Drug Companies Required to Reveal Drug Prices in TV Ads 

May 09 2019

On Wednesday, the Department of Health and Human Services (HHS) announced that it has finalized a new rule requiring all drug manufacturers to include the list prices of their drugs in TV advertisements, potentially paving the way towards drug price transparency and lower drug costs. If the price is equal to or greater than $35 for a month’s supply (or the usual course of therapy), it must be published in all direct-to-consumer TV ads. Until now, drug companies were required to disclose the major side effects a drug can have in TV ads but not the price. According to HHS Secretary Alex Azar, “Requiring the inclusion of drugs’ list prices in TV ads is the single most significant step any administration has taken toward a simple commitment: American patients deserve to know the prices of the healthcare they receive.”

However, drug makers argue that the list price is not what consumers actually pay. Under the new rule, all manufacturers that make prescription drugs and biological products that are covered by Medicare or Medicaid (which includes most brand-name drugs) will be required to publish the list price, or Wholesale Acquisition Cost – the average price paid by a retailer to buy a drug from a wholesaler. But this price does not take into account the rebates, discounts and other incentives provided by manufacturers, which will affect the actual cost of the drug to the consumer – and to employer health plan sponsors. Still, federal health officials argue that list prices do directly impact a number of people, such as those who have yet to meet their deductibles or Medicare Part D members, whose coinsurance is based on the list price.

So the billion-dollar question remains: Will this new rule actually give consumers information they can act on to lower their spending -- and lead drug companies to reduce prices? It will likely be a few months before the regulation takes effect and we find out if wishes do come true.

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