The industry and the Department of Health and Human Services presented different visions of what greater pricing transparency looks like in the future, complete with separate proposals of how and what information should be shared with consumers.
PhRMA kicked off this week’s conversation by introducing a voluntary agreement among its members to include information in DTC ads on where consumers can learn more about pricing and access of a medicine—potentially including list price and final OOP costs. The association argued that more detail than just the list price is needed to inform consumers, and cited polling data on what information Americans say they want.
In response, Secretary Azar issued a statement saying the proposal was insufficient.
Then, during a Monday afternoon speech to the National Academy of Medicine, Sec. Azar announced an Administration proposal that would require manufacturers to include the list price for any drug paid for by Medicare or Medicaid in their DTC TV ads. The proposed rule is available here.
In his remarks, Azar said “drug prices are like no other market” – citing the opaque nature of the marketplace and criticizing the pharma industry for claiming list prices are “meaningless.” Azar drew an analogy to automobile sticker prices being a meaningful part of a consumers’ decision-making, even if final prices are eventually negotiated. The Secretary also reiterated his position on the current system of rebates, saying they are unnecessary:
“We believe today’s rebates, which help drive list prices skyward, are not necessary to a strong negotiating ecosystem. They could be replaced with a model driven by fixed-price, upfront discounts—a concept reflected in the NAM’s call for patients’ out-of-pocket costs to reflect net prices.”
The proposals come after months of debate around an Administration proposal to include drug pricing information as part of DTC ads. Given the parameters of the Administration’s proposed rule, the requirement would only apply to companies that plan branded DTC television ads, not disease awareness campaigns or print ads. HHS estimates 25 companies will run 300 different TV ads each quarter and be affected by the rule.
CONSIDERATIONS FOR LIFE SCIENCE COMPANIES
- Prepare for continuous pricing discussions: Drug pricing discussions tend to spike around a few milestones: product approval, price increases and near the end of market exclusivity. Including pricing information on a website or directly in DTC ads will force those conversations to happen continuously, and life science companies should be updating their messaging now to ensure it is relevant and contextualizes pricing decisions.
- Decide what level of visibility you want in the new, more transparent world: Regardless of where the final rules around transparency land, companies have the option to react along a continuum, from meeting the letter of the law to driving thought leadership around pricing and access. We encourage companies to convene cross-functional meetings now to decide where on that continuum they want to fall, and the tactics needed to get there, before new rules are enforced.
- Prepare to provide a full pricing and access story: If transparency requirements expanded up to or including list prices in DTC TV ads per the Administration’s proposal, companies should consider strategies that go beyond the law to tell the broader story around access and OOP costs. Turn the requirement into an opportunity to discuss the value your drug brings to market and all the ways your company is working to ensure that people who need these treatments can get them.
The Syneos Health Reputation and Risk Management Practice has supported clients on pricing issues with brands in a variety of disease states, patient population sizes, and throughout product lifecycles. Companies with questions should email ReputationRiskManagementPractice@syneoshealth.com to discuss how to be best positioned in the new, more transparent, future.