one in control of her healthcare,” Azar said. “We’re moving from a system where patients are left in the dark to where patients are put in the driver’s seat.”

Currently, he explained, some drug ads mention that a patient’s co-pay may be $0, but that’s only if the patient has insurance that covers the drug. In many cases, patients may actually be responsible for the entire list price, especially with the rise of high-deductible plans. “Claiming list prices don’t matter is almost the same thing as claiming there’s no problem with high drug costs at all, and I don’t think many American seniors of patients with serious illnesses would say that’s the case,” said Azar.

“If a drug company is afraid that their prices are so excessive and abhorrent that they will scare patients away from using their drugs, they ought to look inside themselves and think about whether they should be lowering their prices,” he added.

As 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. According to Azar, while he expects the rule will put pressure on drug manufacturers to lower prices, there is no available data to estimate savings generated from the rule.

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. It’s a fundamental right to know whether the drug they’re being pitched is $50 or $5000 before patients spend the time and money to go to their doctor and ask about the drug, he said.

Johnson & Johnson has already taken the lead on the measure, including the $448 list price of Xarelto in its ads starting late March. The ad also mentions that most patients pay between $0 and $47 a month, depending on insurance coverage. According to the drug maker, 75% of patients pay within that range.

Following the announcement, Matt Eyles, president and chief executive officer of America’s Health Insurance Plans, issued a statement praising the decision. He said, “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.”

Meanwhile, 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."