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HHS Wants to Shame Drug Companies into Curbing List Prices

— Would require list prices in direct-to-consumer advertisements

Last Updated October 17, 2018
MedpageToday

WASHINGTON -- Drug companies would have to include the list price of any drug paid for by Medicare or Medicaid in their TV advertisements if a new proposed rule from the Trump administration is implemented.

Secretary of Health and Human Services Alex Azar announced the change as part of the administration's latest action to curb drug prices, during a National Academy of Medicine (NAM) event on Monday afternoon.

"Patients deserve to know what a given drug could cost when they're being told about the benefits and risks it may have.... They deserve to know if the drug company has pushed their prices to abusive levels, and they deserve to know this every single time they see a drug advertised to them on TV," he said.

The proposal would require ads to disclose a drug's list price if it is more than $35 for a month's supply or for the usual course of therapy "with the prices updated quarterly," noted an .

Drug companies like to say that list prices are "often meaningless," Azar said -- presumably because of rebates and coupons provided to patients and because insurers often cover a portion of patients' costs -- but he disagreed. Medicare Part D plans frequently include co-pays for specialty and non-preferred drugs, Azar said. Also, nearly half of Americans under 65 have high-deductible plans under which patients may have to pay thousands of dollars for drugs before insurance kicks in. He also argued that drug companies have "fiercely" resisted sharing such information.

While the Pharmaceutical Research and Manufacturers of America (PhRMA) issued a earlier that same day regarding a new approach to direct to consumer advertising that it believes will increase transparency around drug costs, Azar was unimpressed.

"We appreciate their effort. But placing information on a website is not the same as putting it right in an ad," he said, underscoring the 5-month lag following President Trump's blueprint on drug prices in May.

PhRMA's "voluntary" efforts can complement but not replace the Trump administration's proposal, he said.

Azar also hinted at possible future actions by the administration such as rethinking the drug industry's "opaque system of rebates."

If market players don't act, "we have the power to redesign the system for them," he threatened.

Azar noted that many of the administration's efforts mirror recommendations from the NAM's own 2017 report, "."

The FDA is already following the academy's call to stop drugmakers from misusing the agency's Risk Evaluation and Mitigation Strategy requirements in order to prevent generics from reaching the market.

He also lauded the FDA for approving a record number of generic drugs in FY 2018 -- even more than in 2017, Azar said.

Azar said the administration is seeking ways to achieve "more effective negotiation" in a manner that preserves patient safety and access. In August, the Centers for Medicare and Medicaid Services (CMS) announced it would allow Medicare Advantage plans to apply a "step therapy" approach to plans, which would require patients to try one clinically appropriate drug before moving to a more expensive one.

"There's plenty of room to update our programs and increase negotiating power," Azar said, particularly in Medicare Part B "where there's currently no negotiation ... Medicare gets the bill and we pay it."

But he clarified that "negotiation tools will only be as common as patients want," stressing that Medicare Advantage plans that leverage step therapy, for example, would include "exit rights" allowing members to choose other plans up to a certain date.

Azar also highlighted his role in directing the FDA to create a working group to identify ways to import sole-source drugs whose prices have risen dramatically. While this step was not included in the president's blueprint, it fits with the document's key principles of potentially bringing down costs without harming patient safety, he said.

"But we will go beyond the four corners of the blueprint if we need to. Any ideas that could bring down costs while respecting innovation and patient choice are on the table," he stressed.

The American Medical Association said it remains opposed to direct-to-consumer advertising for prescription drugs, but if the practice is going to continue, including "at least a small dose of transparency" seems reasonable, said AMA President Barbara McAneny, MD, in a .

"While this proposed rule alone won't remove the often-misleading nature of prescription drug ads, it will give consumers a data point that is currently unavailable. That is a step in the right direction," McAneny said.

The Pharmaceutical Care Management Association (PCMA), also lauded the administration's actions. "We believe that list prices of drugs should be included in drug manufacturers' communications with prescribers to help patients make informed treatment choices."

"The most direct way to reduce costs and improve access to prescription drugs is for drugmakers to cut their prices, and we look forward to working with the Administration and Congress to accomplish this goal," said.