Under a major change drafted as a new federal rule, drug manufacturers would need to state the list price of a 30-day supply of any drug that is covered through Medicare and Medicaid and costs at least $35 a month.
WASHINGTON – The nation’s top health official proposed on Monday that pharmaceutical companies be required to include the list price of medicines in television advertisements to consumers – the boldest in a series of efforts by the Trump administration to curb rampant drug spending.
Under a major change laid out by Health and Human Services Secretary Alex Azar and drafted as a new federal rule, drug manufacturers would need to disclose in ads the list price of a 30-day supply of any drug that is covered through Medicare and Medicaid and costs more than $35 a month.
“Sometimes it takes government to make the first move, to disrupt a broken system, and to lay down new rules of the road,” Azar, typically an advocate of market-based approaches, said in a speech Monday before the National Academy of Medicine.
The proposal intensifies a tug of war between the pharmaceutical industry and an HHS secretary who emerged from its ranks and has striven to dispel any perception of alignment with his former drugmaker colleagues. The draft rule will now be debated through the fall, and its likelihood of becoming an actual requirement will hinge, in large part, on the intensity of the industry’s resistance.
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While some health policy researchers are skeptical that disclosing drug prices in television ads would change consumer behavior and doctors’ prescribing habits, the proposal drew immediate praise from unlikely bedfellows.
Health insurers’ main trade group commended the administration “for taking such bold action” to combat “out-of-control” drug prices. The American Medical Association lamented the existence of direct consumer advertising of medicine but said in a statement that “as long as the practice is allowed, the ads should come with at least a small dose of transparency.”
Praise came from both Sens. Dick Durbin, D-Ill., and Chuck Grassley, R-Iowa, who had jointly sponsored a similar bipartisan measure that passed that chamber this year but died in the House.
The proposed regulation is the latest effort by the Trump administration and some members of Congress to rein in drug spending. Proponents say that compelling drug companies to disclose the list prices of medicines in television ads would prompt consumers to become more price sensitive, in turn slowing the rise in pharmaceutical charges that have been a main driver in recent years of the United States’s uncommonly high health-care spending.
Hours before the HHS secretary’s speech before the National Academy of Medicine, the major pharmaceutical lobbying group announced a new voluntary action that would, instead, direct consumers to company websites with pricing information. The move by the industry, to begin by April 15, would give patients a variety of pricing information, including the list price of a drug, the expected out-of-pocket costs of the drug and the patient assistance programs available.
The announcement by PhRMA, the Pharmaceutical Research and Manufacturers of America, was seen by experts as an attempt to fend off more aggressive federal regulation. In his speech, Azar denounced the industry’s effort to blunt federal intervention.
The secretary made an analogy between disclosing drug prices in ads to a 1950s-era rule that requires automobile companies to post their cars’ sticker prices. “Despite the ample precedent for this common-sense measure, the pharmaceutical industry has resisted it fiercely,” the secretary said. Calling the timing of PhRMA’s announcement “no coincidence,” he said, “placing information on a website is not the same as putting it right in an ad.”
Steve Ubl, president of PhRMA, argued that disclosing the list price of a medication in a television ad would be “very confusing, misleading, lacks appropriate context and isn’t what patients want or need.” He predicted that the list price might deter patients from seeking medical care.
Ubl said that the administration’s proposed rule raised First Amendment concerns – signaling that, if the proposal becomes final, a protracted legal fight might ensue between the government and one of the nation’s most powerful lobbies.
In a briefing for reporters after Azar’s speech, senior federal health officials disputed the idea that the rule could be found unconstitutional, saying that the Supreme Court has upheld the government’s authority to ensure that consumers receive accurate information.
Pharmaceutical companies are now required in ads to specify side effects to drugs but not to describe what the medicine costs.
The officials, speaking on the condition of anonymity, said that, during a 60-day comment period, they would welcome suggestions about whether to expand the price-disclosure requirement to drug ads beyond those on television. For now, the proposal calls for the price to be written in a type size that is legible to television-watchers and would not require the price to be said aloud.
The requirements would apply to all prescription drugs that are covered by Medicare or Medicaid, regardless of whether they are manufactured within the United States, the officials said. They said that, between the two government insurance programs, virtually all pharmaceuticals are covered.
Drugmakers that violated the price-listing rule would be penalized by being named on a list issued by HHS – and possibly by legal action, the officials said.
Rachel Sachs, an associate professor of law at Washington University in St. Louis School of Law, said that it is unclear how or why disclosures would reduce drug prices. “The administration has not yet advanced a theory for how that’s likely to happen, and we’ve seen many times that shaming companies for their high prices publicly doesn’t cause them to lower their prices.”
The senior health officials said that they had not tried to estimate “any numerical percent impact” on drug spending but predicted that disclosing prices would have a beneficial effect.