In May of 2018, the Department of Health and Human Services (HHS) issued a final rule about drug price transparency in ads. The rule stated that drug companies must list the price of drugs covered by Medicare and Medicaid if the list price is equal to or greater than $35 for a one-month supply.
The rule came as part of an HHS blueprint endorsed by Trump that was meant to boost competition, enhance drug price negotiation, create incentives for lower list prices, and decrease out-of-pocket costs. The goal was to make drug companies be more transparent about their prices and practices.
Drug companies are required to list all potential side effects of a drug, which consumers are accustomed to seeing in fine print or hearing read through very quickly. However, when it comes to the price, that can often come as a huge surprise when they arrive at the pharmacy check-out counter.
What happened next?
Three large drug companies — Merck, Eli Lilly, and Amgen — launched a lawsuit against the transparency rule arguing that HHS did not have the authority and that it violated free speech. Broadcasting and advertising groups also advocated against the rule.
On July 8, 2019, federal judge Amit Mehta blocked the HHS final rule. He ruled that the HHS did not have the authority to issue such a rule without Congress authorizing it. “No matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized,” Mehta wrote.
On January 12 of this year, the HHS took the drug makers to federal appeals court to fight it out, however judges were skeptical about the rule.
Arguments against the rule
Drug companies and the judges argue that the list price is not always what the patient will pay, which would lead to confusion. However that is not the case; the list price will give a person a good idea of what they will pay, and is often exactly what they will pay. Here’s why.
If a patient has a high-deductible plan, they pay the drug’s list price until they meet their deductible. If they have a Medicare Part D plan, the patient pays a percentage of the list price in coinsurance. And if a patient has no insurance or if the drug in question is not on their plan’s formulary, then the patient pays the list price.
AARP Advocacy and Congressional action
AARP has been advocating for transparency and putting drug prices in ads with their Stop Rx Greed campaign to help convince federal and state lawmakers to bring down the cost of drugs. “Improving transparency sheds the cloak of secrecy around drug prices by revealing valuable information to consumers and other stakeholders so they can seek viable, cost-reducing solutions,” AARP states.
As far as action by Congress, Senators Dick Durbin (D-IL) and Chuck Grassley (R-IA) have sponsored a bill that would require drug price transparency in TV ads, however getting the bill passed is another issue.