Trump Rule Would Compel Drugmakers to Disclose Prices in TV Commercials

WASHINGTON — Over vehement objections by drug companies, the Trump administration proposed Monday a new federal regulation that would require them to disclose the list prices of prescription drugs in their television advertisements.

The proposal sets the stage for a battle with the pharmaceutical industry, which said the requirement would be a form of “compelled speech” in violation of the First Amendment.

“Patients deserve to know what a given drug could cost when they’re being told about the benefits and risks it may have,” Alex Azar II, the secretary of health and human services, said in a speech at the National Academy of Medicine. “They deserve to know if the drug company has pushed their prices to abusive levels.”

Azar compared the proposed rule to long-standing requirements for automakers to disclose sticker prices.

“You buy a car every once in a while,” Azar said. “But millions of American patients buy expensive drugs every month. And a year’s worth of the most advertised drugs, mind you, can cost more than a car.”

The chief lobby for the drug industry, the Pharmaceutical Research and Manufacturers of America, announced earlier Monday that its 33 members would voluntarily include information in TV ads directing viewers to company websites where they could find data on list prices and estimates of the typical out-of-pocket costs for patients.

Azar said this was “a small step in the right direction,” but voluntary action was not enough. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” Azar said.

Stephen Ubl, president and chief executive of the drugmakers’ lobby, known as PhRMA, said the industry’s proposal was much more feasible. To require the disclosure of list prices in TV commercials would be “very confusing and misleading, lack appropriate context and isn’t what patients want or need,” he said.

The Centers for Medicare and Medicaid Services proposed the new rule under federal laws that govern the two huge health programs, which between them cover nearly all prescription drugs, officials said.

The proposed rule would apply to any drug if the list price, also known as the wholesale acquisition cost, was greater than $35 for a month’s supply or for the usual course of therapy. The 10 most commonly advertised drugs have list prices ranging from $535 to $11,000 for a month or for a course of therapy, the administration said.

Asked about enforcement, federal officials said they would maintain a public list of drug products found to be in violation of the price disclosure requirement. But, the proposal says, the “primary enforcement mechanism” would be the threat of lawsuits under a 1946 law known as the Lanham Act, for unfair competition in the form of false or misleading advertising.

The proposed requirement would not apply to drug advertising in magazines and newspapers or on websites or social media.

The public will have two months to comment on the proposal. The government will consider the comments before issuing any final rule with the force of law.

The list price is generally understood to be the sticker price set by a drug manufacturer, before discounts and rebates to middlemen and financial assistance to patients.

Drug company executives and some consumer advocates say that the disclosure of list prices in ads, without more information, could perversely discourage patients from considering helpful medicines, especially those with high price tags.

Moreover, the price that patients pay depends on many factors: Do they have insurance? Have they met the deductible? Is the drug on the insurer’s list of preferred medicines?

Federal officials said the list price was meaningful because patients, including Medicare beneficiaries and people with high-deductible health plans, often pay the list price or a price based on it.

Under the proposal, drug companies would have to disclose price information “in a legible textual statement” at the end of each TV ad. The statement would have to appear on the screen long enough, in large enough type, so that it could easily be read.

The proposed rule would carry out ideas set forth in May in President Donald Trump’s blueprint to lower drug prices, but it is a sharp departure from his usual efforts to promote market-based solutions and slash federal regulations.

Under the PhRMA proposal, drug prices would not necessarily appear in ads, as Trump wants.

The group’s member companies voluntarily endorsed a declaration of principle stating, “All direct-to-consumer television advertising that identifies a medicine by name should include direction as to where patients can find information about the cost of the medicine, such as a company-developed website, including the list price and average, estimated or typical patient out-of-pocket costs, or other context about the potential cost of the medicine.”

It is unclear how useful the information would be to consumers. Each company would disclose the prices of its advertised products on its own website.

Holly Campbell, a spokeswoman for PhRMA, said, “A given product may have different list prices depending on the dosage of a medicine, and companies will have to determine how to report a list price if this is the case.”

It may therefore be difficult for patients to compare the prices of similar drugs.

James Stansel, general counsel for PhRMA, said that any effort by the government to force drugmakers to disclose prices in their ads would be subject to legal challenge. “If the government is compelling companies to speak, that violates the First Amendment,” Stansel said. It is not unusual for drugs now to cost $50,000 or $100,000 a year. Azar said Trump was determined to bring “price transparency” to the market in an effort to stimulate competition and overturn the current convoluted, opaque system in which everyone but the consumer benefits from higher prices.

Ben Wakana, executive director of Patients for Affordable Drugs, a consumer group, supported the administration’s effort, but said: “Disclosing list prices in ads does not lower drug prices. There is no evidence that providing patients and consumers access to list prices will result in lower prices.”