As drugmakers spend $6B annually on DTC ads, senators revive bill to include list prices in ads
A new GAO report on biopharma companies’ $6 billion annual spending on direct-to-consumer advertising is pushing US Senate Majority Whip Dick Durbin (D-IL) and Sen. Chuck Grassley (R-IA) to reintroduce legislation that would require price disclosures in the ads.
The GAO found that drugmakers spent almost half—$8.2 billion of the $17.8 billion from 2016 to 2018—on DTC ads for drugs in three therapeutic categories, including inflammatory conditions (e.g., arthritis, gout), endocrine and metabolic disorders (e.g., type 2 diabetes, hypothyroidism), and conditions affecting the central nervous system (e.g., depression, multiple sclerosis), according to the new report.
At the very top of that list is AbbVie’s rheumatoid arthritis megablockbuster Humira, which saw $1.4 billion in new DTC ads from 2016 to 2018, while Eli Lilly’s type 2 diabetes biologic Trulicity ($655 million) and Pfizer’s neuropathic pain drug Lyrica ($913 million) had the highest spending across the 3 years among drugs that treat endocrine and metabolic disorders and conditions affecting the central nervous system, respectively.
GAO also said that manufacturer spending on consumer advertising may have been one of several factors contributing to increases in Medicare beneficiary use and spending from 2010 to 2018.
Durbin and Grassley requested the GAO report and said the findings confirm the need for reforms.
“GAO documented Pharma’s tried and true scheme: America’s seniors are being targeted with ads for expensive medications without disclosing the price of the drug, then Medicare spending is inflated to the tune of tens of billions of dollars each year,” the senators said in a statement. “We plan to introduce new legislation to bring transparency to Pharma’s unfair drug advertising practices by requiring the disclosure of the product’s cost, which will lower drug spending and empower patients.”
That push for transparency will need some legislative help as US District Court Judge Amit Mehta ruled in July 2019 that HHS lacks the authority to require drugmakers to post list prices in DTC ads.
Amgen, Merck, Eli Lilly and the Association of National Advertisers sued HHS over the potential rule, claiming that the list prices are not what patients pay and that the agency does not have the authority for such a rulemaking.
Mehta sided with the pharmaceutical companies and said the rule is invalid, while acknowledging that “the costs imposed by the WAC Disclosure Rule amount to a rounding error for the pharmaceutical industry. But that argument misses the point. It is the agency’s incursion into a brand-new regulatory environment, and the rationale for it, that make the Rule so consequential. To accept the agency’s justification here would swing the doors wide open to any regulation, rule, or policy that might reasonably result in cost savings to the Medicare and Medicaid programs, unless expressly prohibited by Congress.”