By Leah S. Poniatowski, J.D.
Motivated to stem the increasing costs of prescription drugs and biologics, CMS proposed new regulations that would require drug manufacturers to disclose the cost of a typical course of treatment of a drug in direct-to-consumer television advertisements. The disclosed cost would be the wholesale acquisition cost (WAC), also known as the list price and which is set by manufacturers, and the requirement would apply to any drug reimbursable by Medicare or Medicaid. The rule proposes requiring sharing the cost of a typical course of treatment for an acute medication, or a 30-day supply for a medication for a chronic condition.
Rising costs. Earlier this year, the current administration acknowledged its concern that despite the availability of pharmaceutical treatments, they are often too expensive for consumers, spurring HHS into action on how to reduce the cost of prescription drugs. According to the HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE), spending on prescription drugs and biological products rose from 2010 to 2014, and the HHS estimates that spending in 2015 on drugs alone was $457 billion, a little over 16 percent of overall personal health care services. The ASPE determined that some of the factors causing the rise in prices are increased prescriptions per person, overall inflation, price increases in drugs or composition changes in the drugs toward higher priced products, and population growth. CMS explained that the health care market lacks the same transparency of other markets with respect to the price of the market product, and that features of the health care market, such as participation of third-party providers and manufacturer rebates, make it difficult for consumers to ascertain the cost of a drug.
Transparency and efficiency. According to research, direct-to-consumer advertising (DTC ads) has been shown to increase the use of advertised drugs. CMS stated that consumers should have an idea of how much the advertised drug costs in order to make better-informed decisions when considering treatment or discussing treatment options with a health care provider as they can consider less expensive options in addition to comparing the efficacy and side effects of those options. CMS highlighted provisions of the Social Security Act that promote economic efficiency and disclosure of drug prices in support of its rulemaking, stating that increasing transparency of drug prices via the advertisement price disclosure rule will help both the individual consumer and the taxpayer.
Subpart L. The rule would add subpart L to 42 CFR part 403 and affect advertisements of drugs "distributed in the United States for which payment is available, directly or indirectly, under titles XVIII or XIX of the Social Security Act," unless the drug is less than $35 per month for a typical course of treatment. The rule provides the disclosure statement that must be included in the ad and its presentation requirements. With respect to compliance, those drugs advertised in violation of the rule will be kept on a public list maintained by the HHS Secretary. CMS is seeking comments on the rule and its impact, to be submitted in accordance with the details provided in the published notice.
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