HHS Rule Requires Drugmakers to Display Prices in TV Ads
Abstract
It’s unclear how the rule will lead to lower prescription drug prices for patients or the government. Drugmakers are likely to sue.
Consumers will start seeing monthly list prices displayed during all TV commercials for prescription medications as a new Trump administration rule takes effect July 9.
Rachel Sachs, J.D., a health policy and drug law specialist, says the Trump administration’s new rule requiring prices to be displayed in prescription drug commercials won’t likely lower rising drug prices or help patients.
The final rule applies to all TV commercials for prescription medications priced at more than $35 a month and covered by Medicare or Medicaid. In practice, the rule will likely apply to all TV drug ads: The 10 most heavily advertised prescription drugs have monthly list prices from $488 to $16,938 for the usual course of therapy, the Department of Health and Human Services (HHS) wrote in a fact sheet.
Drugmakers spent $3.7 billion in 2018 on TV ads, with the amount of overall revenue allocated to marketing growing by 30% from the previous year.
The final rule is part of the Trump administration’s blueprint for lower prescription drug prices; it calls for boosting competition, enhancing negotiation, creating “incentives” for lower list prices, and reducing out-of-pocket spending.
“It’s hard to see how adding the list price to a TV commercial could truly help consumers when their out-of-pocket costs vary so widely from insurer to insurer,” said Patrick Runnels, M.D., chair of APA’s Council on Advocacy and Government Relations. His patients sometimes get sticker shock when filling their prescriptions and either won’t pick up a needed medication or call back and ask for something less expensive, he added.
“Cost is an impediment to patients getting good care,” Runnels said. “We should be ensuring in our practice and when training psychiatrists that we focus on population health and making sure we offer people the best treatment that is also the most affordable to them.”
Rachel Sachs, J.D., an associate professor of law at Washington University in St. Louis and a specialist in health policy and drug law, agreed the rule is unlikely to help patients or have much impact on drug prices. “The administration does not make it clear how displaying prescription prices on TV is going to result in lower prices for consumers—or how it’s going to lower costs for the federal government,” she said.
The final rule is likely to trigger lawsuits by the pharmaceuticals industry, Sachs added.
David Mitchell, founder of independent consumer group Patients for Affordable Drugs Now, echoed this sentiment. “It is useful to give patients and consumers more information about prices of prescription drugs,” he said. “List prices are important because about two-thirds of Americans pay for some or all of their drugs based on list price. But there is no evidence that putting prices on direct-to-consumer advertising will lower the prices of drugs.”
Nearly half of consumers have high-deductible health plans for which they must pay the list price for prescription medication until they have spent through their deductible. An increasing number of Medicare Part D plans also have a deductible.
Sachs said one way the rule might lower drug prices is if patients see the list price for a particular drug on TV and then decide it is too expensive for them and choose not to see their physician or ask about a prescription for a particular medication. “So they may not get a drug they need,” she said. “But it’s too early to know how big of an impact the rule will have on patient requests for a particular prescription medication.”
The Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group representing drugmakers, opposes the rule, saying it raises First Amendment and statutory concerns. After the rule was proposed in May 2018, PhRMA members voluntarily began directing patients to websites that contain cost information and include a search tool to help patients connect to financial assistance programs.
This is the Trump administration’s first final rule aimed at lowering drug prices. “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 health care they receive,” said HHS Secretary Alex Azar.
Under the final rule, drugmakers may also include a statement that reads, “If you have health insurance that covers drugs, your costs may be different.” The primary enforcement mechanism of the rule will be the threat of private lawsuits, according to the rule. ■
The final rule can be accessed here.
