People Care about Their Cost for Medicine, Not Pricing

The Kaiser Family Foundation released a poll showing that most Americans of all political persuasions support requiring prices in prescription drug ads, as supported by President Trump.

Ed Silverman of Stat News wrote a story about this poll, including a few comments from me. Later, I mentioned on Twitter that there was at least one important point I didn't tell Ed.

The poll didn't ask people what price to include (WAC, AMP, NADAC, FUL, AAC, SWP, etc.), and that's not surprising, since most people don't realize that there are so many different prices for prescription drugs.

That's an important point. There are tons of prices for prescription drugs, and at the end of the day, none of them correlates with what consumers actually care about.

Consumers care about how much THEY will pay for their prescriptions, but there's no way to determine that for all consumers, so any price that is presented is AT BEST deeply misleading.

What actually determines the price paid by the consumer at the pharmacy counter is a combination of: 1) what insurance (if any) they have, 2) which pharmacy they're using, 3) where they are in terms of their personal/family deductible for the year (or progress toward the prescription drug donut hole for those with Part D coverage), and 4) whether the manufacturer has any sort of copay or patient assistance program.

The WAC for Drug A might be $100, but if my copay is $4, then that's what matters to me. And if Drug B has a WAC of $50, but my copay is $25 for Drug B, then I'm not going to prefer Drug B despite the lower WAC.

I didn't conduct the Kaiser survey, and it would be difficult to ask the right questions to get at this issue, but if the pollsters were to include questions about things such as which price matters to a consumer, or what consumers mean when they say they want the "price" included in the drug ads, I suspect that what they'll find is that when pollsters ask, "Do you want pricing in drug ads?" what consumers hear is, "Do you want the ad to include how much you'll have to pay out of pocket for the drug?"

And unfortunately (or fortunately), there's no way to do that. I don't mean it's very hard to do that. I mean it's impossible to do that. Because the factors (as discussed above) are deeply personal, there's no way a manufacturer can include that information in their ads.

As Peter Pitts noted in a recent column, one factor driving the recent emphasis on drug pricing is the transition to high-deductible plans. As Americans are being asked to shoulder more of the costs out of pocket, they're becoming more aware of the high cost of some prescription drugs.

A few years ago, I learned just how much variety there is among pharmacies even for generic drugs, when I was buying medicine for a family member who did not have health insurance. I called several different pharmacies because the price was solely coming out of my pocket, and I was shocked to learn that the price varied from more than $150 to $10 for a 30-day supply. Needless to say, I chose the pharmacy with the $10 prescription.

All of this is to say that in addition to the issues I've previously discussed on how unlikely it is for FDA to mandate the inclusion of drug pricing in ads, consumers really don't understand what is being proposed, and as a consequence, they're unlikely to be happy with anything that results.

As I said to Ed during our phone call discussing this in comments that wound up on the cutting room floor, this is a situation where consumers are angry at pharmaceutical companies and I suspect that a significant part of the bipartisan support for including pricing in ads is along the lines of, "if pharma companies are against it, then it must be a good idea."

Careers in Food & Drug Law

I started law school last year, enrolling in Drexel University's Thomas Kline School of Law's accelerated JD program. In the fall, I'll begin my final year.

Among other things, becoming a law student made me learn about the Food and Drug Law Institute's group for those new to food and drug law (NFDL). Although I've been involved with FDLI for more than a decade, I wasn't aware of this program, which has a variety of programs and opportunities for young lawyers and law students who are new to the food and drug bar.

In March, I organized an FDLI event at the Kline Trial Advocacy Institute in Philadelphia. This was the first NFDL event outside the DC area, and approximately 40 law students from area schools attended.

The current issue of FDLI's Update magazine has my write-up about the evening's event, including some of the insights from Gayle Lawson of the FDA, Paul Savidge of Spark Therapeutics, Yvonne McKenzie previously of Pepper Hamilton, Amy Rick of FDLI, and Marlene Shea of Johnson & Johnson.

If you know any law students considering a career in food and drug law, I hope you'll share the piece and let them know about the NFDL.

Drug Ads Won't Include Drug Pricing Anytime Soon

Updated

Earlier today, the President announced a series of measures intended to lower drug pricing. Most of the measures were expected, but one particular item caught my eye.

