HHS Secretary Alex Azar (Photo: Screen Capture/House Appropriations) HHS Secretary Alex Azar (Photo: Screen Capture/House Appropriations)

Pharmaceutical companies will have to disclose drug prices in television commercials in the U.S. for the first time, as the Trump administration begins to put in place a plan to lower prescription costs.

The Centers for Medicare and Medicaid Services (CMS) and the parent of CMS, the U.S. Department of Health and Human Services, finalized a rule Wednesday that would require drugmakers to disclose a drug’s cost if its price before rebates and discounts is above $35 for a month’s supply or the usual course of therapy. The rule is the first move by regulators to implement a blueprint to lower drug prices laid out last year by President Donald Trump.

(Related: CMS to Drug Makers: Put Your Prices in TV Drug Ads)

“Patients who are struggling with high drug costs are in that position because of the high list prices that drug companies set,” HHS Secretary Alex Azar said in a statement unveiling the rule. “Making those prices more transparent is a significant step in President Trump’s efforts to reform our prescription drug markets and put patients in charge of their own health care.”

The rule will go into effect 60 days after it’s published, Azar said on a conference call with reporters.

Federal Register officials say the rule will be published Friday.

Drugmakers had started disclosing prices online, with the Pharmaceutical Research and Manufacturers of America urging members to redirect patients watching TV ads to the websites, which discuss different pricing scenarios rather than just the list price.

The trade association said the rule would give patients watching TV the false impression that they’re required to pay the full price and that the ads would deter patients from seeking treatment. The group also said the proposal would violate the First Amendment by compelling commercial speech.

The rule will apply to drugs that are covered by the Medicare and Medicaid programs.

Officials are estimating that the new requirements will affect about 25 pharmaceutical companies, and that those companies will run about 300 separate ads every three months.

Comments

Officials say in the preamble to the final rule that they received 147 comments from the public.

Many commenters centered on the meaning of a drug’s “wholesale acquisition cost,” or WAC.

“A few commenters noted that the full WAC is paid by the uninsured and by beneficiaries with high deductibles,” officials write in the preamble. “Others noted that patients could estimate their out of pocket costs from the WAC if they understand the percentage coinsurance of their coverage. A few noted that due to variation in other price points, it would be administratively burdensome for manufacturers to display any price other than the WACand that the proposal is easy for manufacturers to comply with. A few commenters noted their belief that with the proposed cost variation disclaimer, the WAC is an appropriate price point to share in advertisements. Others noted that the WAC is primarily informative for single-source drugs.”

In their response, officials say they believe the WAC is an appropriate measure for disclosure in direct-to-consumer television advertisements.

“The WAC is the most commonly used benchmark in the pharmacy purchasing of drugs, which means that it is a single, manufacturer-published price that excludes rebates and discounts, and therefore is the closest metric we have to a generalizable list price that applies to all patients prior to the application of insurance coverage, making this an actual list priceof the drug,” officials say. “While insurance coverage will affect what the patient pays OOP [out of pocket] for the drug,as stated abovethe WAC is an important factor for determining the final price that patients will pay for the drug. Moreover, the WAC is a real price that manufacturers set for their drugs and share with various private price compilers.”

Resources

A preliminary copy of the final version of the rule is available here.

— Read 7 Key Points From Trump’s Drug Cost Fight Blueprint, for Agentson ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on LinkedIn and Twitter.

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