DTC Advertising

HHS’ Azar Announces Proposed Rule Requiring DTC Ad Price Disclosures

Oct. 16, 2018 – Yesterday morning, the Pharmaceutical Research and Manufacturers of America (PhRMA) announced a program under which member companies would refer patients to online information about medicine costs in direct-to-consumer (DTC) ads. But then yesterday afternoon, Department of Health and Human Services (HHS) Secretary Alex Azar made clear that this effort would not be enough to stave off a proposed rule to require list price disclosures directly  in DTC ads for drugs paid for by Medicare and Medicaid. The proposed rule is slated for publication in the Federal Register on Oct. 18.

“It is no coincidence that the industry announced a new initiative today that will help make price and cost information more accessible,” Azar said to a National Academy of Medicine audience. “We appreciate their effort, but placing information on a website is not the same as putting it right in an ad.”

However, Coalition for Healthcare Communication Executive Director Jon Bigelow contends that drug list price information in DTC ads may not work as HHS intends. “When you need prescription medicine, the list price is only the starting point: what the patient actually pays will vary dramatically” depending on a variety of factors, according to Bigelow.

“To mandate that list prices be included in DTC advertising makes a tempting talking point – it sounds simple, understandable, and pro-transparency,” he said. “The truth is very different.  This mandate will likely mislead more than it clarifies, because the price most patients pay is often far from the list price.” And, he noted, “It will do nothing to lower prices.”

At the National Academy of Medicine meeting, Azar touted President Donald J. Trump’s commitment to providing greater transparency in drug pricing and to reducing drug costs – part of his “American Patients First” blueprint released in May – and stated that the upcoming proposal would provide consumers with drug cost information at the same time that they are told about the risks and benefits the drug may have. Patients “deserve to know if companies have pushed their prices to abusive levels, and they deserve to know this every single time they see a drug advertised to them on TV,” Azar asserted.

An advance copy of the proposed rule states that the purpose of this regulation is “to improve the efficient administration of the Medicare and Medicaid programs by ensuring that beneficiaries are provided with relevant information about the costs of prescription drugs and biological products so they can make informed decisions that minimize not only their out-of-pocket costs, but also expenditures borne by Medicare and Medicaid, both of which are significant problems.” (https://bit.ly/2OwqWJN)

“The proposed regulation reflects how serious the current administration is about addressing high drug prices,” APCO Worldwide Senior Director Wayne Pines told the Coalition. “This proposal is sure to stimulate considerable discussion and debate. Will the information really achieve the desired outcome? Will it discourage patients from taking drugs they need? What prices would be appropriate to post? Does the government have the legal authority to require prices to be included in ads?  The debate will surely be robust and it’s too soon to predict the outcome,” he said.

PhRMA’s voluntary program, “Guiding Principles on Direct-to-Consumer Advertisements About Prescription Medicines,” instructs members to provide greater information on drug prices than HHS calls for — not only the list price, but also data on expected or average out-of-pocket costs, as well as patient assistance programs (for more information, see PhRMA_PatientAffordability_Backgrounder-Alliance_Final). The difference is that this more extensive information and context would be found at company websites, not as a single number in a DTC ad.  Azar immediately discounted the potential of PhRMA’s program.

“The [PhRMA] initiative is a helpful compliment to, but not a substitute for what we’ve proposed today. We will not rely on voluntary action to accomplish our goals,” Azar explained. “Prices are completely opaque and the industry actually makes a point of claiming that their list prices are often meaningless – but that second part isn’t really true. List prices are meaningful to every American senior on Medicare Part D, because they typically have to pay co-insurance – a share of list price – for specialty and non-preferred drugs.”

Azar contended that precedent for mandated price listing in ads has existed for many years, and cited the need for and the continued practice of listing the Manufacturer Suggested Retail Price for automobiles. However, CHC’s Bigelow believes that this analogy falls short.

“If a consumer wants to buy a midsize SUV, there are dozens of models to choose from, differentiating features like styling or horsepower or EPA mileage are understandable to most people, and at the end of the day, any of several models will do,” he said. “If a patient has hepatitis C or HER-positive breast cancer or Fabry’s disease, there are few options, more is at stake, and understanding the differentiators is difficult,” he stated.