Last month, the U.S. Department of Health and Human Services (HHS) finalized the new rule that would require pharma companies to include drug prices in their DTC TV ads starting on July 9th. More specifically, the rule from the Centers for Medicare & Medicaid Services (CMS) requires the inclusion of the list price—the Wholesale Acquisition Cost—for prescription pharmaceuticals covered by Medicare or Medicaid if that price is equal to or greater than $35 for a month’s supply or the usual course of therapy.
Johnson & Johnson is one pharma company that got ahead of this by already listing the price of its blood thinner Xarelto in a DTC TV ad that came out in March. While that ad did include the list price of $448 per month, it also noted that most patients’ out-of-pocket costs would range between $0 to $47 per month and directed people to the Xarelto website for more specific pricing information.
Pharma’s Opposition to New Rule
However, not all pharma companies are willing to embrace this new rule so easily. On June 14th, Amgen, Merck & Co, Eli Lilly and Co, and the Association of National Advertisers filed a joint lawsuit in the U.S. district court for the District of Columbia that would challenge this new regulation. Furthermore, they filed a motion to delay the rule until the case is decided. The court set a hearing to decide on the motion on July 2nd and the judge plans to make a decision by July 8th—one day before the rule would go into effect.
A statement released by Amgen explains the companies’ reasoning behind the suit: “Not only does the rule raise serious freedom of speech concerns, it mandates an approach that fails to account for differences among insurance, treatments, and patients themselves, by requiring disclosure of list price. Most importantly, it does not answer the fundamental question patients are asking: ‘What will I have to pay for my medicine?’”
The trade association PhRMA raised similar concerns when CMS first proposed this new rule back in October 2018. In a statement, PhRMA said, “As CMS has acknowledged, list-price disclosures in DTC advertisements may give Medicare and Medicaid beneficiaries the false impression that they are required to pay the full price, rather than a copay or coinsurance. For these beneficiaries, list-price disclosures in DTC advertisements could mislead patients, deter them from seeking needed medical treatment, and reduce their adherence to prescribed medication regimens, which would worsen health outcomes and increase the total cost of care.”
Instead, they had proposed revised voluntary Guiding Principles on Direct-to-Consumer Advertisements that all PhRMA member companies would follow. As part of those guidelines, DTC TV ads would “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.”
Meanwhile, in response the latest lawsuit from drug companies, HHS spokeswoman Caitlin Oakley told Reuters in an email statement: “If the drug companies are embarrassed by their prices or afraid that the prices will scare patients away, they should lower them. President Trump and Secretary Azar are committed to providing patients the information they need to make their own informed healthcare decisions.”
Patients’ Support of Price Transparency
Since this new rule is supposed to benefit patients, what do they think about it? WEGO Health, which has the world’s largest network of Patient Leaders, asked them. In a survey of 550 patients, approximately one-third were aware of this new federal rule prior to the survey. And 81% of all of the respondents—even those initially unaware about the rule—believe it will help consumers make informed decisions that minimize their out-of-pocket costs for prescription drugs.
Furthermore, patients are just generally in favor of more price transparency from pharma. While 7 in 10 patient KOLs say that they believe pharma companies are “not at all” transparent about out-of-pocket costs for drugs they advertise, 76% of them feel drug price transparency is “extremely important” to the average consumer. And the vast majority (90%), think that price transparency will ultimately spur consumers to seek out lower-cost alternatives.