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Drugmakers Explain How CMS Lacks Authority to Mandate Price Disclosures in DTC TV Ads

Posted 08 January 2019 | By Zachary Brennan 

Drugmakers Explain How CMS Lacks Authority to Mandate Price Disclosures in DTC TV Ads

Drugmakers and industry groups came out swinging in comments opposing a Centers for Medicare and Medicaid Services (CMS) proposed rule that would require the companies to disclose list prices in direct-to-consumer (DTC) television advertisements.

The comments, released in mid-December, come as a new JAMA study found that from 1997 through 2016, spending on the marketing of drugs, disease awareness campaigns, health services and laboratory testing increased from $17.7 billion to $29.9 billion.

DTC advertising represented the “most rapid increase,” from $2.1 billion (11.9%) of total spending in 1997 to $9.6 billion (32%) of total spending in 2016. More specifically, DTC prescription drug advertising increased from $1.3 billion (79,000 ads) in 1997 to $6 billion (4.6 million ads, including 663,000 TV commercials), “with a shift toward advertising high-cost biologics and cancer immunotherapies.”

Comments on Proposed Rule

Industry group PhRMA, however, explains in its comments on the proposed rule how not only will disclosing a drug’s list price in DTC TV advertising be misleading to patients, but CMS lacks the statutory authority to issue the proposed rule in light of the Food, Drug and Cosmetic Act (FDCA) express delegation of authority to regulate prescription drug advertising, which has been delegated to FDA, and FDA’s powers to enforce the FDCA’s misbranding provisions.

Similarly, industry group BIO said CMS in promulgating the rule is ignoring the far more specific grants provided by Congress to FDA to regulate DTC advertising.

PhRMA also describes the First Amendment principles that preclude CMS from compelling manufacturers to detail a drug’s list price in such TV ads.

J&J, meanwhile, explains an initiative to be undertaken by PhRMA member companies, which have agreed that by April, DTC television advertising that identifies a prescription medicine by name will direct patients to a website containing information about the cost of the medicine, including the list price of the medication and average, estimated or typical patient out-of-pocket costs, or other context about the potential cost of the medicine.

Eli Lilly already began offering such a website, though as of Tuesday, only information on Trulicity (dulaglutide) was available.

“While Lilly is fully supportive of providing pertinent information on drug costs to consumers, we fear that the CMS approach will create more confusion than clarity for patients. CMS efforts to pressure manufacturers into lowering list prices through public scrutiny is coming at the expense providing patients with the total picture of meaningful cost information for their specific situation. As CMS has acknowledged, list price disclosures in DTC advertisements may intimidate and confuse consumers while deterring them from seeking needed medical treatment,” the drugmaker added.

In addition, Sanofi explained how the proposed rule will not achieve the government's objective of enabling consumers to make more informed and cost-conscious decisions that ultimately reduce CMS spending. “This is the case not only because the Proposed Rule fails to account for the complexities of drug pricing, reimbursement, and value-based decision-making, but also because the Lanham Act is unlikely to provide an appropriate mechanism for enforcing the Proposed Rule.”

Meanwhile, Johns Hopkins professor Gerard Anderson said in a comment that research his center has done found that such price disclosures could be potentially effective in educating people about the cost of drugs. But he also noted that there should not be any modifying language emphasizing the possibility of lower out-of-pocket costs, as the PhRMA companies agreed to.

Anderson added: “The inclusion of such modifying language in ads reduces or eliminates the effect of price disclosure for expensive drugs. Therefore, the impact will fail to achieve its intended consequence if modifying languages, together with price disclosure, are included in direct-to-consumer advertising.”

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