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Drug price transparency regulation for television advertising
Key provisions and industry response
The Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would require pharmaceutical manufacturers to include the list price for drugs in direct-to-consumer television advertisements.
October 17, 2018 | Health care
CMS releases proposed rule on the inclusion of drug prices in television advertising
On October 15, 2018, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would require pharmaceutical manufacturers to include the list price for drugs in direct-to-consumer television advertisements. The proposal is intended to reduce prescription drug spending in the federal Medicare and Medicaid programs and to provide consumers with more informed purchasing decisions as a result of greater price transparency.
The rule will be published in the Federal Register on October 18, 2018. Comments are due by December 17, 2018.
The proposed rule is one of several active and planned administration initiatives originally described in the American Patients First Trump Administration Blueprint to lower drug prices and reduce out of pocket costs, issued on May 11, 2018.
The proposed transparency requirement would apply to all drug and biological products that are reimbursable in any way through Medicare or Medicaid.
Advertisements would be required to include the list price for a 30-day supply or a typical course of treatment for such a drug. For the purposes of this rule, the list price is defined as a drug’s Wholesale Acquisition Cost (WAC), which is set by manufacturers.
CMS proposes to exempt drugs that have a WAC of less than $35 for a 30-day supply from the price transparency requirement.
As part of the proposed rule, CMS also seeks comment on several key policy elements, including:
- Whether WAC is the amount that best reflects the “list price” for the stated purposes of price transparency and comparison shopping
- Whether a 30-day supply and typical course of treatment are appropriate metrics for a consumer to gauge the cost of the drug
- How to treat an advertised drug that must be used in combination with another non-advertised drug or device
- Whether the $35 minimum price is a fair threshold for advertising requirements
- Whether other media such as radio, web, or print advertising should be included in the requirement
- Whether compliance should be a condition of payment under public programs such as Medicare and Medicaid
In anticipation of the release of the proposed rule, the Pharmaceutical Researchers and Manufacturers of America (PhRMA) earlier Monday released plans for a voluntary agreement under which drug manufacturers would agree to direct consumers to their websites for price disclosures.
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