HHS Proposes New DTC Advertising Requirement

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For our daily readers, you may have seen our post yesterday about the Pharmaceutical and Research Manufacturers of America (PhRMA) announcement about all member companies agreeing to new direct-to-consumer (DTC) ad Principles. Interestingly, the same day the new PhRMA Principles were announced, the United States Department of Health and Human Services (HHS) announced a proposal that would require television ads for prescription drugs include the list price of the drug.

The HHS proposal would require DTC television ads for prescription drug and biological products  paid for by Medicare or Medicaid to include the list price if the list price (the Wholesale Acquisition Cost) is greater than $35 for a month’s supply, or for the usual course of therapy, with the prices updated quarterly.

HHS Secretary Alex Azar gave a nod to the PhRMA announcement made the same day as the HHS proposal announcement, saying, “Patient empowerment and transparency are at the core of the President’s drug-pricing blueprint that was released five months ago. Our vision for a new, more transparent drug-pricing system does not rely on voluntary action. 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.”

In addition to the proposal, HHS is continuing to explore different ways to improve drug price transparency and inform consumer decision-making. One area that HHS may look at in the coming months, and that is mentioned in the press release, is the area of rebates, which HHS believes “drive list prices up and do not fully benefit patients.”

Comments on the HHS proposal are due no later than 5pm on December 17, 2018, and may be submitted electronically or via regular, express, or overnight mail. Some of the questions HHS is seeking answers to include: What is the frequency with which WACs are changed; what would be the effect of this potential advertising reduction on patient behavior, including as regards the information they seek out from their medical providers; how might patient outcomes vary depending on advertising choices among competitor drug companies; if all producers of drugs for a condition cease advertising on television, to what extent are patients likely to switch to other forms of treatment—such as surgery—or to forgo treatment; to what extent will drug companies, in order to increase the feasibility of continuing to advertise on television, reduce the frequency of changing their WACs and what would be the consequences for drug supply chains and the prices experienced by patients and other payers.

It will be interesting to see how the HHS proposal plays out, and it may not even turn into anything at all. Even if it does, we are likely looking at several years down the road and many court challenges before it becomes solidified.

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