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Providers, insurers call for strong enforcement of drug price transparency


Providers and insurers want the CMS to put some real teeth—including financial penalties—into any plan requiring greater price transparency from drugmakers.

In comments on a proposed rule to require drugmakers to list a drug’s wholesale price in TV ads, several provider and insurers groups told the agency that a stick is needed to ensure pharmaceutical companies follow through.

Kaiser Permanente, which said it would prefer to see HHS and Congress curtail direct-to-consumer ads, suggested imposing a fine of 1% of Medicare and Medicaid payments on drugmakers that violate the rule should it become final. America’s Health Insurance Plans and the Medicare Payment Advisory Commission favored making compliance a condition of payment or coverage in Medicare and Medicaid.

“Openly disclosing drug prices will … bring additional public attention to drug price increases, which will discourage drugmakers from raising their prices year after year—often multiple times a year—without justification,” AHIP wrote.

Generally, health systems, insurers, consumer advocates and policy experts praised the CMS’ proposal to require makers of prescription drugs to post the wholesale acquisition cost of the product in every direct-to-consumer TV ad.

They called it an important step to help patients make cost-conscious decisions about their medications. Beyond strong enforcement measures, some commenters suggested having Medicare pay for physicians to discuss drug costs with patients.

The Pharmaceutical Research and Manufacturers of America, along with the Biotechnology Innovation Organization, strongly opposed the rule and asked the CMS to withdraw it, warning they would challenge it in the courts on free speech and other constitutional grounds.

“The list price alone does not convey to patients meaningful information about how much they will actually pay for a medicine,” PhRMA said in a 29-page comment letter, most of which consisted of a scathing legal analysis of the proposed rule.

UnitedHealth Group and UnityPoint Health stated their opposition to both direct-to-consumer drug advertising and the CMS proposal. They argued that consumers might make misinformed medical decisions based on misleading price information in the ads, potentially resulting in higher healthcare spending.

The CMS issued the rule in October as part of HHS Secretary Alex Azar’s broader initiative to boost healthcare competition and reduce costs through greater price transparency. For the first time, manufacturers would have to include a legible textual statement at the end of each TV ad, listing the price for a typical course of treatment for an acute medication like an antibiotic or for a 30-day supply of medication for a chronic condition.

The sole enforcement mechanism would be that the HHS secretary would maintain a public list of drugs that were advertised in violation of the rule.

Many commenters backing the rule favored expanding the requirement to all media—radio, print, websites and social media platforms. The Cleveland Clinic suggested that ads mention the price both orally and in writing.

Azar said the proposal would “create new incentives for drug companies to start lowering their list prices, rather than raising them.”

There were only 146 public comments about the proposed rule, a seemingly small number given the political prominence of the debate over how to bring down prescription drug prices. In a recent poll by the Harvard T.H. Chan School of Public Health, a majority of Americans favored more direct approaches to bringing down drug costs, including letting Medicare negotiate directly with manufacturers.

Going beyond the proposed price disclosure rule, the American Medical Association urged the Trump administration to require drugmakers to provide public notice before raising the price of any drug by 10% or more per year, and force them to publicly disclose their R&D and marketing costs.

PhRMA argued that its voluntary approach to providing consumers with information about drug costs would be more effective than the proposed rule. Its members have committed, starting in April, to including in their TV ads direction as to where patients can find information about the cost of the medicine, such as a company website.

The advantage of that approach, PhRMA said, is that consumers could find out estimated out-of-pocket costs.

UnitedHealth Group also doubted the usefulness of telling consumers the average wholesale cost of a drug. It said the list price is rarely the same as the out-of-pocket cost for insured patients, which depends on the patient’s health plan, the pharmacy network, discounts the plan has negotiated, and the frequency in which the drug is prescribed.

It said a better solution is for the CMS to require broader use of real-time benefit tools to provide accurate, timely, and patient-specific drug cost information to prescribers rather than patients. That could facilitate a useful dialogue between providers and patients about potential out-of-pocket costs as well as lower-cost alternatives, United said.

The CMS estimated that 25 pharmaceutical companies, which run about 300 distinct TV ads each quarter, would be affected by the proposed rule, and that it would cost them a total of $5.2 million in the first year and $2.4 million in subsequent years.