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Focus on Regulation

U.S. Senate passes bill requiring prescription drug ads to include prices (updated)

Update (9/18/2018): Last week, as the U.S. House of Representatives was reconciling its spending bill for the Health and Human Services Department (HHS) with the amendment package passed by the U.S. Senate that is discussed below, House Republicans declined to adopt S.Amdt. 3964, which would have provided HHS with $1 million to issue rules requiring pharmaceutical companies to list prices of their prescription drugs in direct-to-consumer (DTC) advertisements.  In response, several Senators issued public statements critical of the House’s failure to act, which suggests that the proposal may survive to appear in future legislation.

August 28, 2018:  On Thursday, the U.S. Senate passed (85-7) the fiscal year 2019 minibus appropriations bill (H.R.6157) that would fund the Departments of Labor, Health and Human Services (HHS), and Education, attaching to it a large amendment package.  The bill includes S.Amdt. 3964, an amendment introduced by Sens. Richard Durbin (D-IL) and Chuck Grassley (R-IA) that provides HHS with $1 million “to issue a regulation requiring that direct-to-consumer prescription drug and biological product advertisements include an appropriate disclosure of pricing information with respect to such products.”  The U.S. House of Representatives has yet to take up their version of the HHS funding bill for FY-2019, or to consider this amendment.

Vague Amendment raises Free Speech concerns, other questions

There remains significant ambiguity over whether HHS has the legal authority to enact such a rule and how any such potential regulation would be enforced.  Coalition for Healthcare Communication Executive Director John F. Kamp told the New York Times in May that a drug-price disclosure requirement, “as a form of compelled speech, could violate the First Amendment.”  The measure says HHS would enforce “appropriate disclosure of pricing,” but it is unclear what pricing information should be communicated to the consumer: the Wholesale Acquisition Cost (WAC) or a different metric.  The price that a consumer ultimately pays may not be reflective of the price at which the manufacturer makes the drug available to providers or insurers (due to various negotiated price concessions such as rebates, as well as due to the fact that benefit plan requirements that may govern patient out-of-pocket costs).  Any proposed regulation therefore would need to specify whether drug makers could include caveats regarding such differentiating factors.

Amendment sponsors attack “Big Pharma” for opposition to measure

Sen. Durbin attacked “Big Pharma” in a statement, saying they were the only groups opposed to the proposal.  Similarly, in a floor speech promoting the amendment, Sen. Grassley assailed pharmaceutical companies for lobbying against drug price transparency measures such as this.

Grassley called the measure “Midwestern common sense” and compared it to price disclosure requirements for cars or gas stations.  Grassley concluded, “We ought to be able to get some of this common sense stuff done,” confidently adding, “We’re going to get this done one way or this other.  If we don’t get it done on this bill, we’re going to get it done, because it’s the right thing to do.”

More drug pricing transparency reforms to come

Earlier last week, the Centers for Medicare and Medicaid Services (CMS) sent to the Office of Management and Budget (OMB) for review a proposed rulemaking titled, “Regulation to Require Drug Pricing Transparency,” the text of which has not been made public; it is unclear what precisely the measure would require.  Earlier this month, CMS also announced plans to begin using “step therapy” to reduce spending on Part B drugs in Medicare Advantage plans.  In February, we outlined the budget proposals of HHS and OMB, predicting more changes to come in this space.  We will continue to monitor these changes and keep you apprised as the funding bills move through Congress.