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.