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S. 1437: Drug-price Transparency in Communications (DTC) Act

The text of the bill below is as of May 13, 2019 (Introduced).


II

116th CONGRESS

1st Session

S. 1437

IN THE SENATE OF THE UNITED STATES

May 13, 2019

(for himself, Mr. Grassley, Mr. King, and Mr. Alexander) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend title XI of the Social Security Act to require that direct-to-consumer advertisements for prescription drugs and biological products include truthful and non-misleading pricing information.

1.

Short title

This Act may be cited as the Drug-price Transparency in Communications (DTC) Act.

2.

Findings

Congress finds the following:

(1)

Direct-to-consumer advertising of prescription pharmaceuticals is legally permitted in only 2 developed countries, the United States and New Zealand.

(2)

In 2018, pharmaceutical ad spending exceeded $6,046,000,000, a 4.8-percent increase over 2017, resulting in the average American seeing 9 drug advertisements per day.

(3)

In 2015, pharmaceutical companies spent more than $100,000,000 on advertising with respect to each of the 16 most advertised brand-name drugs and biological products, primarily new and relatively high-cost medications.

(4)

The 10 most commonly advertised drugs have list prices ranging from $535 to $11,000 per 30-day supply or usual course of therapy.

(5)

According to a 2011 Congressional Budget Office report, direct-to-consumer advertising is used to promote only a small set of specific drugs, typically the expensive, brand-name medications. And the top-selling drugs in any given year are frequently among the drugs with the largest expenditures for direct-to-consumer advertising.

(6)

According to a 2011 Congressional Budget Office report, pharmaceutical manufacturers advertise their products directly to consumers in an attempt to boost demand for their products and thereby raise the price that consumers are willing to pay, increase the quantity of drugs sold, or achieve some combination of the two.

(7)

Studies show that patients are more likely to ask their doctor for a specific medication and for the doctor to write a prescription for it, if a patient has seen an advertisement for such medication, regardless of whether the medication is clinically appropriate for the patient or whether a lower-cost generic may be available.

(8)

According to a 2011 Congressional Budget Office report, the average number of prescriptions written for newly approved brand-name drugs with direct-to-consumer advertising was 9 times greater than the average number of prescriptions written for newly approved brand-name drugs without direct-to-consumer advertising.

(9)

Approximately half of Americans have high-deductible health plans, under which they often pay the list price of a drug until their insurance deductible is met. All of the top Medicare prescription drug plans use coinsurance rather than fixed-dollar copayments for medications on nonpreferred drug tiers.

(10)

The Centers for Medicare & Medicaid Services is the single largest drug payer in the Nation. Drug price inflation accounts for a significant portion of the 22-percent, 32-percent, and 42-percent growth in Medicare parts D and B and Medicaid expenditures, respectively, on a per beneficiary basis between 2013 and 2016.

(11)

The 20 most advertised drugs on television cost Medicare and Medicaid a combined $24,000,000,000 in 2017.

(12)

Price shopping is the mark of rational economic behavior, and markets operate more efficiently when consumers have relevant information about a product, including its price, before making an informed decision about whether to buy that product.

(13)

The American Medical Association has passed resolutions supporting the requirement for price transparency in any direct-to-consumer advertising.

(14)

The Kaiser Family Foundation found that 88 percent of the public favors the Federal Government requiring prescription drug advertisements to include a statement on how much the drug costs.

(15)

Pursuant to its existing authority under sections 1102 and 1871 of the Social Security Act, on May 10, 2019, the Centers for Medicare & Medicaid Services published regulations (subpart L of part 403 of title 42, Code of Federal Regulations) to require direct-to-consumer television advertisements of prescription drugs and biological products for which payment is available through or under Medicare or Medicaid to include the wholesale acquisition cost of that drug or biological product.

(16)

To support the permanence and clarity of this policy, and to facilitate future planning, Congress finds a benefit to codifying such regulation.

3.

Requirement that direct-to-consumer advertisements for prescription drugs and biological products include truthful and non-misleading pricing information

Part A of title XI of the Social Security Act is amended by adding at the end the following new section:

1150C.

Requirement that direct-to-consumer advertisements for prescription drugs and biological products include truthful and non-misleading pricing information

(a)

In general

The Secretary shall require that each direct-to-consumer advertisement for a prescription drug or biological product for which payment is available under title XVIII or XIX includes an appropriate disclosure of truthful and non-misleading pricing information with respect to the drug or product.

(b)

Determination by CMS

The Secretary, acting through the Administrator of the Centers for Medicare & Medicaid Services, shall determine the components of the requirement under subsection (a), such as the forms of advertising, the manner of disclosure, the price point listing, and the price information for disclosure.

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