On Monday, CMS proposed a new rule that would require manufacturers to disclose drug prices in television ads. The rule was expected, as the Trump administration and HHS Secretary Alex Azar have ramped up rhetoric to put more pressure on rising drug prices.
Specifically, the proposal would require manufacturers to publish the Wholesale Acquisition Cost (WAC) for drugs covered in Medicare and Medicaid in ads directed to consumers. The agency maintains that the additional transparency would give beneficiaries more information to make informed, cost-based decisions and create a “moderating force to counteract price increases."
The Trump administration has taken a hard stance on rising drug prices, including President Trump calling out drug companies via Twitter and the release of a blueprint that outlines several goals to bring prices down.
“This historic proposal is an important way to create new incentives for drug companies to start lowering their list prices, rather than raising them,” Azar said in a statement Monday. “President Trump’s drug-pricing blueprint called for HHS to consider how to accomplish this goal, and now we are following through on this measure to better inform patients, help them lower their drug costs, and reduce unreasonable spending in Medicare and Medicaid.”
The prices disclosed in the advertisements would reflect a typical course of treatment for an acute medication such as an antibiotic, or a 30-day supply of medication to treat chronic conditions. Under the rule, the price would be disclosed in a legible textual statement at the end of the ad, according to CMS. Drugs that cost less than $35 per month will be exempted.
In addition, Azar will keep a running list of any drugs advertised that fail to comply with the price disclosure. CMS is seeking feedback if it should also require similar disclosures across other media formats, such as radio, newspapers, magazines, websites and social media.
Before the proposed rule was announced, the drug industry mobilized to support some steps toward pricing transparency. The Pharmaceutical Research and Manufacturers of America (PhRMA) committed to directing patients to information to find out more about medicine costs, but the policy stops short of disclosing actual prices.
CMS’s policy makes that mandatory.
“Our vision for a new, more transparent drug-pricing system does not rely on voluntary action,” Azar said. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay. So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further and continue to implement the President’s blueprint to deliver new transparency and put American patients first.”
The PhRMA board of directors adopted the new enhancements to its guiding principles earlier this month.
With the proposal officially on the table, questions remain over its potential to effectively lower drug prices over the long term. Critics argue that the policy doesn’t go far enough because the disclosures may only reflect the sticker price of drugs and not the prices negotiated between insurance providers and manufacturers.
The proposal was met with enthusiasm on both sides of the political aisle, including from Illinois Senator Dick Durban who introduced a bill, Drug-price Transparency in Communications Act, to require drug manufacturers to post prices in advertisements.
“Today’s announcement by Secretary Azar is welcomed news, and I commend him for working with me to put American patients before Big Pharma,” Durbin said in a statement Monday. “ ... When I first introduced my bill list year, what I wanted to do was to give the American people more information about drug costs. More information gives transparency to the transaction, it empowers patients, and will help give American consumers a break and start to slow down the skyrocketing cost of prescription drugs."