"FDA is going to get straight to work on having drug companies share their prices in direct-to-consumer ads," said Secretary Azar, according to this transcript of his prepared remarks. That piqued my interest because ad-promo is sort of important to me. I just spent two days training people on all of the FDA's ad-promo requirements. Do I have to revise all of my materials and send out corrections to the attendees?

This announcement was part of the American Patients First blueprint, so I went to take a look at the blueprint itself. And there it is on page 11.

Listed under the heading "Immediate Actions," "FDA evaluation of requiring manufacturers to include list prices in advertising."

And then again on page 25, "HHS may" (emphasis added)
"Call on the FDA to evaluate the inclusion of list prices in direct-to-consumer advertising."

That's a far cry from FDA beginning to require companies include drug pricing in their advertising.

I'm well acquainted with 21 CFR 202.1, and I can't figure out under what provision FDA could reasonably interpret companies to have an obligation to include list prices.

Even determining what that requirement is would take some time, since there's the list price for a single dose, the price for a standard course of treatment, the annual price for people who take the treatment, etc.

So, it will indeed take some "evaluation" from FDA to determine how to require such inclusion in advertising. That might be why the FDA commissioner's statement about today's plan neglected to mention this item.

And of course, there's a separate question of whether there's a legal basis for such a requirement.

Congress certainly could pass a law to require the inclusion of this information in advertising. Fairly recently, Congress required that print advertising include the "MedWatch" statement.

Such a new requirement would probably face court challenges, as many "compelled speech" provisions have been facing court challenges.

And as part of its deliberations, Congress would, I hope clarify things such as exactly what ads this requirement applied to.

Assuming Congress figured this out, the President signed the bill, FDA promulgated the relevant regulations, and everything successfully survived court challenges, there could at some point in President Trump's third term be a new requirement for prescription ads to include pricing information.

Why, though, would anyone want this? What exactly is the mechanism by which such a requirement would lower drug pricing?

I can think of two possibilities. First, shame. Perhaps, the idea is that pharmaceutical companies would be simply too embarrassed to include the price of very expensive drugs in their ads. Based on this idea, just exposing the prices to the light of day would itself result in the prices being lowered.

I find this idea implausible. Companies already make their prices public in various ways. It isn't unusual for companies to announce pricing in investor notices or announcements of drug approvals. That publicity hasn't resulted in any lowering of costs, and I see no reason why this would change things.

The second possibility is that consumers would demand lower-cost alternatives. I guess the idea is that a consumer who sees an ad for a potential cancer treatment with a list price of $100,000 would think, "Gee, I better look for a less expensive alternative treatment."

I don't know why a consumer would think that, and I also don't know why anyone would find it desirable to have consumers do so.

Would a consumer who definitely won't be paying the full list price really respond to seeing the list price by looking for a less expensive treatment? I doubt it.

But more importantly, I don't want consumers deciding against a course of treatment based on the list price. In FDA's 2017 guidance about presenting health care economic information to payors, FDA stated that sponsors should present this information to people with the skill to understand such information and quoted the House report that the legal provision permitting such communications were "not intended to permit manufacturers to provide such health care economic information to medical practitioners."

If FDA and Congress were concerned that physicians would not understand healthcare economic information, why would anyone think that mandating the presentation of incomplete HCEI to consumers is a good idea? Because remember that list price of treatment is only one factor in determining actual cost effectiveness of treatment.

TL/DR version: This is a bad idea that would at a minimum require new regulations to become an actual requirement. It probably requires a new law to authorize it. I fully expect that this proposal will generate a ton of headlines and chatter for the next few days, and then be quietly ignored by people who actually care about controlling the cost of medications.

Update (May 27, 2018): A group of Senators sent a letter to several major pharmaceutical companies urging them to voluntarily include drug prices in their ads. It's unclear to me whether this letter makes it more or less likely that the Senate will take up and pass legislation to add this requirement to prescription medicine ads.

FDA Product Name Guidance Finalized

Last week, the FDA published a final version of the Product Name Placement, Size, and Prominence in Promotional Labeling and Advertisements.

FDA has been remarkably active on this topic, as this is now the third update to the guidance in the past five years. People who have been following this guidance will be pleased to hear that there's little new. Though there are many changes, there are no substantial changes from the 2013 version. The most significant development in the new guidance is the provision of examples demonstrating FDA's principles about prominence of the product name.

