tablets

Perspectives

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.

Key provisions

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

Industry response

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.

Contact us

Anne Phelps
Principal

Deloitte Risk and Financial Advisory
US Health Care Regulatory leader
Deloitte & Touche LLP
Twitter

 

Daniel Esquibel
Senior manager

Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

 

Ethan Joselow
Manager

Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Fullwidth SCC. Do not delete! This box/component contains JavaScript that is needed on this page. This message will not be visible when page is activated.

Site-within-site Navigation. Do not delete! This box/component contains JavaScript that is needed on this page. This message will not be visible when page is activated.

Did you find this useful?