What will new drug price disclosure regulations mean for pharma marketers?

On May 8, the Department of Health & Human Services finalized its upcoming rule requiring manufacturers to disclose drug prices in TV ads. According to HHS Secretary Alex Azar, the regulation aims to increase pricing transparency to help patients make more informed decisions.

"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.

The Centers for Medicare and Medicaid have fully supported the move, with CMS Administrator Seema Verma stating that transparent prices will enable patients to demand value from drug makers. Despite pushback from industry leaders and the threat of legal battles, the new rule is set to go into effect July 9 with a 60-day compliance window.

The first major pharma industry regulation from the Trump administration

For the pharmaceutical industry, the first two years of President Trump's term have been quiet ones. As noted by Medical Marketing & Media, the Tax Cuts and Jobs Act of 2017 infused the industry with an influx of cash that manufacturers have used to lobby Congress, research and develop new products and market existing solutions. The new drug price disclosure rule is the first significant move the Trump administration has taken to regulate the pharmaceutical industry.

According to the new rule, any direct-to-consumer TV ad featuring drugs covered by Medicare or Medicaid with a list price greater than $35 will be required to clearly display that price. One way that manufacturers are working within this regulation is to display the list price alongside prices commonly paid by patients with private or employee-sponsored health insurance.

For example, the first commercial to feature list prices was for Johnson & Johnson's blood thinner Xarelto. The ad displayed the drug's monthly list price of $448, and showed that the typical out-of-pocket expense for insured patients ranges between $0 and $47. Additionally, the ad directs viewers to visit the drugs website for more detailed pricing information.

The new rule will impact almost every drug advertised on TV.

A push toward print and digital channels?

The new rule will necessitate behind-the-scenes changes for pharma stakeholders. Speaking with the Wall Street Journal, veteran advertising consultant Mel Sokotch noted that marketers may have to pay for longer ads to include all of the required information. Considering TV spend accounts for nearly two-thirds of pharma marketing spend, that additional cost could be significant.

Pharma companies will need to formulate, test and adjust their direct-to-consumer marketing strategies moving forward. While there's still the chance that the new rule could get struck down by a legal injunction, that fight is likely to be a long one.

In the meantime, pharma manufacturers may need to adjust their marketing budgets toward other channels like print and digital. Likewise, marketing to healthcare professionals remains a viable option. By communicating product benefits to physicians, manufacturers can gain influence in the prescribing decision making process.

With the new rule coming into effect on July 9, it remains to be seen how it will impact patient perceptions of pharma products. In the meantime, pharma marketers will be looking for ways to engage patients and HCPs via other channels. To learn more about how print and digital peer-reviewed content can support your organization's marketing goals, contact a trusted Elsevier consultant today.