If you'd like a quick overview of the guidance, I suggest this one from Intouch Solutions.

WTA?

Disclosure: I sit on the Google Health Advisory Board, and Google has been a client of PhillyCooke Consulting. Nothing in this post has been shown to Google or received the endorsement or approval of anyone at Google. I have discussed the topic of this post with Google employees.

"Why this ad?" (WTA) functionality has suddenly become hot news in the pharmaceutical industry. For those of you who have not noticed it previously, or heard the hubbub, here's the deal.

Google takes transparency quite seriously, and given the privacy concerns everyone has about trusting any company with as much information as Google maintains on people, it's understandable why.

As part of its transparency efforts, Google added some new functionality to its search engine marketing (SEM) results a few years ago. Users are able to learn why a particular ad is being presented to them.

In practice what users see is a symbol (either an encircled letter "i" or a green triangle) next to a promoted message.



The red box surrounds the symbol in mobile and desktop search results that
enable the user to learn more about the ad targeting.
Users who click on the symbol see a question appear, "Why this ad?"




These images show the "Why this ad?" popup that users see after clicking on the symbol.

Clicking on the question prompts a further box to appear with information about why that particular ad was displayed to the user.



There are differences between the functionality in a desktop/laptop and a mobile environment. For example, in the mobile environment, the shadow box effect obscures and separates the underlying ad from the information supplied by Google more than the overlaid box alone that is seen on a laptop.

Both mobile and desktop ads display the root URL of the destination from the ad at the top of the box, and both allow signed-in users to opt out of seeing ads from that URL via a slider at the bottom of the box, which again displays that root URL of the destination webpage.

The reasons provided for what the ad is based on will vary depending on what caused the ad to appear. The factors listed in SEM ads will always include the search terms and might also include factors such as location (if the user permits Google to access that information) or that the user has previously visited the site.

The WTA information and functionality is not advertising content. No advertiser is permitted to alter this content or has any control over it. Advertisers indirectly influence it via the parameters that they set for determining when their ads appear. For example, if an advertiser targets only users who have previously visited their website, then that factor might appear, whereas if the targeting is solely based on the search terms, then it would be less likely to appear.

Some people have recently learned about this functionality and raised questions about whether it poses a potential risk for violating the Food and Drug Administration's (FDA) advertising regulations.

The scenario these people envision is that a company is using a redirecting ad, which by definition doesn't include the brand name in the ad itself but instead redirects users to a Brand.com website. If a user sees such an ad and clicks on the WTA symbol, and then clicks a second time on the "Why this ad?" popup, the user will see the brand name appearing because the brand name is most often the root URL of the home page for the destination of the redirecting ad.

The FDA has made clear via previous enforcement actions (such as many of the infamous 14 search letters from 2009) that merely using the brand name in a URL is considered by the FDA to be a mention of the drug for the purposes of advertising the product, and carries with it all of the requirements associated with any other product name mention.

Depending on the type of ad, the requirements might include only the inclusion of the brand and generic names and the relative sizing of the two, or they could be as extensive as the inclusion of the complete indication statement, dosage form, etc., associated with a full product promotion.

Let's first address the idea that a company could be out of compliance because the brand name of its product appeared without the generic name. The brand name is appearing in a location over which the company has no control. As mentioned earlier, the popup box is not itself an advertising unit. Companies cannot ask Google to change the information that appears in the box, and they have no control over it. There is some indirect influence, but this is definitely not a company-owned or company-controlled communication. Consequently, it would seem that this appearance of the brand name would be analogous to a newspaper using the brand name, and newspapers frequently use the brand name of drugs without including the generic name. 

FDA would never take enforcement action against a company for that type of third-party action, and it is hard to imagine that they would do so here.

Then there's a second issue. Depending on whether a user is accessing the ad via a mobile device or a desktop computer, the user might be able to see the underlying ad at the same time as the overlay. It is certainly possible that this could mean that a user sees both the brand name and some of the underlying redirecting ad, which was so carefully designed by the company to avoid including the brand name. In some cases, there is information in the redirecting ad that would be considered by the FDA to describe the product's use. And in that same set of infamous letters from 2009, FDA made very clear that including some description of a product's use with the brand name carries with it the full requirements associated with a complete production promotion (indication statement, etc.).

