CMS Finalizes Regulations Around Prescription Drug Price Disclosure for TV Advertisements

It has finally happened. On May, 10th the Centers for Medicare and Medicaid Services (CMS) finalized its proposed rule that will require pharmaceutical manufacturers to disclose their products wholesale acquisition cost (WAC) for certain direct-to-consumer advertisements. The final rule is largely unchanged from the proposed rule and will become effective beginning on July 9th, 2019.

What does the final rule entail?

The final rule stipulates that any pharmaceutical advertisement (regardless of platform) for prescription drug products must include a statement disclosing the WAC for a typical 30-day treatment regimen. The rule applies to any prescription drug or biologic product that’s eligible for Medicare or Medicaid reimbursement. The statement to be placed on qualifying products reads as follows:

“The list price for a [30-day supply of][typical course of treatment with][name of prescription drug or biological product] is [price]. If you have health insurance that covers drugs, your cost may be different.”

The “list price” to be included in the advertisements is the WAC is the manufacturer’s list price for the most recent month available, excluding any applicable discounts or rebates. This list price aims to reflect the WAC for a 30-day regimen or typical course of treatment. For pharmaceutical and biologic products that treat multiple conditions, the list price used is the one associated with the indication advertised. The statement will be placed at the end of advertisements and must appear in a legible style and font.

The rule applies to all prescription drugs for which direct or indirect payment is available through Medicare and Medicaid. The only exception to the finalized rule is for products that have a WAC of less than $35 dollars per month for a typical course of treatment or 30-day supply.

Companies who fail to comply with the final rule will be added to a publicly available list on the CMS’s website.

What does the rule accomplish?

CMS claims that the final rule will bring greater scrutiny to the rising prices of prescription medications and the impact they have on costs to Medicare and Medicaid. CMS argues that by increasing transparency around drug pricing will give consumers the tools they need to make more informed healthcare decisions. In defense of the new rule, CMS cited a 2019 study in the Journal of the American Medical Association that found consumers were better able to estimate their out-of-pocket costs when they know the WAC than without.

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