DTC Act of 2021

II 117TH CONGRESS 1ST SESSION S. 2304 To amend title XI of the Social Security Act to require that direct-to- consumer advertisements for prescription drugs and biological products include an appropriate disclosure of pricing information. IN THE SENATE OF THE UNITED STATES JUNE 24, 2021 Mr. DURBIN (for himself, Mr. GRASSLEY, and Mr. KING) 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 an appropriate dis- closure of pricing information. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Drug-Price Trans- 4 parency for Competition Act of 2021’’ or the ‘‘DTC Act 5 of 2021’’. 6 SEC. 2. FINDINGS; SENSE OF THE SENATE. 7 (a) FINDINGS.—Congress finds the following: 8 VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS 2 •S 2304 IS (1) Direct-to-consumer advertising of prescrip- 1 tion pharmaceuticals is legally permitted in only 2 2 developed countries, the United States and New 3 Zealand. 4 (2) In 2018, pharmaceutical ad spending ex- 5 ceeded $6,046,000,000, a 4.8 percent increase over 6 2017, resulting in the average American seeing 9 7 drug advertisements per day. 8 (3) The most commonly advertised medication 9 in the United States has a list price of more than 10 $6,000 for a one-month’s supply. 11 (4) A 2021 Government Accountability Office 12 report found that two-thirds of all direct-to-con- 13 sumer drug advertising between 2016 and 2018 was 14 concentrated among 39 brand-name drugs or biologi- 15 cal products, about half of which were recently ap- 16 proved by the Food and Drug Administration. 17 (5) According to a 2011 Congressional Budget 18 Office report, pharmaceutical manufacturers adver- 19 tise their products directly to consumers in an at- 20 tempt to boost demand for their products and there- 21 by raise the price that consumers are willing to pay, 22 increase the quantity of drugs sold, or achieve some 23 combination of the two. 24 VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS 3 •S 2304 IS (6) Studies, including a 2012 systematic review 1 published in the Annual Review of Public Health, a 2 2005 randomized trial published in the Journal of 3 the American Medical Association, and a 2004 sur- 4 vey published in Health Affairs, show that patients 5 are more likely to ask their doctor for a specific 6 medication and for the doctor to write a prescription 7 for it, if a patient has seen an advertisement for 8 such medication, even if such medication is not the 9 most clinically appropriate for the patient or if a 10 lower-cost generic medication may be available. 11 (7) According to a 2011 Congressional Budget 12 Office report, the average number of prescriptions 13 written for newly approved brand-name drugs with 14 direct-to-consumer advertising was 9 times greater 15 than the average number of prescriptions written for 16 newly approved brand-name drugs without direct-to- 17 consumer advertising. 18 (8) The Centers for Medicare & Medicaid Serv- 19 ices is the single largest drug payer in the United 20 States. Between 2016 and 2018, 58 percent of the 21 $560,000,000,000 in Medicare drug spending was 22 for advertised drugs, and in 2018 alone, the 20 most 23 advertised drugs on television cost Medicare and 24 Medicaid a combined $34,000,000,000. 25 VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS 4 •S 2304 IS (9) A 2021 Government Accountability Office 1 report found that direct-to-consumer advertising 2 may have contributed to increases in Medicare bene- 3 ficiary use and spending among certain drugs. 4 (10) The American Medical Association has 5 passed resolutions supporting the requirement for 6 price transparency in any direct-to-consumer adver- 7 tising, stating that such advertisements on their own 8 ‘‘inflate demand for new and more expensive drugs, 9 even when these drugs may not be appropriate’’. 10 (11) A 2019 study published in the Journal of 11 the American Medical Association found that health 12 care consumers dramatically underestimate their 13 out-of-pocket costs for certain expensive medications, 14 but once they learn the wholesale acquisition cost (in 15 this section referred to as the ‘‘WAC’’) of the prod- 16 uct, they are far better able to approximate their 17 out-of-pocket costs. 18 (12) Approximately half of Americans have 19 high-deductible health plans, under which they often 20 pay the list price of a drug until their insurance de- 21 ductible is met. All of the top Medicare prescription 22 drug plans use coinsurance rather than fixed-dollar 23 copayments for medications on nonpreferred drug 24 tiers, exposing beneficiaries to WAC prices. 25 VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS 5 •S 2304 IS (13) Section 119 of division CC of the Consoli- 1 dated Appropriations Act, 2021 (Public Law 116– 2 260) requires the Secretary of Health and Human 3 Services to increase the use of real-time benefit tools 4 to lower beneficiary costs. However, there still re- 5 mains a lack of available pricing tools so patients 6 may not learn of their medication’s cost until after 7 being given a prescription for the medication. A 8 2013 study published in The Oncologist found that 9 one-quarter of all cancer patients chose not to fill a 10 prescription due to cost. 11 (14) The Federal Government already exercises 12 its authority to oversee certain aspects of direct-to- 13 consumer drug advertising, including required disclo- 14 sures of information related to side effects, contra- 15 indications, and effectiveness. 