Drug prices on TV may cause sticker shock
WASHINGTON — The administration is moving ahead with its proposal to require drug companies to disclose the often sky-high prices of their products in television commercials, despite strenuous objections and the threat of legal challenges by drugmakers and TV broadcasters.
The White House is reviewing the text of a final rule to impose the requirement, contending that the disclosures “will provide manufacturers with an incentive to reduce their list prices by exposing overly costly drugs to public scrutiny.”
President Donald Trump has rolled back dozens of Obama-era regulations affecting financial services, energy and the environment. But he has been willing to impose new rules to rein in what he describes as outrageously high drug prices, and administration officials say these efforts will be politically popular.
In a poll last month by the Kaiser Family Foundation, nearly 9 in 10 Americans said they supported requiring drug companies to include list prices in their advertisements. Democrats and Republicans were equally likely to favor it.
Trump vowed in the Rose Garden of the White House last May that he would “bring soaring drug prices back down to earth.” He said this past week that “prescription drug prices have come down” for the first time in 51 years, crediting Alex M. Azar II, the secretary of health and human services, for the development.
The administration wants drugmakers to disclose the list prices of drugs in television advertisements, and in many ads, the sticker shock could be considerable. Two dosing pens of Humira, AbbVie’s heavily advertised rheumatoid arthritis and chronic plaque psoriasis medication, have an average retail price of $5,684, according to the website GoodRx, which tracks drug prices. Xeljanz, a Pfizer arthritis medication in heavy television rotation, costs about $80 a pill. Cosentyx, a Novartis medication for psoriasis, has a list price that amounts to $67,325 a year, the company said.
Drug companies say such information would be misleading in an advertisement because most consumers pay less than the list price, and they are lobbying the White House in an effort to kill or delay the rule. Officials could not say how long the White House review would take or when the final rule would be in place.
“Requiring list price disclosures could result in increased consumer confusion and may potentially deter patients from seeking care,” Robert W. Jones, a senior vice president for U.S. government relations at Pfizer, said in a recent letter to Seema Verma, the administrator of the Centers for Medicare and Medicaid Services.
Eli Lilly, the pharmaceutical company where Azar was once a top executive, said, “Many patients may incorrectly surmise that they are required to pay the full list price, rather than a co-pay or co-insurance.”
Drugmakers spent nearly $4.5 billion on television advertising of prescription drugs last year, according to Kantar Media, an ad tracking company.
Even some people who desperately want lower drug prices question how effective the disclosure requirement would be.
David Mitchell, the founder of Patients for Affordable Drugs, a nonprofit advocacy group, said that the disclosure of list prices in TV ads could be helpful to patients, but he added: “We have not seen any evidence that it will lower drug prices. We do not believe drug companies will be shamed by public displays of prices.” Mitchell has a blood cancer called multiple myeloma.
Carl E. Schmid II, the deputy executive director of the AIDS Institute, a public policy and advocacy organization, said: “The list price is an inflated price and does not represent what the patient pays, nor for that matter, what the pharmaceutical company receives. In and of itself, it is not a useful figure for patients . ... (Continued on next page)
What they need to know is how much a drug will actually cost them at the time of sale.”
When the Trump administration proposed the price-disclosure requirement last fall, Azar called it a “historic action” to reduce drug prices by providing consumers with more information.
But in the fine print of the proposed rule, the Department of Health and Human Services made some notable concessions. It acknowledged that “Congress has not explicitly provided HHS with authority to compel the disclosure of list prices to the public.”
In addition, while extolling the benefits of “price transparency,” the department said that “consumers, intimidated and confused by high list prices, may be deterred from contacting their physicians about drugs or medical conditions.” This, in turn, “could discourage patients from using beneficial medications” and “potentially increase” the total cost of care, the department said in a preamble to its proposed rule.
Two powerful lobbies, the National Association of Broadcasters and the Pharmaceutical Research and Manufacturers of America, contend that the disclosure requirement would be a form of “compelled speech” in violation of the First Amendment. Their comments on the proposed rule provide a road map for possible lawsuits challenging the mandate.
The required disclosure of list prices has no rational connection to the government’s stated goal of reducing drug prices paid by Medicare and Medicaid beneficiaries, said Rick Kaplan, an executive vice president of the broadcasters association.
James C. Stansel, the top lawyer at the drugmakers lobby known as PhRMA, said there were “other, much less intrusive ways to make cost information available to patients.” For example, he said, Congress could authorize the Medicare agency to disclose list-price data itself, along with cost-sharing information for beneficiaries, on a government-sponsored website.
When the White House issued a “blueprint to lower drug prices” with several dozen ideas last year, it directed the Food and Drug Administration to consider requiring drugmakers to include list prices in advertising. The agency has clear legal authority to regulate drug ads, but it is not issuing the new rule. Rather, it was drafted by the Centers for Medicare and Services.
The Trump administration says this is justified because the agency that runs Medicare and Medicaid is “the single largest drug payer in the nation.”
But its authority is sure to be challenged. Federal law “delegates regulatory power over prescription drug advertising to FDA, not CMS,” Stansel said. Both agencies are part of the Health and Human Services Department.
The drug industry is poised to roll out an alternative to Trump’s plan. PhRMA companies say they will voluntarily include information in TV ads directing viewers to company websites that provide data on list prices, typical out-of-pocket costs and sources of financial assistance for patients who need it. With many drugs now costing more than $50,000 a year, many people do need assistance.
Johnson & Johnson is going further. It plans to disclose the list prices of its prescription drugs, as well as potential out-of-pocket costs, in television ads.
It will start in the next couple of weeks with its most widely prescribed medicine, Xarelto, a blood thinner, which has a list price of $448 a month.
The administration plan to require disclosure of drug prices is supported by the American Medical Association, the American Hospital Association, and America’s Health Insurance Plans.