HHS Finalizes Rule Requiring Prices in TV Drug Ads

Kerry Dooley Young

May 08, 2019

Pharmaceutical companies will have to include information in their television ads about the cost of products if they cost $35 or more for a course of treatment or for a month's supply if a medicine is taken long term, the Trump administration announced today.

The Department of Health and Human Services (HHS) on Wednesday said it finalized a rule that establishes this requirement for prescription drugs covered by Medicare or Medicaid. That classification covers virtually the entire pharmaceutical market in the United States.

For the ads, the list price will be pegged to the wholesale acquisition cost, HHS said. The rule will appear soon in the Federal Register and will take effect 60 days after publication there.

Drugmakers spent more than $5.5 billion on prescription drug advertising in 2017, including nearly $4.2 billion on television advertising, HHS said.

The trade group for drugmakers, the Pharmaceutical Research and Manufacturers of America (PhRMA), on Wednesday criticized the rule. In a statement, PhRMA CEO Stephen J. Ubl said the posting of prices could confuse patients and discourage them from seeking needed medical care.

On a call with reporters, HHS Secretary Alex Azar had a clear rebuttal regarding the PhRMA's concerns. A former top executive at Eli Lilly, Azar advised his former industry colleagues to "level with people" about the cost of medicines.

"Put it in the TV ads. Patients have a right to know," Azar said. "And if you're ashamed of your drug prices, change your drug prices. It's that simple."

Enforcement

With this rule on direct-to-consumer (DTC) ads, HHS is counting on pharmaceutical companies to police their rivals.

The US Food and Drug Administration (FDA) already keeps an eye on drug promotion, looking for instances in which companies underplay the risks or misrepresent the potential benefits of their products. Rather than expanding the FDA's role, HHS has designed a system in which the federal government will publicize violations of the rule and then leave it to private industry to pursue litigation.

At least once a year, the Centers for Medicare & Medicaid Services (CMS) will post online a report on violations of the price-disclosure rule. "We continue to believe that competitors are best positioned to identify and act upon advertisements that violate this regulation," HHS staff wrote in the final rule.

Azar spelled out how the $35 benchmark in the price-disclosure rule would trigger legal action for violations.

"If you do not have compliant information in your television ad, you are implicitly suggesting your drug costs less than $35," Azar told reporters on the call. "And a competitor would sue you."

In writing the rule on price disclosure in DTC ads, HHS cited the Lanham Act, a federal law meant to protect consumers from false advertising. There is already a pool of attorneys who focus on this field of law, said Azar, who himself is a lawyer and has spent much of his career in health policy circles.

"There are very large legal practices built on pharma companies suing each other for violations of the deceptive trade practices provision of the Lanham Act," Azar said. "So this will be a quite effective mechanism of enforcement."

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