CMS aims to increase drug pricing transparency through price disclosure legislation

23 May 2019

Healio

WASHINGTON — In a presentation at the Rising Leaders Conference on Healthcare Policy, Kate Rawson discussed what to expect with the Direct-to-Consumer Price Disclosure Rule proposed by CMS.

Proposed as a way to increase transparency on drug pricing, the Direct-to-Consumer Price Disclosure Rule allows HHS to “call on FDA to evaluate the inclusion of list prices in direct-to-consumer advertising,” Rawson, who is a senior editor at Prevision Policy LLC, said.

Although the legal basis and price impact of the rule are unknown, according to Rawson, it has prompted the Pharmaceutical Research and Manufacturers of America (PhRMA) “to change its policy on patient-level pricing” and the rule has bipartisan support. The rule will require drug manufacturers to advertise the list price per month of the product.

Rawson noted one response from industry on this new rule may be to discontinue TV ads for some brands.

“That may seem like an extreme step with some adverse commercial implications but at least, in some cases, it could be an attractive option for shifting promotional expenses provided that the competitors for that product make the same choice,” Rawson said.

Another option would be to challenge the rule in court on First Amendment grounds, Rawson noted. Finally, she added that manufacturers can fail to comply with the rule and see what happens.

“The immediate impact of not complying with this rule is that you land on ... a public list that HHS maintains saying that you did not comply, but that is only the immediate consequence,” Rawson said.

According to Rawson, the Medicare Part D Rebate Rule is one of two pricing rules to come from HHS through the Office of the Inspector General which would eliminate the safe harbor protecting rebates.

“We have now heard from CMS that they are going to be delaying [the Medicare Part D Rebate Rule], so that will not impact the next term year,” she said.

In addition, Rawson said the Medicare Part B Reference Pricing Demonstration would put a spending cap on out-of-pocket costs for Medicare Part D drugs, while an international price index would benchmark Medicare Part B drugs in the United States against those in other countries.

However, Rawson noted that neither of these rules are popular options on Capitol Hill and may be de-prioritized or dropped altogether. – by Casey Tingle

Reference:

Rawson K. Health policy entering the 2020 campaign cycle. Presented at: Rising Leaders Conference on Healthcare Policy; May 21-22, 2019; Washington.

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