Drug Prices Will Now be Included in TV Ads as Part of Effort to Drive Costs Down

colorful pills in shape of dollar sign

Television advertisements for prescription medications that are covered by Medicare or Medicaid will begin to display the list price of the drug.

The rule, which has been favored by the White House and supported in Congress, was finalized Wednesday, Department of Health and Human Services Secretary Alex Azar said. If drug prices covered by the government-funded plans have a list price, the wholesale acquisition cost, greater than $35 for a month’s supply. The inclusion of the list price is part of an effort from the administration to lower the cost of prescription drugs.

In a brief statement, Azar said that including the list price of a drug, which is not the price that a patient pays at the pharmacy, is the “single most significant step” taken toward giving patients greater information about the cost of healthcare.

“Patients who are struggling with high drug costs are in that position because of the high list prices that drug companies set. Making those prices more transparent is a significant step in President Trump’s efforts to reform our prescription drug markets and put patients in charge of their own healthcare,” said Azar, a former executive with Eli Lilly.

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The inclusion of list prices on television advertisements is part of the White House’s blueprint for lowering healthcare costs, called American Patients First. The White House plan includes four primary strategies to bring down costs -- boosting competition, enhancing negotiation, creating incentives for lower list prices and bringing down out-of-pocket costs. Requiring the inclusion of the list price is seen by the White House as a means of making drug prices more transparent and as a way of giving patients some leverage with their prescribers over medication they may require.

While the list price is not the retail price most people with insurance pay at their neighborhood pharmacy, Azar said the prices still matter to patients, particularly those who have a high-deductible insurance plan or for the uninsured. For the 47 percent of Americans who have high-deductible health insurance plans, the price they see in ads essentially is the price they pay, until they meet their deductible, Azar said. All seniors on Medicare Part D have coinsurance for certain types of drugs, which means their out-of-pocket expenses are calculated as a share of list price. List prices are also what patients pay if a drug is not on their insurance formulary.

As the administration touts the new rule, it is being met with skepticism from the pharmaceutical industry. Pharmaceutical Research and Manufacturers of America (PhRMA) president and CEO Steven J. Ubl said the industry organization was concerned about the new rule. Because the rule requires the list price to be displayed, Ubl said it may be confusing for patients and may discourage them from seeking needed medical care – something he and PhRMA have argued since the plan was first put into motion.

“We support providing patients with more transparency about medicine costs, which is why our member companies voluntarily began directing patients to links to comprehensive cost information in their DTC television advertising. After speaking with patients across the country, we learned that patients prefer this approach,” Ubl said in a statement.

In response, PhRMA launched a platform called the Medicine Assistance Tool, or MAT, which links to the websites referenced in company television advertising and includes a search tool to help patients connect to financial assistance programs.

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