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Prescription Drug Prices – CMS Says ‘Coming to a TV Ad Near You!’

• Author: Healthcare Team

cms drug prices

Update 7.11.19: Since this article was published, a federal court has struck down this rule requiring all direct-to-consumer advertisements contain the list price. The U.S. District Court for the District of Columbia ruled in favor of the pharmaceutical industry that the U.S. Department of Health and Human Services (HHS) has the authority to regulate content in advertisements regulated to health and safety, but not to dictate price transparency.

The Centers for Medicare and Medicaid Services (CMS) has finalized another rule. This rule requires all direct-to-consumer television advertisements for prescription drug and biological products covered by Medicare or Medicaid to include the list price, if the price is greater than or equal to $35 for a month’s supply. (The list price is the cost of the drug before health insurance or any other subsidies come into play.)

Health insurers like this new rule. “Greater transparency from manufacturers into drug prices — how drug makers set those prices, and why they increase prices on the exact same product year after year — is essential to bringing down drug prices,” says Matt Eyles, president and CEO of America’s Health Insurance Plans (AHIP). Indeed, this rule looks like it will help payers, who are currently picking up most of the tab for drug costs.

CMS says “the 10 most commonly advertised drugs have list prices ranging from $488 to $16,938 per month or usual course of therapy.” With about 47% of Americans currently enrolled in high-deductible health plans (HDHPs), many people are paying the list price until they have spent down their deductible. Knowing the cost of drug prices will help consumers have better, more informed conversations with their doctor about the approach to care and treatment. According to ThinkAdvisor, “Medicare or Medicaid plans pay most of the cost of expensive drugs for consumers with Medicare or Medicaid coverage, but [CMS] officials say in the introduction to the draft regulations that they want consumers to hear what the full list price of drug advertised on TV.”

Eyles adds, “Giving consumers pricing information in drug advertising will empower them to have more informed conversations with their doctor about the best approach to improve their health and manage their medical conditions.” CMS is definitely leading the charge on healthcare price transparency. Earlier this year, we wrote about another rule from CMS went into effect that required hospitals to post their prices online. Overall, the goal is to help empower healthcare consumers to ask for better treatment options and costs, and also to have as much information as possible about potential risks and realistic outcomes. It is no surprise that most drug makers do not like this new rule. In general, it will be interesting to see how this story plays out.

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