New DTC principles unveiled by PhRMA for transparency on drug prices

In a move that seems designed to head off potential legislative action, PhRMA on Monday announced that its member companies would be taking a new approach to DTC television advertising. The changes, which PhRMA member companies are expected to fully adopt by April 15, 2019, are aimed towards providing more transparency to patients about the cost of their medicines.

“We think this kind of transparency is needed across the healthcare system,” says Stephen Ubl, president and CEO of PhRMA. “This opaque pharmaceutical supply chain often results in uncertainty and frustration for patients and it’s no wonder why patients and policy makers have questions about their costs and are looking for more information. Insurers, pharmacy benefit managers, wholesalers, and every other entity in the supply chain should be more transparent and to help answer these questions.”

The new principles are an update of “PhRMA Guiding Principles: Direct to Consumer Advertisements About Prescription Medicines,” which were first adopted in 2006. According to PhRMA, “The DTC Principles have been expanded to include a new guiding principle stating, ‘All DTC television advertising that identifies a medicine by name should include direction as to where patients can find information about the cost of the medicine, such as a company-developed website, including the list price and average, estimated, or typical patient out-of-pocket costs, or other context about the potential cost of the medicine.’”

The administration in its “Blueprint to Lower Drug Prices” and members of Congress have advocated for including list prices of pharmaceuticals in DTC television spots. On Monday, the Department of Health and Human Services released a proposed regulation that would require companies that sell drugs covered by Medicare or Medicaid to disclosed a standard price in ads, if that drug costs more than $35 a month.

But Ubl says while the industry believes there needs to be more information about pricing and supports the use of DTC advertisements to disseminate this information, “we believe just including list prices in DTC advertisements is not sufficient and would be misleading for several reasons.”

These reasons include: list prices alone without context could discourage patients from seeking medical care; list prices are not a good indicator of what patients actually pay at the pharmacy counter as their insurers determine what they pay out of pocket; and list prices do not include the discounts and rebates negotiated by insurers and PBM.

Additionally, any such requirement would “raise significant legal issues, including First Amendment concerns,” Ubl says.

According to PhRMA’s own talks with patients through focus groups and one-on-one meetings, patients want information about their medicine costs, but they want information they can act upon, Ubl says. “They want to know if their medicine is covered by their insurer, what they will have to pay out of pocket for their medicines, and whether any financial assistance is available, Ubl says. The research also confirmed concerns that simply including list prices would be confusing and discouraging to patients.

The PhRMA proposal would have companies provide resources that include the list price of the medicine as well as the potential range of costs, and information about where patients can find assistance with the cost of their drugs. Patients would be directed to the drug pricing information via a voiceover or text in a DTC that will tell patients where they could go to learn more about the cost of their medicine. Ads will direct patients to existing product-specific websitesor other platforms where this cost information will be available, Ubl says.

If there’s a feeling of déjà vu among pharmaceutical industry observers, it may be coming from a decade ago, when PhRMA headed off legislative action about “inappropriate” gifts for physicians from pharma sales representatives by updating its Code of Ethics to prohibit such things as minimal value “reminder” leave-behinds such as pens, mugs, notepads, and other trinkets; off-site meals for physicians; and concert and sports event tickets.

For companies that choose to comply with the new DTC principles, their CEOs and chief compliance officers will have to certify on an annual basis that they have policies and procedures In place that foster compliance with the principles, Ubl says.

PhRMA is also partnering with consumer, patient, pharmacist, provider, and consumer groups – including CancerCare, the National Alliance on Mental Illness, the National Consumers League, the National Community Pharmacists Association, the National Hispanic Council on Aging and the National Medical Association – to develop a new patient affordability platform that will launch in early 2019. The new platform will include resources, such as:

An enhanced search tool that will include medicine-specific public cost and affordability information, including the new information companies will direct patients to via their DTC TV advertisements;
Information on how to access company-specific patient assistance and other forms of cost-sharing support, which isn’t currently available on the PPA site; and
Resources to help patients navigate their insurance coverage.

PhRMA sponsored a survey with Morning Consult that shows patients want to know more about drug costs. The survey showed that Americans “strongly support” PhRMA’s new approach, preferring it by a 3:1 margin (61 percent to 23 percent) to a proposal that includes the list price of a medicine in DTC advertisements.

If only the list price of a medicine is included in a TV advertisement, 68 percent of those polled said they thought patients would worry a lot more about how they will afford their medicines; 65 percent said they would become confused about what a medicine actually costs them; 58 percent said patients would avoid seeking the treatment that they need; and 51 percent said they would stop taking the medicines that they need.

Additionally, when asked to prioritize healthcare issues, 37 percent of those polled said it is a top priority for them to know how much they would pay out of pocket for hospital care, but only 4 percent said that knowing the initial list price of a medicine in a DTC ad was a priority.

While PhRMA’s signatory companies are required to follow the new DTC principles, Ubl says he hopes all pharmaceutical companies will adopt them.