Does that pose a risk of FDA enforcement? 

For FDA to take an enforcement action in this instance, FDA would have to hold a company accountable for a message over which it has complete control (the underlying redirecting ad) when that message is combined with a separate message over which the company has no control.

It seems hard to believe the FDA would do something like that.

I admit that I would be happier if the WTA overlay box behaved the same way on a desktop as it does on a mobile device, with the shadow box effect that obscures the underlying ad and that also makes the separation between the two communications more clear.

But even without this change being implemented, I see an extremely low risk that FDA would take an enforcement action for an advertising publisher creating a tool that reveals more information than an advertiser wanted included in their ad.

While Google is determining what (if any) changes to make to its WTA functionality in light of the latest stir, I would submit for all of the reasons above that this poses a low risk of enforcement.

FDA's One-click Study

At the beginning of November, FDA announced its intention to conduct a study looking at the so-called "one-click rule." As readers of this blog know, I've termed this, "The 'Rule' That Isn't."

The basic idea behind any version of the one-click rule is that companies can meet their fair balance requirement (21 CFR 202.1(e)(5)(ii)) by including a hyperlink to the risk information, rather than by providing the risk information itself in the original communication. As I've written about previously, this idea has had significant allure for marketers of prescription products but there has never been any indication from the FDA that it was open to it...until now.

I have been working with a few different clients preparing comments on the study proposal outlined by the FDA. Those will be posted to the docket and available for public view at a later date.

In this post, I wanted to take a step back and look at what this study means (and what it doesn't mean) for the immediate and future use of space-limited contexts by prescription product manufacturers and FDA guidance about this issue.

In 1998, FDA took its first enforcement action for Internet marketing. At the time, the FDA noted that "the link to the full prescribing information alone is insufficient to meet the requirements...that advertisements contain fair balance."

This began an 18-year history of the FDA making clear that it did not acknowledge a one-click "rule." This position was further solidified via FDA's 2014 guidance on space-limited contexts (the so-called "Twitter Guidance") that directly addressed the use of Twitter and search engine marketing formats that explicitly limit the number of characters. In that guidance, FDA asserted, "Regardless of character space constraints that may be present on certain Internet/social media platforms, if a firm chooses to make a product benefit claim, the firm should also incorporate risk information within the same character-space-limited communication." This is as explicit a rejection of any version of a one-click rule as FDA could possibly have made.

Just one sentence earlier in the guidance, FDA further asserted that, "If an accurate and balanced presentation of both risks and benefits of a specific product is not possible within the constraints of the platform, then the firm should reconsider using that platform for the intended promotional message (other than for permitted reminder promotion)."

Combined, these two statements established a framework that FDA was explicitly acknowledging could not be used by some manufacturers of prescription products for making claims about the benefits of their products. The consequences of this framework is that in certain contexts only products not subject to FDA's fair balance requirement would be able to provide benefit information about their products.

Of course, "benefit" information includes any suggestion of the product's indication. In practice, this means that prescription products manufacturers are frequently prevented from letting people know that their product(s) are possible treatment options for them; and that FDA's official position, as expressed in the 2014 guidance, is that this is fine.

Many people objected to this aspect of the draft guidance (see, for example, the comments from PhRMA), and that resulted in a brief movement to include a version of the one-click rule in the 21st Century Cures Act.

In that context, FDA's openness to studying these issues is a major step forward. Rather than simply assuming without any evidence that the public is harmed by companies following some version of a one-click rule, FDA is actually studying the issue.

This positive development is balanced, however, with the study design itself. In the proposed study, FDA is comparing a format that makes use of a one-click rule with a format that follows the recommendations from the 2014 guidance. One problem with this study design is that it is comparing a format that the FDA has acknowledged is not available to all product manufacturers because of the nature of their specific indications and risks. Indeed, I'm not aware of a single company that has attempted to use the format FDA demonstrated in that guidance for Google search or a Twitter ad.*

In addition, although FDA's willingness to study this topic is refreshing, the study announcement coming late in 2016 would seem to indicate that the status quo will remain for several years. It has been more than a year since FDA has released any new or updated guidance related to advertising and promotion (the last one was a minor revision in August of 2015), and the existing FDA guidance on space-constrained contexts has some glaring issues, independent of the position on one-click.

