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Proposed CMS rule about disclosing drug costs on TV ads could have public health & legal concerns

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The Trump administration has proposed a new rule that would require direct-to-consumer TV advertisements for prescription drugs to disclose the price of their products.

The Centers for Medicare & Medicaid Services (CMS) said the disclosures would help consumers “make informed decisions that minimize not only their out-of-pocket costs, but also expenditures borne by Medicare and Medicaid, both of which are significant problems.”

The idea enjoys broad public support, since medical care and drug costs continue to skyrocket.  A U.S. Senate report earlier this year revealed that the cost of the 20 most commonly prescribed brand-name drugs have risen tenfold in the past five years.

In a June 2018 poll, 76 percent of Americans favored required drug advertisements to include a statement about how much the drugs cost.

But Michelle Mello, a Stanford Law School professor and Stanford Medicine professor of health research and policy, writes in this New England Journal of Medicine perspective that the proposed rule raises substantial public health and legal concerns.

A potential unintended consequence of price disclosure may be to dissuade patients from seeking care, writes Mello and her co-author, Stacie B. Dusetzina of Vanderbilt University School of Medicine, because of the perception that they cannot afford treatment. For example, Trulicity, a widely advertised drug for type 2 diabetes has a list price of $730 a month.

“Patients who could benefit from diabetes treatment may assume that they cannot afford it, when in fact insured patients’ costs for Trulicity may be much lower, and cheaper treatment options available,” they write. Metformin, for instance, costs $4 per month for patients who pay cash.

CMS would demand drug makers use the list prices from the Wholesale Acquisition Cost (WAC) in their television ads, including that costs “may be different” for those who are insured.

“This wording doesn’t communicate that costs to patients are probably much lower than the WAC,” writes Mello, a core faculty member at Stanford Health Policy.

This could have important legal implications as well, as compelled disclosures in advertising impinge on commercial speech protected by the First Amendment. Furthermore, they write, “disagreement about whether the WAC accurately represents a drug’s price could affect how courts assess the rule when constitutional challenges are inevitably filed.”

The researchers say three aspects of the proposed rule undercut the government’s ability to argue that it would improve patient decision-making and reduce drug spending: 

  1. Price information does little to inform consumer decisions if it inaccurately represents actual cost.
  2. Consumers can already obtain information on cash prices online and their own cost from their insurer.
  3. The rule contains no meaningful enforcement mechanism; CMS plans only to list violators on its website, calling into question whether companies will comply.

“We think that a better alternative would be making patient-specific cost information accessible at the point of prescribing, “ the authors write. 

The cost of prescription drugs should become a routine part of clinician-patient discussions, although they acknowledge that this would put more time constraints on medical practices.

“Providing salient cost information at the right time could help reduce drug spending while preserving patient choice, but we believe that direct-to-consumer advertising is the wrong vehicle,” they write.