Drug-price Transparency in Communications (DTC) Act

II 116TH CONGRESS 1ST SESSION S. 1437 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. IN THE SENATE OF THE UNITED STATES MAY 13, 2019 Mr. DURBIN (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. 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 in Communications (DTC) Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 VerDate Sep 11 2014 05:39 May 22, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1437.IS S1437 kjohnson on DSK79L0C42 with BILLS 2 •S 1437 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) In 2015, pharmaceutical companies spent 9 more than $100,000,000 on advertising with respect 10 to each of the 16 most advertised brand-name drugs 11 and biological products, primarily new and relatively 12 high-cost medications. 13 (4) The 10 most commonly advertised drugs 14 have list prices ranging from $535 to $11,000 per 15 30-day supply or usual course of therapy. 16 (5) According to a 2011 Congressional Budget 17 Office report, direct-to-consumer advertising is used 18 to promote only a small set of specific drugs, typi- 19 cally the expensive, brand-name medications. And 20 the top-selling drugs in any given year are fre- 21 quently among the drugs with the largest expendi- 22 tures for direct-to-consumer advertising. 23 (6) According to a 2011 Congressional Budget 24 Office report, pharmaceutical manufacturers adver- 25 VerDate Sep 11 2014 05:39 May 22, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1437.IS S1437 kjohnson on DSK79L0C42 with BILLS 3 •S 1437 IS tise their products directly to consumers in an at- 1 tempt to boost demand for their products and there- 2 by raise the price that consumers are willing to pay, 3 increase the quantity of drugs sold, or achieve some 4 combination of the two. 5 (7) Studies show that patients are more likely 6 to ask their doctor for a specific medication and for 7 the doctor to write a prescription for it, if a patient 8 has seen an advertisement for such medication, re- 9 gardless of whether the medication is clinically ap- 10 propriate for the patient or whether a lower-cost ge- 11 neric may be available. 12 (8) According to a 2011 Congressional Budget 13 Office report, the average number of prescriptions 14 written for newly approved brand-name drugs with 15 direct-to-consumer advertising was 9 times greater 16 than the average number of prescriptions written for 17 newly approved brand-name drugs without direct-to- 18 consumer advertising. 19 (9) Approximately half of Americans have high- 20 deductible health plans, under which they often pay 21 the list price of a drug until their insurance deduct- 22 ible is met. All of the top Medicare prescription drug 23 plans use coinsurance rather than fixed-dollar copay- 24 ments for medications on nonpreferred drug tiers. 25 VerDate Sep 11 2014 05:39 May 22, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1437.IS S1437 kjohnson on DSK79L0C42 with BILLS 4 •S 1437 IS (10) The Centers for Medicare & Medicaid 1 Services is the single largest drug payer in the Na- 2 tion. Drug price inflation accounts for a significant 3 portion of the 22-percent, 32-percent, and 42-per- 4 cent growth in Medicare parts D and B and Med- 5 icaid expenditures, respectively, on a per beneficiary 6 basis between 2013 and 2016. 7 (11) The 20 most advertised drugs on television 8 cost Medicare and Medicaid a combined 9 $24,000,000,000 in 2017. 10 (12) Price shopping is the mark of rational eco- 11 nomic behavior, and markets operate more efficiently 12 when consumers have relevant information about a 13 product, including its price, before making an in- 14 formed decision about whether to buy that product. 15 (13) The American Medical Association has 16 passed resolutions supporting the requirement for 17 price transparency in any direct-to-consumer adver- 18 tising. 19 (14) The Kaiser Family Foundation found that 20 88 percent of the public favors the Federal Govern- 21 ment requiring prescription drug advertisements to 22 include a statement on how much the drug costs. 23 (15) Pursuant to its existing authority under 24 sections 1102 and 1871 of the Social Security Act, 25 VerDate Sep 11 2014 05:39 May 22, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1437.IS S1437 kjohnson on DSK79L0C42 with BILLS 5 •S 1437 IS on May 10, 2019, the Centers for Medicare & Med- 1 icaid Services published regulations (subpart L of 2 part 403 of title 42, Code of Federal Regulations) 3 to require direct-to-consumer television advertise- 4 ments of prescription drugs and biological products 5 for which payment is available through or under 6 Medicare or Medicaid to include the wholesale acqui- 7 sition cost of that drug or biological product. 8 (16) To support the permanence and clarity of 9 this policy, and to facilitate future planning, Con- 10 gress finds a benefit to codifying such regulation. 11 SEC. 3. REQUIREMENT THAT DIRECT-TO-CONSUMER AD- 12 VERTISEMENTS FOR PRESCRIPTION DRUGS 13 AND BIOLOGICAL PRODUCTS INCLUDE 14 TRUTHFUL AND NON-MISLEADING PRICING 15 INFORMATION. 16 Part A of title XI of the Social Security Act is 17 amended by adding at the end the following new section: 18 ‘‘REQUIREMENT THAT DIRECT-TO-CONSUMER ADVERTISE- 19 MENTS FOR PRESCRIPTION DRUGS AND BIOLOGICAL 20 PRODUCTS INCLUDE TRUTHFUL AND NON-MIS- 21 LEADING PRICING INFORMATION 22 ‘‘SEC. 1150C. (a) IN GENERAL.—The Secretary shall 23 require that each direct-to-consumer advertisement for a 24 prescription drug or biological product for which payment 25 is available under title XVIII or XIX includes an appro- 26 VerDate Sep 11 2014 05:39 May 22, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1437.IS S1437 kjohnson on DSK79L0C42 with BILLS 6 •S 1437 IS priate disclosure of truthful and non-misleading pricing in- 1 formation with respect to the drug or product. 2 ‘‘(b) DETERMINATION BY CMS.—The Secretary, act- 3 ing through the Administrator of the Centers for Medicare 4 & Medicaid Services, shall determine the components of 5 the requirement under subsection (a), such as the forms 6 of advertising, the manner of disclosure, the price point 7 listing, and the price information for disclosure.’’. 8 Æ VerDate Sep 11 2014 05:39 May 22, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S1437.IS S1437 kjohnson on DSK79L0C42 with BILLS