Taking a generous view of FDA's speed in fielding this research, it would be difficult to imagine that the final study results would be available before the end of 2017. FDA absolutely takes the work of its research team into account in developing guidance, including the ad-promo research. That probably means that the earliest we would see any update to the 2014 guidance would be 2018.

That's four years after FDA released the draft guidance and nine years after the 2009 hearings. FDA can't be expected to provide guidance that keeps up with the pace of technological change. Indeed, I think that's a virtue rather than a drawback to FDA's approach. It's better to have guidance that lags slightly behind innovation rather than wasting time developing guidance on topics that prove to be mere flashes in the pan. Consider the wasted effort if FDA had developed a guidance dedicated to Sidewiki after its 2009 hearings.

This, however, is a very different situation. FDA's enforcement activity related to its rejection of any version of the one-click rule has spanned nearly 20 years. Throughout that time, marketers of prescription products who want to inform the public about how they can help have been hindered in the ability to make that information available in the platforms that people are showing they prefer. And only now is FDA announcing its intention to see whether that position has any basis in actual experience. 



* If anyone is aware of such an ad, please share it in the comments or via the contact form in the right rail.

Google's Latest Ad Format Update

Google recently announced a change to its standard ad unit. This marks the third significant change affecting marketers of prescription products in the past year who are using Google.

At this point, I'm definitely seeing the need to revisit my article on using Google to market prescription products and even the presentation from last fall's FDLI Advertising and Promotion conference is now out of date. Over the next few months, I will be providing more on that.

In the meantime, here's the skinny on the update.

Google is fully embracing a mobile-first world view and is expanding the character count limitations for text ads.

The chart below (lifted from Google's public blog post) shows the breakdown between the current and the new formats.


For the ad copy, an additional 35 characters will be available for the headline, and an additional 10 characters will be available for the description. As pointed out by Convergence Point Media, in practice, this might expand the total characters available in a description even more than 10 characters because the description will no longer be treated as two separate 35-characters fields. That might mean that marketers are able to avoid the waste that sometimes is entailed in the current two-line description.

The primary benefit for marketers of prescription products is that it will be easier to meet their requirements for promoting drugs without a black box via a reminder ad and for black box drugs to fit all of the required elements for a reminder-like ad. This is most particularly relevant to fixed dose combination products. When the product being promoted has four or five active ingredients, it can very quickly be difficult to fix everything into the current character count limitations. Yet, failure to use the full established name remains on FDA's radar both in guidance and enforcement as a key regulatory requirement.

In addition to this expansion of the character counts, the display URL will be treated differently. Currently, marketers are able to manually enter a distinct display URL for their ads. In the new ad format, the display URL will be "automatically extracted" from the destination URL, with some (but only minimal) ability to customize the display URL seen by users.

This change has far greater implications for prescription product marketers, as it is precisely the ability to have a difference between the destination and the display URL that enables marketers to make use of redirecting ads.

If the ads automatically extract the base URL from the destination URL, then the mismatch between display and destination URL that is essential to redirecting ads will no longer be possible. This would significantly limit prescription product marketers' options. 

The biggest concern is for smaller, less well known brands. For those brands a reminder ad is not viable because very few people are already aware of their brand name; hence a reminder ad that doesn't describe the product's use has no value. But if the redirecting ads are eliminated, then such lesser known brands would have no way of attracting people who are looking for treatments. By assumption, these brands are not as well known which also means that their organic listings are not likely to be very high, so this would have a deeply chilling effect on the information available to people using Google. In essence, Google paid search would no longer be a viable means for building brands, but only for maintaining brands built on other platforms.

At the moment, Google has not provided any information about when this update will move beyond its initial testing to be available for everyone, or when it will be mandatory that ads adopt this new format. For now, this is simply something that marketers and regulatory professionals will need to stay abreast of.

It is also important to note that Google isn't synonymous with search, though it is the largest platform by a significant margin. Yahoo! and Bing remain very large players in this arena, and there's no reason to assume that Yahoo! and Bing will automatically adopt Google's changes. As a practical matter, this will probably mean having multiple sets of paid search campaigns going through the review and approval process.