Pricing in DTC Pharma Ads Rollup: The Latest Federal Plans, Interest Group Opinions and Company Actions

On April 15, PhRMA rolled out its (voluntary) revised principles that include a new guideline: direct-to-consumer drug TV ads should let people know where they can find pricing information. This update comes at a time when the federal government is fighting for pricing transparency, and we have already seen a few companies begin the process of updating their ads.

This topic has also piqued consumer interest. A recent Kaiser Family Foundation poll on prescription drugs and their prices found that 88% of respondents were in favor of requiring drug list prices in ads.

Though including list prices only makes a tiny dent in today’s expensive healthcare problems, it’s a step in the right direction. Pricing transparency is an opportunity for consumers to be more aware of drug costs, and maybe — just maybe — it will pressure companies to rethink rising prices.

Regardless of opinion, many of these updates create a new challenge in pharmaceutical advertising: How can cost be communicated clearly in a world of health insurance, Medicare, and rebates? We decided to summarize the current state of affairs to understand how soon we’ll see required changes in advertising.

Federal Government: DTC Ads Should Include List Prices

• The American Patients First plan, released by the Department of Health & Human Services (HHS) in May 2018, promotes including list prices in direct-to-consumer advertising. This is an effort to incentivize lower list prices and, ultimately, lower drug costs.
• In August 2018, the Senate approved a spending bill that would provide $1 million to HHS to issue rules requiring advertisers to include drug list prices in direct-to-consumer ads. The amendment was later blocked in the House of Representatives.
• Meanwhile, the Centers for Medicare & Medicaid Services issued the proposed rule in October 2018 and collected comments until December 2018. In total, it received over 140 comments.

Interest Groups: Consumers Should Be Able to Find Pricing, But Maybe Not in DTC Ads

• In addition to updating its voluntary DTC principles to urge that television ads direct consumers to pricing information, PhRMA has also pushed back against federal proposals to include list prices in DTC ads, claiming a drug’s list price alone is “misleading, lacks appropriate context, and isn’t what patients want or need.”
• The Campaign for Sustainable Rx Pricing — made up of insurance companies, hospitals, physicians and more — is all for including list prices in DTC ads. They’ve referred to PhRMA’s guidelines update as “a joke since drug pricing can already be found online.”
• The American Medical Association adopted a policy in 2017 that “calls on manufacturers to list the suggested retail prices of drugs when running direct-to-consumer ads.” Since then, they’ve been quiet. Their campaign site, truthinrx.org, makes no mention of their policy.

Companies Taking Action

• Eli Lilly has started following PhRMA’s guidelines. In January 2019, its drug Trulicity was one of the first to include a phone number and a link to a website for pricing information, www.lillypricinginfo.com.
• Johnson & Johnson took it a step further. Starting in February 2019, ads for Xarelto, its most frequently prescribed drug, include list price, average patient cost, and a link to more pricing information.
• Since then, several other PhRMA members have followed suit, directing consumers to websites in their ads as well.

While widespread changes have been slow, we’re interested to see what actions companies take on their own and how that might impact pricing pressures and consumer perceptions. We’ll provide updates as they become available, and we’ll keep an eye out as regulations are put in place.