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CMS Proposes Drug Price Transparency in Television Ads

CMS aims to improve drug price transparency for Medicaid and Medicare beneficiaries by requiring manufacturers to display prices in television ads.

CMS aims to improve drug price transparency with television ads.

Source: Thinkstock

By Thomas Beaton

- CMS has proposed a new rule that would enhance drug price transparency by requiring drug manufacturers to publish wholesale prices of Medicaid and Medicare prescription drugs during television ads.

The proposed rule would require pharmaceutical companies to display the price of a short-term or thirty-day supply prescription before accounting for possible insurer or pharmacy benefit manager (PBM) discounts.

CMS stated that displaying the list price in television ads will allow consumers with high deductibles, who don’t usually receive insurer discounts on drugs, to make more informed drug purchasing decisions.

“Price transparency is a necessary element of an efficient market that allows consumers tomake informed decisions when presented with relevant information, but for consumers of

prescription drugs, including those whose drugs are covered through Medicare or Medicaid, both the list price and actual price to the consumer remain hard to find,” CMS said.

The proposed rule aims to reduce the rising costs of prescription drugs in the US and specifically within public payer programs.

CMS estimates that Medicare Part B and D beneficiaries spent $174 billion on prescription drugs in 2016, while Medicaid beneficiaries spent $64 billion. Between 2013 and 2016, prescription drug spending increased by 22 percent in Part B, 32 percent in Part D, and 42 percent in Medicaid, CMS said.

Targeting television ads is likely to help curb the growth of prescription drug spending, CMS believes, because of the relationship between prescription drug TV ads and drug spending.

CMS found that direct-to-consumer television advertising can influence consumers’ drug purchasing decisions. Consumers that learn about a new drug on television are likely to put pressure on providers to prescribe an advertised drug.

“In one recent survey, one in eight adults said they were prescribed a specific drug after asking a doctor about it as a result of seeing or hearing an advertisement,” CMS said.

“When manufacturers direct their advertising to consumers, such messaging can help facilitate more informed discussions between consumers and their health care providers in making decisions about treatment.”

Industry organizations have responded to the proposed rule with both praise and criticism.

AHIP expressed approval of the proposed rule.

“There are three ways to meaningfully reduce drug prices: increase competition, increase visibility into manufacturer pricing practices, and focus on true value for patients and consumers,” AHIP CEO Matt Eyles said. “Giving consumers pricing information in drug advertising will empower them to have more informed conversations with their doctor about the best approach to improve their health and manage their medical conditions.”

AHIP added that it is looking forward to working with Congress to implement meaningful drug pricing reforms.

The American Medical Association also stated that the proposed rule may help consumers understand the cost of drugs and promote additional changes to drug pricing regulations.

“Last year, the AMA called for regulations requiring the ads to include the manufacturer’s suggested retail price of those drugs, and we supported similar legislative efforts by Senators Grassley and Durbin earlier this year,” AMA President Barbara L. McAneny, MD, said.

“While thi proposed rule alone won’t remove the often-misleading nature of prescription drug ads, it will give consumers a data point that is currently unavailable. That is a step in the right direction.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) responded to the rule by releasing new member guidelines for direct-to-consumer advertisements.

PhRMA’s new guidelines require pharmaceutical companies to provide information about where consumers can find the cost of a drug after possible discounts and rebates.

However, PhRMA believes that the requirements in CMS’s proposed rule is not sufficient to help consumers identify the final cost of prescriptions after insurer and PBM discounts.

The proposed rule follows other CMS efforts to improve prescription drug price transparency and provide more affordable prescriptions to beneficiaries.  

“This historic proposal is an important way to create new incentives for drug companies to start lowering their list prices, rather than raising them,” said HHS Secretary Alex Azar in a press release. “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.”

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