May 8, 2019
HHS Finalizes Rule Requiring Manufacturers Disclose Drug Prices in TV Ads to Increase Drug Pricing Transparency
Less than a year after the release of President Trump’s American Patients First blueprint, HHS finalizes first rule implementing the blueprint, aimed at increasing transparency for patients and bringing down overall drug costs both for patients and for the Medicare and Medicaid programs.
On Wednesday, Health and Human Services Secretary Alex Azar announced a final rule from the Centers for Medicare & Medicaid Services (CMS) that will require direct-to-consumer television advertisements for prescription pharmaceuticals covered by Medicare or Medicaid to include the list price – the Wholesale Acquisition Cost – if that price is equal to or greater than $35 for a month’s supply or the usual course of therapy.
“Requiring the inclusion of drugs’ list prices in TV ads is the single most significant step any administration has taken toward a simple commitment: American patients deserve to know the prices of the healthcare they receive,” said HHS Secretary Alex Azar. “Patients who are struggling with high drug costs are in that position because of the high list prices that drug companies set. 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.”
“Patients have the right to know the prices of healthcare services, and CMS is serious about empowering patients with this information across-the-board,” said CMS Administrator Seema Verma. “Today’s final rule is an important step toward achieving President Trump’s vision for lowering prescription drug prices by bringing much-needed pricing transparency to the convoluted market for prescription drugs. Equipped with information on prescription drug prices, patients will be better able to make informed decisions and demand value from pharmaceutical companies.”
In May 2018, President Trump and Secretary Azar introduced the American Patients First blueprint to bring down prescription drug prices. The blueprint laid out four strategies for solving the problems patients face: boosting competition, enhancing negotiation, creating incentives for lower list prices, and bringing down out-of-pocket costs.
To create better incentives for lower list prices, the blueprint called for HHS to consider requiring the inclusion of list prices in direct-to-consumer advertising. Less than a year later, this final rule has been published to implement the vision laid out in the blueprint.
Up until now, drug companies were required to disclose the major side effects a drug can have—but not the effect that buying the drug could have on your wallet. Patients deserve more transparency, and this Administration is committed to delivering it.
List prices matter to patients, many of whom either pay the list price or prices based on the list price. For the forty-seven percent of Americans who have high-deductible health insurance plans, the price they see in ads essentially is the price they pay, until they meet their deductible. All seniors on Medicare Part D have coinsurance for certain types of drugs, which means their out-of-pocket expenses are calculated as a share of list price. List prices are also what patients pay if a drug is not on their insurance formulary.
President Trump has already done more than any President to lower drug prices for American patients, and HHS will continue to deliver solutions as laid out in the American Patients First blueprint to improve drug price transparency and inform consumer decision making. HHS is reviewing comments on a number of other proposed rules to fix opaque systems, change perverse incentives, and put American patients first.
Read the final rule
Click here for a fact sheet about the final rule
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