October 19, 2018

In This Issue
Fast Facts
Administration Seeks Drug Price Transparency in Ads
Healthcare Happy Hour: NAHU's Coalition Efforts to Oppose Single-Payer and Medicare-for-All
State Spotlight: Michigan Pursuing Outcomes-Based Contracts with Drug Manufacturers in Medicaid
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Administration Seeks Drug Price Transparency in Ads
CMS issued a proposed rule on Monday that would require pharmaceutical companies to disclose drug prices in consumer advertising. This is being pushed as a means to help consumers make more informed decisions and reduce out-of-pocket expenses, as well as federal spending in Medicare and Medicaid. While Congress has not passed legislation to prompt these rules, the administration has cited its regulatory authority to efficiently operate Medicare and Medicaid for its ability to mandate price disclosures. The proposal is part of the administration’s “America First” prescription drug plan, and follows the signing of legislation last week to ban gag clauses on pharmacists that had prevented disclosing potentially lower pharmaceutical costs to consumers.

The proposal would require manufacturers to list a drug's monthly wholesale price or the cost for a typical course of treatment, if that cost is greater than $35 for 30 days. While the disclosures would indicate that costs may differ depending on insurance coverage, the pharmaceutical industry has argued that these disclosures will be misleading as negotiated costs are often a fraction of a drug's list price, and many consumers may be discouraged from seeking treatment due to the higher list prices that are advertised. PhRMA offered a separate plan set to take effect in April that would direct consumers to websites to learn more about list prices and their expected out-of-pockets costs, and any financial assistance programs that are available to offset the costs.

Roughly $450 billion is spent on pharmaceuticals annually of the $3.5 trillion spent in the healthcare industry last year. Direct-to-consumer advertising comprises $5.5 billion, including nearly $4.2 billion on television alone. While nearly all other nations banned direct-to-consumer pharmaceutical advertising by the 1940s, the U.S. and New Zealand are the only countries that continue to permit these ads, with the U.S. easing regulations in 1997 that has led to a proliferation of consumer advertising and corresponding increase in pharmaceutical sales.

NAHU commends the Trump Administration for putting forth the proposal as an initial step in addressing healthcare cost transparency as it relates to pharmaceuticals. NAHU identified the high cost of pharmaceuticals in our Healthcare Cost Drivers white paper, where we identified that the factors driving the increases in pharmaceutical costs as: increasing utilization of prescription drugs; newer, higher-priced drugs replacing older, less-expensive drugs; fewer manufacturers and less competition, and manufacturer price increases for existing drugs. We further called for addressing these in our overarching position paper for reforming the nation’s healthcare system, Access, Choice and Affordability. In addition to NAHU, other organizations to support the administration’s effort include the AMA, AHIP, PCMA and the Campaign for Sustainable Rx Pricing.
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