16 (b) SENSE OF CONGRESS.—It is the sense of Con- 17 gress that— 18 (1) a lack of transparency in pricing for phar- 19 maceuticals has led to a lack of competition for such 20 pharmaceuticals, as evidenced by a finding by the 21 Department of Health and Human Services that 22 ‘‘Consumers of pharmaceuticals are currently miss- 23 ing information that consumers of other products 24 can more readily access, namely the list price of the 25 VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS 6 •S 2304 IS product, which acts as a point of comparison when 1 judging the reasonableness of prices offered for po- 2 tential substitute products’’ (84 Fed. Reg. 20735); 3 (2) in an age where price information is ubiq- 4 uitous, the prices of pharmaceuticals remain shroud- 5 ed in secrecy and limited to those who subscribe to 6 expensive drug price reporting services, which typi- 7 cally include pharmaceutical manufacturers or other 8 health care industry entities and not the general 9 public; 10 (3) greater insight and transparency into drug 11 prices will help consumers know if they can afford 12 to complete a course of therapy before deciding to 13 initiate that course of therapy; 14 (4) price shopping is the mark of rational eco- 15 nomic behavior, and markets operate more efficiently 16 when consumers have relevant information about a 17 product, including its price, before making an in- 18 formed decision about whether to buy that product; 19 (5) providing consumers with basic price infor- 20 mation may result in the selection of lesser cost al- 21 ternatives, all else being equal relative to the pa- 22 tient’s care, and is integral to providing adequate 23 competition in the market; 24 VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS 7 •S 2304 IS (6) the WAC is a factual, objective, and 1 uncontroversial definition for the list price of a 2 medication, in that it is defined in statute, reflects 3 an understood place in the supply chain, and is at 4 the sole discretion of the manufacturer to set; 5 (7) there is a governmental interest in ensuring 6 that consumers who seek to purchase pharma- 7 ceuticals for purposes of promoting their health and 8 safety understand the objective list price of any 9 pharmaceutical that they are encouraged through 10 advertisements to purchase, which allows consumers 11 to make informed purchasing decisions; and 12 (8) there is a governmental interest in miti- 13 gating wasteful expenditures and promoting the effi- 14 cient administration of the Medicare program by 15 slowing the growth of Federal spending on prescrip- 16 tion drugs. 17 SEC. 3. REQUIREMENT THAT DIRECT-TO-CONSUMER AD- 18 VERTISEMENTS FOR PRESCRIPTION DRUGS 19 AND BIOLOGICAL PRODUCTS INCLUDE AN 20 APPROPRIATE DISCLOSURE OF PRICING IN- 21 FORMATION. 22 Part A of title XI of the Social Security Act is 23 amended by adding at the end the following new section: 24 VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS 8 •S 2304 IS ‘‘SEC. 1150D. REQUIREMENT THAT DIRECT-TO-CONSUMER 1 ADVERTISEMENTS FOR PRESCRIPTION 2 DRUGS AND BIOLOGICAL PRODUCTS IN- 3 CLUDE AN APPROPRIATE DISCLOSURE OF 4 PRICING INFORMATION. 5 ‘‘(a) IN GENERAL.—The Secretary shall require that 6 each direct-to-consumer advertisement for a prescription 7 drug or biological product for which payment is available 8 under title XVIII or XIX includes an appropriate disclo- 9 sure of pricing information with respect to the drug or 10 product. 11 ‘‘(b) APPROPRIATE DISCLOSURE OF PRICING INFOR- 12 MATION.—For the purposes of subsection (a), an appro- 13 priate disclosure of pricing information, with respect to 14 a prescription drug or biological product— 15 ‘‘(1) shall include a disclosure of the wholesale 16 acquisition cost (as defined in section 17 1847A(c)(6)(B)) for a 30-day supply of (or, if appli- 18 cable, a typical course of treatment for) such drug 19 or product; 20 ‘‘(2) shall be presented clearly and conspicu- 21 ously, as appropriate for the medium of the adver- 22 tisement; and 23 ‘‘(3) may include additional qualitative or quan- 24 titative information regarding the price of such drug 25 or product explaining that certain patients may pay 26 VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS 9 •S 2304 IS a different amount depending on their insurance 1 coverage. 2 ‘‘(c) ENFORCEMENT.—Any person who violates the 3 requirement of this section may be subject to a civil money 4 penalty of not more than $100,000 for each such violation 5 or to another enforcement mechanism determined by the 6 Secretary. Any civil money penalty shall be imposed and 7 collected in the same manner as civil money penalties 8 under subsection (a) of section 1128A are imposed and 9 collected under that section. 10 ‘‘(d) REGULATIONS.—The Secretary, acting through 11 the Administrator of the Centers for Medicare & Medicaid 12 Services, shall promulgate regulations to carry out this 13 section. Such regulations shall determine the components 14 of the requirement under this section, including the forms 15 of advertising, the manner of disclosure, the appropriate 16 sanctions, and the appropriate disclosure of pricing infor- 17 mation.’’. 18 Æ VerDate Sep 11 2014 07:36 Jul 09, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S2304.IS S2304 kjohnson on DSK79L0C42PROD with BILLS