DTC Advertising

“List Prices in DTC Ads” Proposal Reintroduced After Aduhelm Pricing Decision

June 29, 2021 – In the wake of the FDA granting a controversial accelerated approval for Biogen’s aducanumab (Aduhelm) – and Biogen’s decision to set the list price for the drug for Alzheimer’s disease at $56,000 per year despite equivocal evidence of efficacy – members of Congress are introducing drug pricing legislation, calling for hearings, and revisiting the proposal to require including list prices in direct-to-consumer (DTC) prescription drug advertisements that industry opposed in the recent past.

In a June 23 Coalition for Healthcare Communication (CHC) Industry Leaders Alert, CHC Executive Director Jon Bigelow stated that Biogen “in effect waved a red flag in front of a herd of bulls” with its decision on pricing.

“The aggressive pricing for Aduhelm, at a level that is hard to justify based on clinical trial results and that poses a major burden on Medicare, has put the prescription drug price issue back on the front burner in Congress,” according to Bigelow. “In particular, the idea of requiring list prices in DTC ads –which creates an illusion of transparency even though list prices have little relationship to what most patients actually pay, while also raising significant First Amendment issues – is back and could easily be folded into one of the large legislative packages now being debated in Congress.”

Democrats in both the House and Senate were already working on proposals for limiting drug prices, including HR 3, a broad bill that first passed in the Senate in 2020, and a new initiative by Sen. Ron Wyden (D-Ore.) to win bipartisan backing for a more moderate proposal. Meanwhile, Sen. Chuck Grassley (R-Iowa) is promoting a drug pricing bill that he shepherded through the Senate Finance Committee last year by a large margin, and last week several other Republicans, led by Sens. Mike Crapo (R-Idaho) and Richard Burr (R-N.C.) reintroduced their own proposal. While the Grassley and Crapo-Burr proposals do not include Medicare negotiations on drug prices, “they suggest there could be enough Republican votes for action on drug pricing to break a filibuster,” Bigelow noted.

Now, Sens. Elizabeth Warren (D-Mass.) and Bill Cassidy (R.-La.) are calling for hearings in the Senate Finance Committee about the Aduhelm approval and pricing, and Reps. Carolyn Maloney (D-N.Y.) and Frank Pallone (D-N.J.) are calling for hearings on Aduhelm in the House Oversight and Reform Committee.

And on June 24, Sen.  Grassley  joined Sen. Rick Durbin (D-Ill.) and Sen. Angus King (I-Me.) to introduce the Drug-price Transparency for Competition Act (DTCA), a bill that would require price disclosures on prescription drug ads “In order to empower patients and reduce spending on medications,” according to a press release on the bill.

This is an approach similar to that proposed by former President Donald Trump in 2018. At the time, the Coalition argued that – taking into account the impact of insurance plans, formularies, copays and deductibles, PBM rebates, negotiated discounts, patient assistance programs, and other factors – the list price is a highly misleading metric for drug cost. Although the approach would not offer true transparency, it may discourage patients from having important conversations with their health care providers about possible diagnoses and available therapies.

Further, to require advertisers to include list prices in advertising flies in the face of First Amendment protections against what, in legal parlance, is termed “compelled speech.” The Trump proposal was blocked by federal courts.

The three senators sponsoring the DTCA legislation shared comments about drug pricing that show the mood in Congress. “Knowing what something costs before buying it is just common sense,” Grassley said. Durbin noted that “Patients deserve to know the price, and a dose of transparency is the prescription Pharma needs,” and King stated that “Continuing to advertise these medications without prices creates challenges for patients trying to make informed decisions about their medical care.” However, they did not address the objections raised against the earlier proposal.

On its face, it seems the Aduhelm situation in many ways is a self-inflicted wound. Biogen’s actions in pricing the drug disregarded most market analyst expectations – as well as the Institute for Clinical and Economic Review’s estimate that a reasonable price would be $2,500 to $8,300 per year, magnitudes less than the current price tag. The need for PET scans to identify candidates, monthly infusion visits, and MRI scans to monitor for Aduhelm’s side effects adds roughly $30,000 in costs the first year and $15,000 in each subsequent year. Given the broad indication granted by the FDA and the lack of other effective therapies, potentially millions of Americans will take Aduhelm—for years.

Market analysts estimate that the drug’s burden on Medicare would range from $6 billion (Cowan) to $29 billion (Kaiser Family Foundation) per year. “This could dwarf the $7 billion spent in 2019 on the drug currently most costly to Medicare (Eliquis); the upper end of the range would match the total spent on the top seven drugs combined,” Bigelow reported. “Plus, Medicare patients lacking supplemental insurance will be responsible for 20 percent of the drug’s cost: $11,200 per year.”

The backlash to the Aduhelm decision does not bode well for pharmaceutical companies. “Biopharma has happily watched its public reputation improving on the heels of the rapid and successful development of COVID-19 vaccines,” Bigelow said in the CHC alert, “but the pricing decision by one company for this one drug may have offset much of the goodwill, at least in Congress.”