GAO Report Urges Senators to Push for Greater Price Transparency in DTC Drug Ads

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A newly published report from the U.S. Government Accountability Office (GAO) is calling for U.S. Senate Majority Whip Dick Durbin (D-IL) and Sen. Chuck Grassley (R-IA) to again introduce legislation requiring price disclosures in biopharma companies’ direct-to-consumer (DTC) advertisements.

In the report to the Committee on the Judiciary in the U.S. Senate, the GAO says drug makers have spent nearly $8.2 billion on DTC drug ads in three therapeutic areas from 2016 to 2018. This is half of what was spent on DTC advertising overall between 2016 and 2018 for 553 drugs. Each year, the industry spent approximately $6 billion on these advertisements.

The top of the list for the most spending was AbbVie’s Humira, the company’s megablockbuster rheumatoid arthritis drug. Between 2016 and 2018, the pharma company spent roughly $1.4 billion in new DTC, according to the GAO report.

Eli Lilly spent $655 million on advertising its diabetes biologic agent Trulicity during the three years, while Pfizer spent $913 million on its neuropathic pain treatment Lyrica. These two companies reported the highest spending for U.S. drugs used to manage metabolic and endocrine disorders as well as diseases associated with the central nervous system.

During the GAO’s three-year study period, Medicare spent $560 billion on pharmaceutical drugs, with 58% comprising drugs that had been advertised. The advertised drugs accounted for 8% of total Medicare Part D drugs used versus 57% of that spending. In the report, the GAO suggests consumer advertising spending on behalf of the drug manufacturers may have contributed to the rise in Medicare beneficiary use and spending between 2010 and 2018.

Durbin and Grassley said in a statement the GAO report highlights the pharma industry’s “tried and true scheme,” targeting seniors with pricy drugs. “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,” they said.

In response to the GAO report, senators Durbin and Grassley noted they plan to introduce new legislation to force pharma companies to be more transparent in their drugs’ costs in advertisements. They stated the legislation “will lower drug spending and empower patients.”

Back in 2019, the U.S. District Court Judge Amit Mehta ruled that the US Department of Health and Human Services (HHS) lacks authority to require pharmaceutical companies to list its drug prices in DTC advertisements.

At the time, the HHS was sued by Merck, Amgen, Eli Lilly, and the Association of National Advertisers over the ruling. In the suite, the pharma companies claim the list prices for the drugs are not paid fully by patients. Mehta supported the companies, saying the rule was invalid.

Last year, the U.S. Court of Appeals upheld a ruling that the then-Trump administration did not have the authority to mandate pharmaceutical companies disclosing their drugs’ list prices in TV advertisements. The ruling was just one of the blows to the administration on its goal of reducing U.S. drug costs. Judge Patricia Millet wrote in the court’s findings that HHS acted unreasonably in its authority to force “a sweeping disclosure requirement that is largely untethered to the actual administration of the Medicare or Medicaid programs.”

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