Oct. 17, 2018
The
Trump administration took one of its more combative moves on drug pricing
Monday, when Health and Human Services Secretary Alex Azar introduced a
proposal requiring drugmakers to disclose list prices in television
advertisements.
The
proposal sets up what is expected to be a confrontation between the drug
industry and the federal government. It also raises a slate of legal, political
and regulatory questions that will be debated in the coming months. Here are
five of the most pressing, and what experts are saying about them:
1. Can the administration
actually do this?
HHS
Secretary Alex Azar certainly thinks so. But it’s an open question, according
to legal experts, and one that’s likely to face tests in court.
“There
are significant legal challenges that HHS will have a hard time overcoming, in
particular if the case comes up to the new Supreme Court,” said Chad Landmon, a
partner at Axinn, Veltrop & Harkrider, in an interview with BioPharma Dive.
The
rule is being proposed through the Centers for Medicare and Medicaid Services,
rather than the Food and Drug Administration, which regulates what drugmakers
can say about the safety and efficacy of their products.
HHS
argues that it has the authority to require price disclosures in ads through
the Social Security Act, which tasks it with the “efficient” administration of
the Medicare and Medicaid programs.
The
agency says the rule would help to lower prices and therefore is “necessary”
for efficiently managing those government health programs.
It’s
not a shut-and-closed case, though, said Rachel Sachs, an associate professor
of law at Washington University in St. Louis.
"It's
not obvious that including pricing information in ads is necessary for the
effective administration of this program,” she said in an interview with
BioPharma Dive.
Sachs
also noted the drug industry could argue that Congress gave the FDA authority
to regulate drugmaker direct-to-communication marketing, and not CMS.
2. Would putting prices in
TV ads actually help?
While
restraining drug price growth for consumers is HHS’ goal, several experts
expressed skepticism that such a policy would achieve that.
"In
general, the administration has not explained clearly how the disclosure of
list prices will lead to lower drug prices,” Sachs said.
Leerink's
Geoffrey Porges predicted in an Oct. 16 note the proposal, if enacted,
"would not materially alter the pricing landscape" or lead to
significant price cuts.
David
Mitchell, president of Patients for Affordable Drugs, said in an interview with
BioPharma Dive that he stands with Azar in support of the initiative, citing
the benefits of transparency on list prices. But, he's skeptical of the
proposal's impact on pricing.
"When
all is said and done, doing this will not lower drug prices," Mitchell
said. "There's absolutely no evidence anywhere that putting prices on ads
will make prices come down."
"If
you're doing it to shame pharma," Mitchell continued, "pharma has
already proven over and over again it's happy to be shamed all the way to the
bank."
On
the other side, Leerink's David Larsen speculated the requirement would add
additional pressure to "already heightened scrutiny on ever rising
prices" if it was implemented. This would make drugmakers "less
likely to raise list prices," he concluded.
3. Will PhRMA sue?
It’s
likely. PhRMA, which represents most large pharmaceutical companies, has
strongly resisted including list prices directly in TV ads.
When
the Trump administration first broached the idea earlier this year, the trade
lobby filed a comment indicating it believes any requirement would raise a
number of legal issues, including First Amendment concerns.
PhRMA
CEO Stephen Ubl reiterated that opposition on a call with reporters Monday,
indicating the group continues to see significant problems to a rule compelling
price disclosure.
While
he wouldn’t say definitively whether PhRMA would sue to stop a regulation from
taking effect, it’s clear the administration faces a confrontation with
industry.
Ubl
did note that PhRMA wouldn’t be able to take any legal action until the rule is
finalized. The draft is subject to a 60-day comment period.
The
administration appears to be expecting a challenge, too. In the proposed rule,
Health and Human Services laid out its case for why such a rule would comply
with First Amendment legal precedent.
“It’s
not as if the administration hasn’t been hearing PhRMA’s arguments for months
now,” said Sachs. “They knew they had to prepare for it.”
4. Why did the Trump
administration choose to make this a signature proposal?
The
Trump administration has picked up the pace of its drug pricing initiatives in
2018, but many of its actions are incremental. Given the profile of this
requirement — and the industry’s likely opposition — the policy could become a
defining proposal for the White House’s policy platform.
It’s
worth asking, then, why the administration chose to push this forward.
Frustration
with the industry’s role in addressing rising drug prices could be one factor,
according to Height Capital Markets analyst Andrea Harris. But she also noted
that the rule could be "an attempt to appeal to President Trump's populist
base" before the Nov. 6 midterm elections.
Trump
could claim the announcement as tangible action on prices, and an example of
his administration’s commitment to the issue.
Mitchell
also suggested political motivations could be behind the move, although he said
that’s not necessarily a negative as it shows a political response to a
hot-button issue.
While
experts doubt this initiative will restrain price growth by itself, there’s
widespread acknowledgement that it puts HHS against drugmakers, which have
become the focus of political criticism from both sides.
Choosing
to fight this battle, though, might mean less resources can be spent on pushing
toward other goals, such as reforming rebating or patent law.
5. Which drugmakers would
hate this most?
The
pharma industry spends billions of dollars on TV ads for their drugs. It’s one
of the main channels for direct-to-consumer marketing, alongside the print ads
that fill the pages of the magazines in doctor’s offices everywhere.
Including
drug costs in those TV spots would be an unwelcome addition for companies
already under scrutiny for their pricing practices.
The
discomfort of price transparency, though, would mainly be felt by two dozen or
so large drugmakers who advertise on TV heavily, according to estimates from
HHS.
Pfizer,
AbbVie and Eli Lilly are among the large pharmaceutical companies that have
advertised on TV most heavily through the first nine months of 2018, according
to data from TV analytics firm iSpot.tv.
AbbVie,
for example, is estimated to have spent more than $200 million on ad spots for
its blockbuster drug Humira (adalimumab).
Other
drug brands with more than $100 million in 2018 ad spending include Pfizer’s
Lyrica (pregabalin) and Xeljanz (tofacitinib), Eli Lilly’s Trulicity
(dulaglutide), J&J’s Xarelto (rivaroxaban) and Celgene’s Otezla
(apremilast), according to iSpot.tv data.
Leerink’s
Porges suggested that price disclosure, if enacted, would cause drugmakers to
rethink their approach to marketing.
“It
would result in a wholesale abandonment of video and TV advertising, to the
detriment of what’s left of mainstream broadcast media, but would ultimately
only affect a small handful of products where marketers concluded that the
headaches and embarrassment of list price disclosure were outweighed by the
positive effects of disease treatment or brand awareness,” Porges wrote in an
Oct. 16 note.
https://www.healthcaredive.com/news/drug-prices-tv-ads-unanswered-questions/539817/
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