February 19, 2020

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CMS Final Rule on Drug Pricing Transparency in Consumer Television Ads

On May 10, 2019, the Centers for Medicare and Medicaid published a Final Rule on drug pricing transparency in consumer advertisements. The new rule requires direct-to-consumer (DTC) television advertisements to include the list price of prescription drugs and biological products distributed in the US that are reimbursable by Medicare or Medicaid, whether directly or indirectly.

As set forth in the rule, the pricing disclosure must include the Wholesale Acquisition Cost (WAC), which CMS is using as its measure for the list price. The price is expressed as the total amount for a 30-day supply or other typical regimen, using this language which is also in the rule:

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

The disclosure rule exempts drugs or biologicals that are priced less than $35 per month for a 30-day supply or typical course of treatment.

CMS is permitting manufacturers to include the price of a competitor’s product as well, as long as the ad is truthful, not misleading, and is not otherwise prohibited by law. CMS will be maintaining a public list that will include the products advertised in violation of the requirements, and anticipates that the primary enforcement mechanism will be the threat of private actions under the Lanham Act sec. 43(a), 15 U.S.C. 1125(a), for unfair competition from false or misleading advertising.

The new disclosure rule arose out of the May 2018 Trump Administration blueprint titled American Patients First, which described a transparent drug pricing system designed to lower high prescription drug prices and bring down out-of-pocket (OOP) costs. The blueprint called for HHS to consider requiring list prices to be included in DTC advertising, and described four strategies: boosting competition, enhancing negotiation, creating incentives for lower list prices, and reducing out-of-pocket (OOP) spending.

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About this Author

Melissa Lisa Thompson Health Lawyer Robinson Cole Law Firm

Lisa Thompson advises companies, senior management, and their boards of directors, with a focus on the health care, life sciences and technology industries. She is a member of the firm’s Health Law Group and Data Privacy + Cybersecurity Team.  She is also an arbitrator on the Commercial panel and the Health Care panel of the American Arbitration Association.  

Health Care, Life Science and Technology Industries

Lisa represents domestic and international clients in the health care, life science and technology industries, including pharmaceutical companies,...