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Drugmakers may have to disclose medicines' prices in their TV commercials

Drugmakers may have to disclose medicines' prices in their TV commercials
Health and Human Services Secretary Alex Azar, who has strived to dispel any perception of alignment with his former drugmaker colleagues, explained the proposal to require drug price disclosures in commercials. (Alex Wong / Getty Images)

The nation's top health official proposed Monday that pharmaceutical companies be required to include the list price of medicines in advertisements to consumers — the boldest element in a series of efforts by the Trump administration to curb 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 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.

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"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 shift, which will now become fodder for months of debate before the proposed rule change takes final form, intensifies a tug-of-war between the pharmaceutical industry and a Health and Human Services secretary who emerged from the industry’s ranks and has strived to dispel any perception of alignment with his former drugmaker colleagues.

The proposed regulation is the latest effort by the Trump administration and some members of Congress to compel drug companies to disclose the list prices of medicines in television ads — a strategy that would test proponents' premise that consumers would become more price sensitive, in turn slowing the rise in pharmaceutical charges that in recent years have been a main driver of the United States’ uncommonly high healthcare spending.

Hours before the HHS secretary's speech, the pharmaceutical industry’s major lobbying group announced a new voluntary action that would instead point viewers of TV commercials to company websites with pricing information.

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. Azar released a statement before his speech, saying that "the drug industry remains resistant to providing real transparency around their prices" and that the government needed to go beyond what he called the industry’s "small step in the right direction."

The industry has also faced pressure from Congress. A bipartisan proposal that would have required drug prices to be included in TV ads passed the Senate but was removed from a House appropriations bill last month.

The voluntary action by the industry, which will go into place 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.

Steve Ubl, president of PhRMA, argued that disclosing only 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 price — which wouldn't reflect what most people would pay, because patients’ out-of-pocket costs vary depending on their insurance plans — might deter patients from seeking medical care.

Rachel Sachs, an associate professor of law at Washington University in St. Louis School of Law, said it is unclear how or why the disclosure of prices in ads would reduce drug prices.

Still, "What PhRMA is doing here is obviously an attempt to preempt some of the public concern," Sachs said. "Realistically, how many patients are going to the website? And if they do go, the additional pieces of information could be even more confusing."

Many questions remain about the website approach: The "list price" of a drug can vary depending on the dosage and formulation of a medicine, and companies would have to choose how to report the price in that case. The out-of-pocket costs of medicines can vary depending on a patient's plan, sometimes ranging from zero to the full price of the medicine, so it is unclear how meaningful an estimated price range or average cost would be to patients.

Ubl said during a press call that there would be potential 1st Amendment and legal concerns if the administration were to put forward a rule that required pricing information to be in an ad, signaling that proposing such a requirement might set up a protracted legal fight between the U.S. government and one of the country's most powerful lobbies.

Sachs said that if the matter does come to a legal fight, it could siphon energy from the administration's larger effort to reduce the cost of medicine, which included a blueprint with dozens of policy ideas.

"It's unfortunate if the agency chooses to spend its legal capital on regulations that don't obviously have an impact on drug pricing," Sachs said. "There are so many actions the administration could take ... that would make a significant difference for patients."

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