Preparing for Pricing in DTC TV

UPDATE: On July 8, 2019, the judge in the pending litigation described below issued an order setting aside the CMS rule. The full opinion is available here.

If nothing changes, the new rule about including drug pricing in TV ads from CMS will go into effect one week from today on July 9, 2019.

There are a few wrinkles to keep in mind as we approach this deadline. First, there's a lawsuit pending that could delay the rule's implementation. Second, the operational challenges of abiding by the rule are the biggest hurdle including the expanded 2253 filing requirements. Third, the rule's scope is still unclear. Fourth, the rule doesn't preclude or preempt the PhRMA Principles change from April. Finally, the overlapping but non-identical scope of the rules could lead to some confusion and compliance hiccups. This post addresses each of these points in turn.

Pending Litigation

As I noted in a previous post, several pharmaceutical companies along with the Association of National Advertisers filed a complaint seeking to overturn the CMS rule. The full complaint is available here. The plaintiffs have filed a motion to stay the rule's implementation, and the judge has set a date of July 8 for issuing a decision. So, it is possible that companies will not actually be required to include their drug pricing in TV spots on July 9; however, as a practical matter, companies airing spots on July 9 and soon thereafter have most likely already developed them with the required pricing information included. 

All promotional materials for prescription drugs, biologics, and vaccines must be submitted to the FDA at time of initial dissemination or publication, so the FDA has most likely already begun receiving submissions of TV spots that include the information, and it is unlikely that a company would go to the time and expense of producing two versions of their TV spots (one with the pricing and one without) and submit both the FDA, only to determine on July 8 which spot to air the next day. Consequently, even if the judge issues a stay on the rule, there's a good chance that you'll see at least a few TV spots featuring pricing on July 9.

And that points to one of the issues the rule raises: operational challenges.

Operational Challenges 

Adding a line of copy to a TV ad is not a massive creative endeavor, and because the rule only requires the copy to appear on screen for a long enough time to be read, there are no audio implications, but the CMS rule requires that the pricing information presented is kept up to date. Specifically, the new rule requires that the pricing information provided be:
"as determined on the first day of the quarter during which the advertisement is being aired or otherwise broadcast." 42 CFR 403.1202 (not yet live on the code of federal regulations itself).

That means the pricing information must potentially be updated every quarter. Of course, most companies don't change their drug pricing quarterly, but it is common to have pricing updates twice per year. So, every time a company changes its pricing, it will have to determine what ads are currently airing and whether the pricing updates affect those ads. If the pricing changes affect the ads, then the ads will have to be updated. An updated TV ad both means an expense for the advertiser, but it also means a new 2253 filing with the FDA because updated materials must be resubmitted to the Agency.

And that means that the media buyers placing the ads will have one additional wrinkle to keep in mind as they manage the ad placements. They'll need to make sure that as new pricing comes into affect and ads are updated that the old ads are removed from the rotation, lest they be placed on CMS's naughty list.

That operational challenge is compounded by the fact that the scope of the rule is unclear, so it's not currently possible to say exactly what ads must include drug pricing.

Rule Scope Unclear

As I noted in a previous post, CMS made it clear that the requirement to include pricing does not apply to ALL direct to consumer (DTC) ads, but only to a limited subset of DTC ads. Specifically, the new requirement applies to only ads that appear on broadcast, cable, satellite, and streaming television. Unfortunately, CMS never explained what "streaming television" is. I tried to find a definition somewhere but wasn't able to do so. This matters because there are tons of DTC video ads that MIGHT be considered subject to the rule that are definitely not presented on "broadcast, cable, or satellite television."

Because of this scope unclarity, the operational challenges of managing ad inventory is compounded, and of course, companies must decide how to handle ads that are used on television when they appear in places where the pricing information is not required. It would certainly be easier to develop a version of the ad that doesn't require quarterly updates, but it also is easier to traffic fewer total ad units.

CMS Rule Adds to (Doesn't Replace) PhRMA's Pricing Requirements

The Pharmaceutical Research and Manufacturers of America (PhRMA) updated its Guiding Principles on Direct to Consumer Advertisements about Prescription Medicines in October of 2018. The most significant change was the addition of a requirement for television ads to include a destination where people can find pricing information about the prescription drug being advertised. This requirement became operative in April of 2019. All members of PhRMA are obligated to follow the PhRMA guiding principles, and most companies that are not members of PhRMA also abide by the guiding principles. Consequently, almost all television commercials currently airing include a link to a webpage with pricing information.

Adhering to the CMS rule does NOT meet the PhRMA guiding principles. Consequently, most companies will be providing both a link to a page with additional information and the pricing information required by CMS. We'll see how companies execute this, but my expectation is that a single screen at the end of a television commercial will accommodate both pieces of information.

Of course, not all ads are required to include both pieces (or even either piece!) of information.

Non-identical Overlapping Scopes

The new CMS rule applies to all advertised indications of a pharmaceutical product that are reimbursed via Medicare or Medicaid and whose cost is at least $35 per month (or for a typical course of treatment). 42 CFR 403.1200. Note that some drugs have multiple indications, where only some of the indications are reimbursed by CMS. For those products, only the ads that promote an indication reimbursed by CMS are required to include the pricing information; and only if the drug's list price is at least $35 per month (or for a typical course of treatment).

By contrast, the PhRMA guiding principles apply to all ads for prescription medicines regardless of whether the drug is reimbursed by CMS and regardless of the cost. Of course, the guiding principles are only binding on members of PhRMA and any non-member companies that have chosen to abide by the guiding principles.

TL;DR

Some commercials (but we don't know exactly which ones) might start having pricing information in one week. The addition of this information is allegedly going to address the allegedly high price of prescription drugs. The only guaranteed aspect of the recent changes from PhRMA and CMS is that marketing and regulatory operations groups are going to have challenges ensuring ongoing compliance, and the FDA is about to start getting more 2253 filings, including a likely surge of revised television spots in the next few days.