It’s official. The Trump administration will require pharma companies to include list prices in TV ads. And the industry only has about two months to do it.
Wednesday morning, the HHS formally announced its rule forcing drugmakers to add prices to their television commercials. The rule will go into effect 60 days after it publishes in the Federal Register, expected Friday.
Some drugmakers, anticipating a ruling, have already started moving in that direction: Johnson & Johnson was first to add list prices to drug TV ads in February, while Eli Lilly was first to add links to list prices and other detailed cost information in January.
And in April, PhRMA trade group members started putting links to list prices in their TV ads as agreed in its DTC Principles announced in October. On the same day, in fact, the Trump administration formally introduced the rule to add list prices, or wholesale acquisition costs, to TV commercials.
“Patients who are struggling with high drug costs are in that position because of the high list prices that drug companies set," Department of Health and Human Services Secretary Alex Azar said in Wednesday's announcement. "Making those prices more transparent is a significant step in President Trump’s efforts to reform our prescription drug markets and put patients in charge of their own healthcare.”
Azar was echoed by Centers for Medicare & Medicaid Services Administrator Seema Verma, who said the move will help lower drug prices because “patients will be better able to make informed decisions and demand value from pharmaceutical companies.”
But drugmakers say list prices in ads may do the opposite and confuse consumers, because they don't reflect payer discounts and rebates or patient out-of-pocket costs. So, the ruling is expected to get some pushback from drugmakers and the advertising industry, too.
During the 60-day comment period for the proposed rule, almost 150 healthcare, pharma and other companies filed their opinions. Among those were four pharma companies— Pfizer, Eli Lilly, Sanofi and Johnson & Johnson—along with the industry’s leading trade association, PhRMA, which agreed in general that price transparency is beneficial to consumers.
In those comments, the pharma companies disputed that simply inserting a drug's list price would be the best way—or even a good way—to establish pricing transparency. They argued that consumers don't usually pay the list price, and false sticker shock could cause patients to skip filling their prescriptions. Drugmakers also argued that the ruling could run afoul of First Amendment protections on commercial free speech.
It’s unclear yet whether any groups will pursue legal action against the new rule. The Association of National Advertisers head of government affairs, Dan Jaffe, said previously that the rule has “substantial First Amendment issues” and that he would not rule out legal action if the move went from proposal to regulation.