The Trump administration made one of its most aggressive moves yet to address rising drug costs, proposing to require drugmakers include list prices in direct-to-consumer television ads and setting up a certain confrontation with industry.
Under a proposal published Monday, pharmaceutical companies would be mandated to cite wholesale acquisition costs in TV marketing campaigns for drugs and biologics covered through Medicare and Medicaid.
The industry hours earlier sought to preempt the administration's announcement with its own DTC proposal but administration officials said it was not enough.
"Sometimes markets evolve on their own, but sometimes, it takes government to make the first move, to disrupt a broken system, and lay down new rules of the road," said Health and Human Services Secretary Alex Azar in a Monday speech announcing the proposal at the National Academy of Medicine's annual meeting.
"You've heard today we're willing to do just that," Azar, a former Eli Lilly executive, added. "We will not wait for an industry with so many conflicting and perverse incentives to reform itself."
If enacted, the proposal would mark a significant change in how drugmakers pitch their drugs to the public. Yet even if successful, it's not clear how much such disclosures would pressure pharma companies to actually lower drug costs.
While the pace of the administration's actions on drug pricing has increased in 2018, many of the changes remain incremental and have yet to fundamentally alter the existing system by which drugs are priced.
Earlier in the day, major trade lobby PhRMA announced its members would begin to voluntarily point consumers to cost information through their TV drug ads, stopping short of directly including prices in the ads themselves. The lobby's CEO Stephen Ubl argued in a call with reporters that requiring prices could mislead consumers about what they might actually pay and indicated that any requirement would raise legal concerns.
The administration's proposal, subject to a 60-day comment period, would require listing the cost of a typical 30-day regimen or other standard course of therapy. The disclosure would be in text at the end of a commercial and indicate that, if consumers are covered by insurance, the costs they pay may be different.
Holly Campbell, a spokesperson for PhRMA, told BioPharma Dive it needed time to review the specifics of the proposal. "However, we think there is a better way to provide patients with medicine cost information," Campbell added.
But Azar called the industry's new policies insufficient, calling the move a "helpful complement to, not a substitute for, what we've proposed today."
Azar criticized the industry's pricing practices as “completely opaque,” and pushed back on the industry claim that list prices aren't meaningful to consumers. The secretary asserted list prices are particularly important to patients under Medicare Part D, for instance, as coinsurance payments are based on list price.
HHS estimates that each year about 25 pharmaceutical companies run roughly 300 drug product ads. Data from the TV analytics firm iSpot.tv showed the industry spent more than $2.8 billion on TV ads through the first nine months of 2018.
While Congress considered a similar legislative proposal in August, lawmakers eventually dropped the idea from spending legislation amid fierce opposition from industry.
"They may have succeeded in delaying Congress from implementing a legislative solution, but President Trump is undeterred," Azar said.
First Amendment challenge?
However, such a proposal is expected to face a strong legal challenge from the industry on First Amendment grounds. PhRMA has raised free speech concerns on the idea previously, and legal experts have told BioPharma Dive it would face challenges.
Willy Jay, a partner at the law firm Goodwin, told BioPharma Dive such a proposal would face "a hard test to satisfy" with the courts.
"The government's going to have to show it can't achieve the same result without trampling on people's speech," Jay said.
The government contends the proposed rule would be consistent with First Amendment legal precedent, calling the mandated disclosures "purely factual and uncontroversial information," according to the proposal's text.
The rule cites the government's authority to enact disclosure regulations through the Social Security Act. The agency does, however, acknowledge in its proposed rule that Congress has not explicitly given it the authority to compel the disclosure of list prices to the public.
On Monday's call, PhRMA's Ubl would not say whether the group would sue to stop the rule from taking effect, but did note that it could take no legal action until the rule is made final after the public comment period.