CMS Drug Pricing Transparency Fact Sheet

“If we want to have a real market for drugs, why not have [companies] disclose their prices in the ads, too? Consumers would have much more balanced information, and companies would have a very different set of incentives for setting their prices.” – HHS Secretary Alex Azar

–

In May 2018, President Trump and Secretary Azar introduced the American Patients First blueprint to bring down prescription drug prices. Less than a year later, we are publishing the first final rule to implement the vision laid out in the blueprint.

• The blueprint laid out four strategies for solving the problems patients face: boosting competition, enhancing negotiation, creating incentives for lower list prices, and bringing down out-of-pocket costs.
• To create better incentives for lower list prices, the blueprint called for HHS to consider requiring the inclusion of list prices in direct-to-consumer advertising.

Right now, drug companies are required to disclose the major side effects a drug can have—but not the effect that buying the drug could have on your wallet. Patients deserve more transparency, and this administration is committed to shining a light on what pharmaceutical companies have been hiding from patients.

Drug companies will now be required to disclose to patients the list price for prescription drugs in TV ads.

• This final rule will require direct-to-consumer television advertisements for prescription drug and biological products covered by Medicare or Medicaid to include the list price – the Wholesale Acquisition Cost – if that price is equal to or greater than $35 for a month’s supply or the usual course of therapy, with the prices updated quarterly.
• The 10 most commonly advertised drugs have list prices ranging from $488 to $16,938 per month or usual course of therapy. Patients deserve to know what a drug costs as they discuss their options with their doctor.
• The final rule will go into effect 60 days after it was published in the Federal Register.
• If a manufacturer simply includes price information in a direct-to-consumer advertisement as required by § 403.1202, that information in the advertisement will not require review by the FDA Office of Prescription Drug Promotion (ODPD). OPDP does not review price information in prescription drug advertisements and does not intend to do so in the future, unless the price information explicitly or implicitly incorporates safety or efficacy information about the drug, or makes express or implied claims about the safety or efficacy of the drug.

List prices matter to patients: Many patients either pay list price or pay prices calculated based on list price.

• 47 percent of Americans have high-deductible health insurance plans, under which they often pay the list price of a drug until they have spent through their deductible.
• A growing number of Part D plans offered use a deductible.
• All seniors on Medicare Part D have coinsurance for certain types of drugs, which means their out-of-pocket expenses are calculated as a share of list price.
• List prices are also what patients pay if a drug is not on their insurance formulary.
• The rules allow drug companies to provide additional information about expected costs for insured patients and other helpful information, if they choose.

HHS will continue to deliver solutions as laid out in the blueprint to improve drug price transparency and inform consumer decision making.

• As Secretary Azar has said, “You ought to know how much a drug costs and how much it’s going to cost you, long before you get to the pharmacy counter or get the bill in the mail.”
• In addition to drugs, HHS is reviewing comments on a number of other proposed rules to deliver more transparency and fix opaque systems and perverse incentives for a range of items and services.

Increased transparency will also incite competition – a major step forward in bringing free market forces to a system full of perverse incentives.

Read the final rule

Read the news release