Big pharma says it will disclose more about drug costs

The Trump administration said Monday it will force drug makers to disclose the list price of medicines in their television ads, setting up a clash with the pharmaceutical industry, which is resisting such open disclosures.

Manufacturers say they’re willing to post prices on their websites and say that should be good enough for consumers.

But Health Secretary Alex M. Azar II said the administration won’t wait for the industry to police itself and is proposing the television advertising rule.

It would require any manufacturer whose drugs are covered by Medicare or Medicaid to include the price in their TV spots, so consumers have a sense for costs even before they talk to their doctors about which drugs are right for them.

“Patients deserve to know what a given drug could cost when they’re being told about the benefits and risks it may have. They deserve to know if the drug company has pushed their prices to abusive levels, and they deserve to know this every time they see a drug advertised to them on TV,” Mr. Azar said in a speech to the National Academy of Medicine in D.C.

The Senate nearly approved a similar idea as part of a health-spending bill this year, though it was pulled from the final version.

Mr. Trump’s administrative action will require companies to disclose the price of a typical course of treatment for acute conditions, such as an antibiotic, and a 30-day supply for chronic conditions. Drugs that cost less than $35 per month can qualify for an exemption, said the Centers for Medicare and Medicaid Services.

Under the proposed rule, companies would have to post the list price in legible text at the end of the ad. To enforce the change, CMS said it would take legal action against noncompliant companies and publish a list of their names.

Reaction was mixed, since it’s not clear how effective the change will be in practice. Some advocates deemed it “real progress,” yet others said there is little evidence it will slash costs.

Also, while the change might shame companies into thinking twice about price hikes, the list price isn’t what consumers with insurance actually pay, and out-of-pocket costs will vary from customer to customer.

A lobbying group for the pharmaceutical industry said Monday it opposed the move for that reason.

The Pharmaceutical Research and Manufacturers of America (PhRMA) instead said its member companies would use TV ads to direct consumers to websites that outline list prices and provide more detail and context around costs, including what consumers might pay when they use their insurance or factor in financial-assistance programs.

“The administration and Congress have called on our industry to provide cost information in [direct-to-consumer] advertisements, and our members are voluntarily stepping up to the plate,” said Stephen J. Ubl, president and chief executive officer of PhRMA.

The agreement is set to take effect in April, though information might be included in ads sooner.

Mr. Azar called it a “step in the right direction” but said Mr. Trump wanted to mandate disclosure on TV instead of relying on drug companies to volunteer information.

“We appreciate their effort, but placing information on a website is not the same as putting it right in an ad,” Mr. Azar said.

PhRMA warned that using list prices as a benchmark is “not sufficient” and might discourage patients from getting the right drugs.

Mr. Azar countered that list price matters. Seniors in Medicare, for instance, typically pay coinsurance that is a share of the list price, and younger Americans with high-deductible plans have to shell out thousand of dollars toward a list price of expensive drugs “before their insurance kicks in,” he said.

He said auto companies have been required to disclose the sticker prices of their vehicles since 1958, and drugs shouldn’t be any different.

“You buy a car every once in a while — but millions of American patients buy expensive drugs every month,” he said. “And a year’s worth of the most advertised drugs, mind you, can cost more than a car.”