PFE Pfizer Inc

By Stephanie Armour 

The Trump administration completed its rule requiring drugmakers to include list prices for most drugs in television ads, pushing ahead with efforts to improve transparency in health-care costs despite opposition from pharmaceutical companies.

The administration's new rule, set to take effect this summer, applies to direct-to-consumer TV advertisements for prescription drugs covered by Medicare or Medicaid. Drugmakers must include the wholesale acquisition cost, or list price, if it is equal to or greater than $35 for a month's supply, and must post the list price at the end of the ad in a way that it can be seen clearly.

In 2017, over $5.5 billion was spent on prescription-drug advertising, including nearly $4.2 billion on TV ads. Commonly advertised drugs include AbbVie Inc.'s Humira, which has a list price of more than $5,000 a month, along with Pfizer Inc.'s Lyrica, which costs $468 a month, according to data provided in the rule.

The rule will go into effect 60 days after it posts in the Federal Register, which is expected to occur Friday.

Drugmakers have opposed the mandate, saying the rule could improperly limit free speech and that providing only the list price would confuse and mislead consumers who might think they have to pay more than they actually would. The list price is the figure initially set by the drugmaker, but it is different than what consumers generally pay, because it doesn't take into account rebates, discounts and insurance payments.

"While we are still reviewing the administration's rule, we believe there are operational challenges, particularly the 60-day implementation timeframe, and think the final rule raises First Amendment and statutory concerns," said Stephen Ubl, president and chief executive of the Pharmaceutical Research and Manufacturers of America, or PhRMA, a trade group for the industry.

The administration argued that list prices matter to patients, especially consumers with high deductibles who often must pay the full amount. The U.S., one of the few countries to allow TV ads for drugs, currently requires ads to disclose side effects and other information.

"Requiring the inclusion of drugs' list prices in TV ads is the single most significant step any administration has taken toward a simple commitment: American patients deserve to know the prices of the healthcare they receive," said Health and Human Services Secretary Alex Azar, in a written statement. "We think it is a fundamental right to know" the list price of the drug.

Matt Eyles, president and chief executive of America's Health Insurance Plans, a trade group for the industry, said "greater transparency from manufacturers into drug prices -- how drugmakers set those prices, and why they increase prices on the exact same product year after year -- is essential to bringing down drug prices."

The rule issued Wednesday by HHS is part of a broader effort launched by the White House in May 2018 to combat rising drug prices, an issue many consumers rank as a top health-care concern in polls.

The administration has pursued a proposal to tackle drug rebates that go to middlemen, which could halt billions of dollars in discounts that drugmakers give insurers and companies such as CVS Health Corp. and UnitedHealth Group Inc. that administer Medicare prescription plans. The Food and Drug Administration has also sharply increased the number of generic drugs approved over the past year.

But the administration has also faced criticism for not taking bolder steps, such as allowing for the importation of drugs from other countries such as Canada. Congressional Democrats have also said the efforts fall short of mandating the negotiation of drug prices in Medicare's prescription drug benefit.

The pharmaceutical industry has said it is being made a scapegoat for other issues that are driving drug costs. Prescription drug costs are projected to increase by an average of 6.3% annually from 2017 through 2026, according to federal data released in February.

Some drugmakers have begun listing prices before the rule was completed. PhRMA last year said major drugmakers would voluntarily include price-related information in TV ads by directing consumers to websites where they can find information on list prices and costs.

The rule's total administrative costs for drugmakers are expected to be about $5.2 million in 2020 and about $2.5 million in subsequent years. Larger drugmakers will experience higher costs.

Write to Stephanie Armour at stephanie.armour@wsj.com

(END) Dow Jones Newswires

May 08, 2019 13:23 ET (17:23 GMT)

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