Late on Monday, the Trump administration said it will require drug companies to include the list prices of prescription medicines in direct-to-consumer television ads. As a central pillar of the President’s blueprint for lowering healthcare costs, the proposal was expected.
In a speech introducing the rule, HHS Secretary Alex Azar took a hard line: “We will not wait for an industry, with so many conflicting and perverse incentives, to reform itself,” he said.
Earlier in the day, pharma’s most powerful lobbying group, PhRMA, unveiled a voluntary DTC measure that would direct consumers to websites where they could find pricing information, in lieu of including list prices in the ads themselves.
On the surface, both sides appear to be digging in, and preparing to battle it out. The proposal “is certainly going to lead to considerable debate and discussion,” said Wayne Pines, president of healthcare at APCO Worldwide, and will be “scrutinized from a legal standpoint.”
There’s a lot to scrutinize, said Robert Hill, a partner at the law firm Reed Smith, starting with the rule’s stated purpose of improving the “efficient administration of the Medicare and Medicaid programs by ensuring that beneficiaries are provided with relevant information about the costs of prescription drugs and biological products so they can make informed decisions.”
According to Hill, requiring drugmakers to include list prices in DTC ads wouldn’t fulfill this aim, as they don’t reflect the true cost for most beneficiaries or Medicare and Medicaid (both programs negotiate with drugmakers for lower prices, as do insurance companies on behalf of covered consumers).
This talking point, trumpeted by PhRMA, is also being repeated by other industry supporters. “This measure will confuse and mislead patients—and potentially may harm them, by discouraging them from initiating important conversations with their health providers and seeking medical care they need,” Jon Bigelow, executive director of the Coalition for Healthcare Communication, wrote in a statement.
For Hill, the proposal’s flawed mechanics could be grounds for successful litigation. “From a constitutional standpoint, it would make it difficult to uphold it.”
The rule could also be attacked as a violation of the First Amendment; pharma companies could argue that requiring them to disclose list prices, which they feel are misleading, is a form of “compelled speech.”
All of these arguments might be moot, however. There’s a possibility that the proposal is either dramatically changed, left outstanding for a long time, or scrapped altogether. Hill said he has reason to expect the last option, primarily because the HHS proposal doesn’t include a mechanism for sufficiently punishing companies should they refuse to comply.
It’s not that such a mechanism doesn’t exist. The government could threaten to make disclosing list prices in DTC ads a condition of payment for Medicare and Medicaid, for instance, Hill said. But that’s not what it did. Instead, should manufacturers fail to include prices, federal regulators would simply put them on a list of non-compliers — the faintest of slaps on the wrist.
“I think the fact that they haven’t proposed a penalty or a sanction of any kind tends to support the view that they may not have the authority to require it in the first place,” conjectured Hill.
If the proposal does get finalized in anything like its current form, an intense legal fight will likely follow, said Pines. “I would expect the courts to get involved.”
Pricing information would add to a long list of safety and other information marketers are already required to include in TV ads for prescription drugs. The pharma industry is the third-highest spender in national TV advertising so far this year, according to Magna, the media intelligence arm of IPG Mediabrands.
But some analysts predict that the pharma industry, whose reliance on TV might be tied to concerns about brand safety and ROI in digital environments, could nevertheless rein in TV spend should the HHS price disclosure proposal be approved.