CMS’ Proposed Rule Regarding Disclosure of Drug “List Prices” in Television Ads: Needed Transparency or Recipe for Confusion?

23 October 2018
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Key takeaways:
  • On October 15, 2018, the Center for Medicare and Medicaid Services (“CMS”) released a Proposed Rule which, if implemented, would require a television advertisement for a direct-to-consumer (“DTC”) prescription drug that is covered by Medicare or Medicaid to disclose the drug’s “list price.” CMS is accepting comments on the Proposed Rule until December 17, 2018.
  • The Proposed Rule was issued as part of the Trump administration’s efforts to lower prescription drug prices by promoting competition and improving transparency regarding drug prices. The Proposed Rule, however, defines a drug’s “list price” as its Wholesale Acquisition Cost (“WAC”), the amount a drug company charges its wholesaler before any discounts or rebates. WAC information is rarely helpful to consumers because the out-of-pocket price of a drug typically bears no relationship to the WAC.
  • If implemented, the Proposed Rule is likely to be challenged for multiple reasons including that it violates the First Amendment and that CMS lacks authority to issue regulations requiring the disclosure of drug prices in advertising.