This Week – October 20, 2018
This Week in Washington, D.C.
- New CMS Rule: Drug Advertisements Must Include List Prices
- Other Rx News: President Trump Signs Pharmacy “Gag Orders” Legislation
- FDA Pediatric IBD Workshop: Register to Attend November Event
New CMS Rule: Drug Advertisements Must Include List Prices
On Monday, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule requiring drug manufacturers to list a product’s monthly wholesale price, or the cost for a typical course of treatment, if it is greater than $35 for 30 days. CMS asserts that the purpose of the proposed rule is to reduce drug prices overall.
Before it was issued, the proposal triggered pushback from drug companies. The industry argues that the disclosure of prices without additional context is misleading, since consumers pay a fraction of the list price due to insurers and pharmacy benefit managers negotiating for lower costs. However, the Trump Administration countered that the list price is relevant to patients before they meet insurance deductibles, or when a specific medication is not covered by a plan.
A brief summary and its impact on ACG members:
Drug costs borne by ACG members and patients: ACG Governors and members continue to convey the problems associated with the high costs of prescription drugs. CMS notes that Medicare beneficiaries spent more than $238 billion on prescription drugs in 2016 — more than half of the U.S. total. Over the past decade, drug spending for a Medicare Part D beneficiary increased nearly 40% — more than double of the consumer price index (CPI) for inflation. CMS also notes that drug rebates are expected to exceed 28% of total Medicare Part D drug costs within the next 10 years. Thus, CMS asserts that price transparency will reduce potential abusive increases, ultimately empowering consumers to be smarter purchasers of drugs.
Legal Authority: This regulation (if finalized) will likely find its way into the court system. Policy experts were quick to debate whether CMS has the legal authority to compel drugs manufacturers to disclose drug prices during advertisements. CMS asserts that the Social Security Act (SSA) provides broad rule-making authority for the administration of the Medicare and Medicaid programs to implement regulations necessary.
Purported Benefits of Price Transparency: CMS asserts that price disclosure in advertisements could impact utilization and spending. According to CMS, most consumers lack access to price information. Thus, list prices would be a helpful “anchor price,” even if it is not the amount most insured individuals will end up paying for the drug.
CMS also cites other statutory provisions which currently require drug pricing disclosures to the government (e.g., Medicaid rebate pricing) to demonstrate that Congress has previously endorsed the use of price disclosure as a means to advance the goal of minimizing unreasonable expenditures.
CMS did note in the rule that “Congress has not explicitly provided HHS with authority to compel the disclosure of list prices to the public,” but counters that “Congress has explicitly directed HHS to operate Medicare and Medicaid programs efficiently” and asserts that facilitating efficient markets through price transparency falls within this mandate. Finally, CMS concludes that its proposal “is necessary to the efficient administration of the Medicare,” and that direct-to-consumer advertisements without price disclosure undermine the efficient administration of the programs.
From ACG Legislative and Public Policy Chair, Whitfield L. Knapple, MD, FACG
Other Rx News: President Trump Signs Pharmacy “Gag Orders” Legislation
On October 10th, President Trump signed a pair of bills into law aimed at increasing drug pricing transparency at retail pharmacies. Congress passed the “Patient Right to Know Drug Prices Act” (S. 2554; HR 6143) and “Know the Lowest Price Act” (S. 2553; HR 6144) last month. These bills prohibit “gag clauses” which prevent pharmacists from telling customers whether they could save money by buying prescription drugs out-of-pocket rather than using their health insurance. S. 2554 applies to private health plans, while S. 2553 applies to Medicare Part D and Medicare Advantage plans.
According to Politico reporters, major pharmacy benefits managers stated that they no longer use “gag clauses,” and actually supported the bills. However, a JAMA study published in March reviewed over 9.5 million drug claims and found that 22%, or 2.2 million, resulted in overpayments in 2013, or $10.50 per covered beneficiary.
Other provisions: S. 2554 includes language requiring biosimilar and brand-name biological companies to submit patent settlement agreements to the Federal Trade Commission and Justice Department in an effort to prevent so-called “pay-for-delay” deals. The arrangements involve brand-name biologic companies paying a biosimilar maker to keep its product off the market for a set amount of years.
FDA Pediatric IBD Workshop:
Register to Attend November Event
ACG and other like-minded organizations are working in collaboration with the FDA on a Pediatric Inflammatory Bowel Disease (IBD) Workshop. This event will take place on Friday, November 16, 2018, from 8:00 a.m. until 5:00 p.m. The event is located at FDA’s White Oak Campus, 10903 New Hampshire Avenue, Building #31 – Room 1503A; Silver Spring, MD 20903. Remote participation is available.
This workshop is open to the public with no cost to attend, but registration is still required. Clinicians, investigators, patients and parents of patients, device manufacturers, pharmaceutical companies, contract research organizations and regulators are encouraged to attend.
Goals and Objectives:
- The aim of the workshop will be to discuss current barriers to expeditious pediatric IBD drug development and steps to overcome them.
- Specific topics will include a review of the legislation relevant to pediatric trials, extrapolation, trial design considerations, dose selection and the level of evidence required to establish safety and effectiveness in pediatric patients with IBD.