By Robert Pear
Oct.
15, 2018
WASHINGTON — Over
vehement objections by drug companies, the Trump administration proposed on
Monday a new federal regulation that would require them to disclose the list
prices of prescription drugs in their television advertisements.
The proposal sets the
stage for a battle with the pharmaceutical industry, which said the requirement
would be a form of “compelled speech” in violation of the First Amendment.
“Patients deserve to
know what a given drug could cost when they’re being told about the benefits
and risks it may have,” Alex M. Azar II, the secretary of health and human
services, said in a speech at the National Academy of Medicine. “They deserve
to know if the drug company has pushed their prices to abusive levels.”
Mr. Azar compared the
proposed rule to longstanding requirements for automakers to disclose sticker
prices.
“You buy a car every
once in a while,” Mr. Azar said. “But millions of American patients buy
expensive drugs every month. And a year’s worth of the most advertised drugs,
mind you, can cost more than a car.”
The chief lobby for
the drug industry, the Pharmaceutical Research and Manufacturers of America,
announced earlier on Monday that its 33 members would voluntarily include
information in TV ads directing viewers to company websites where they could
find data on list prices and estimates of the typical out-of-pocket costs for
patients.
Mr. Azar said that
this was “a small step in the right direction,” but that voluntary action was
not enough. “The drug industry remains resistant to providing real transparency
around their prices, including the sky-high list prices that many patients
pay,” Mr. Azar said.
Stephen J. Ubl, the
president and chief executive of the drug makers’ lobby, known as PhRMA, said
the industry’s proposal was much more feasible. To require the disclosure of
list prices in TV commercials would be “very confusing and misleading, lack
appropriate context and isn’t what patients want or need,” he said.
The Centers for
Medicare and Medicaid Services proposed the new rule under federal laws that
govern the two huge health programs, which between them cover nearly all
prescription drugs, officials said.
The proposed rule
would apply to any drug if the list price, also known as the wholesale
acquisition cost, was greater than $35 for a month’s supply or for the usual
course of therapy. The 10 most commonly advertised drugs have list prices
ranging from $535 to $11,000 for a month or for a course of therapy, the
administration said.
Asked about
enforcement, federal officials said they would maintain a public list of drug
products found to be in violation of the price disclosure requirement. But, the
proposal says, the “primary enforcement mechanism” would be the threat of
lawsuits under a 1946 law known as the Lanham Act, for unfair competition in
the form of false or misleading advertising.
The proposed
requirement would not apply to drug advertising in magazines and newspapers or
on websites or social media.
The public will have
two months to comment on the proposal. The government will consider the
comments before issuing any final rule with the force of law.
The list price is
generally understood to be the sticker price set by a drug manufacturer, before
discounts and rebates to middlemen and financial assistance to patients.
Drug company
executives and some consumer advocates say that the disclosure of list prices
in ads, without more information, could perversely discourage patients from
considering helpful medicines, especially those with high price tags.
Moreover, the price
that patients pay depends on many factors: Do they have insurance? Have they
met the deductible? Is the drug on the insurer’s list of preferred medicines?
Federal officials
said the list price was meaningful because patients, including Medicare
beneficiaries and people with high-deductible health plans, often pay the list
price or a price based on it.
Under the proposal,
drug companies would have to disclose price information “in a legible textual
statement” at the end of each TV ad. The statement would have to appear on the
screen long enough, in large enough type, so that it could easily be read.
The proposed rule
would carry out ideas set forth in May in Mr. Trump’s blueprint to lower drug
prices, but it is a sharp departure from his usual efforts to promote
market-based solutions and slash federal regulations.
Under the PhRMA
proposal, drug prices would not necessarily appear in ads, as Mr. Trump wants.
The group’s member
companies voluntarily endorsed a declaration of principle stating, “All
direct-to-consumer television advertising that identifies a medicine by name
should include direction as to where patients can find information about the
cost of the medicine, such as a company-developed website, including the list
price and average, estimated or typical patient out-of-pocket costs, or other
context about the potential cost of the medicine.”
It is unclear how
useful the information would be to consumers. Each company would disclose the
prices of its advertised products on its own website.
Holly Campbell, a
spokeswoman for PhRMA, said, “A given product may have different list prices
depending on the dosage of a medicine, and companies will have to determine how
to report a list price if this is the case.”
It may therefore be
difficult for patients to compare the prices of similar drugs.
James C. Stansel, the
general counsel for PhRMA, said that any effort by the government to force drug
makers to disclose prices in their ads would be subject to legal challenge. “If
the government is compelling companies to speak, that violates the First
Amendment,” Mr. Stansel said.
It is not unusual for
drugs now to cost $50,000 or $100,000 a year. Mr. Azar said Mr. Trump was
determined to bring “price transparency” to the market in an effort to
stimulate competition and overturn the current convoluted, opaque system in
which everyone but the consumer benefits from higher prices.
Ben Wakana, the
executive director of Patients for Affordable Drugs, a consumer group,
supported the administration’s effort, but said: “Disclosing list prices in ads
does not lower drug prices. There is no evidence that providing patients and
consumers access to list prices will result in lower prices.”
A version of this
article appears in print on Oct. 15, 2018, on Page B6 of the New
York edition with the headline: Rule Would Compel Drug Makers To
Disclose Prices in Commercials.
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