Drug-price Transparency for Consumers Act of 2023

II 118TH CONGRESS 1ST SESSION S. 1250 To amend title XI of the Social Security Act to require that direct-to- consumer advertisements for drugs and biologicals include an appropriate disclosure of pricing information. IN THE SENATE OF THE UNITED STATES APRIL 20, 2023 Mr. DURBIN (for himself, Mr. GRASSLEY, Mr. KING, Mr. BRAUN, Mr. BLUMENTHAL, Mr. VANCE, and Ms. BALDWIN) 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 drugs and biologicals include an appropriate disclosure 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 Consumers Act of 2023’’ or the ‘‘DTC Act 5 of 2023’’. 6 SEC. 2. FINDINGS; SENSE OF THE SENATE. 7 (a) FINDINGS.—Congress finds the following: 8 VerDate Sep 11 2014 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 1250 IS (1) Direct-to-consumer advertising of prescrip- 1 tion pharmaceuticals is legally permitted in only 2 2 developed countries, the United States and New 3 Zealand. 4 (2) In 2018, pharmaceutical ad spending ex- 5 ceeded $6,046,000,000, a 4.8-percent increase over 6 2017, resulting in the average American seeing 9 7 drug advertisements per day. 8 (3) The most commonly advertised medication 9 in the United States in 2020 had a list price of more 10 than $6,000 for a one-month’s supply. 11 (4) A 2021 Government Accountability Office 12 report found that two-thirds of all direct-to-con- 13 sumer drug advertising between 2016 and 2018 was 14 concentrated among 39 brand-name drugs or 15 biologicals, about half of which were recently ap- 16 proved by the Food and Drug Administration. 17 (5) According to a 2011 Congressional Budget 18 Office report, pharmaceutical manufacturers adver- 19 tise their products directly to consumers in an at- 20 tempt to boost demand for their products and there- 21 by raise the price that consumers are willing to pay, 22 increase the quantity of drugs sold, or achieve some 23 combination of the two. 24 VerDate Sep 11 2014 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 1250 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 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 1250 IS (9) A 2021 Government Accountability Office 1 report found that direct-to-consumer advertising 2 may have contributed to increases in Medicare bene- 3 ficiary use and spending among certain drugs. 4 (10) The American Medical Association has 5 passed resolutions supporting the requirement for 6 price transparency in any direct-to-consumer adver- 7 tising, stating that such advertisements on their own 8 ‘‘inflate demand for new and more expensive drugs, 9 even when these drugs may not be appropriate’’. 10 (11) A 2019 study published in the Journal of 11 the American Medical Association found that health 12 care consumers dramatically underestimate their 13 out-of-pocket costs for certain expensive medications, 14 but once they learn the wholesale acquisition cost (in 15 this section referred to as the ‘‘WAC’’) of the prod- 16 uct, they are far better able to approximate their 17 out-of-pocket costs. 18 (12) Approximately half of Americans have 19 high-deductible health plans, under which they often 20 pay the list price of a drug until their insurance de- 21 ductible is met. All of the top Medicare prescription 22 drug plans use coinsurance rather than fixed-dollar 23 copayments for medications on nonpreferred drug 24 tiers, exposing beneficiaries to WAC prices. 25 VerDate Sep 11 2014 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 1250 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 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 1250 IS product, which acts as a point of comparison when 1 judging the reasonableness of prices offered for po- 2 tential substitute products’’ (84 Fed. Reg. 20735); 3 (2) in an age where price information is ubiq- 4 uitous, the prices of pharmaceuticals remain shroud- 5 ed in secrecy and limited to those who subscribe to 6 expensive drug price reporting services, which typi- 7 cally include pharmaceutical manufacturers or other 8 health care industry entities and not the general 9 public; 10 (3) greater insight and transparency into drug 11 prices will help consumers know if they can afford 12 to complete a course of therapy before deciding to 13 initiate that course of therapy; 14 (4) price shopping is the mark of rational eco- 15 nomic behavior, and markets operate more efficiently 16 when consumers have relevant information about a 17 product, including its price, before making an in- 18 formed decision about whether to buy that product; 19 (5) providing consumers with basic price infor- 20 mation may result in the selection of lesser cost al- 21 ternatives, all else being equal relative to the pa- 22 tient’s care, and is integral to providing adequate 23 competition in the market; 24 VerDate Sep 11 2014 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •S 1250 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 DRUGS AND 19 BIOLOGICALS INCLUDE AN APPROPRIATE 20 DISCLOSURE OF PRICING INFORMATION. 21 Part A of title XI of the Social Security Act is 22 amended by adding at the end the following new section: 23 VerDate Sep 11 2014 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •S 1250 IS ‘‘SEC. 1150D. REQUIREMENT THAT DIRECT-TO-CONSUMER 1 ADVERTISEMENTS FOR DRUGS AND 2 BIOLOGICALS INCLUDE AN APPROPRIATE 3 DISCLOSURE OF PRICING INFORMATION. 4 ‘‘(a) REQUIREMENT.— 5 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 6 the Secretary shall require that each direct-to-con- 7 sumer advertisement for a drug or biological for 8 which payment is available under title XVIII or XIX 9 and which is required to include the information re- 10 lating to side effects, contraindications, and effec- 11 tiveness described in section 202.1(e)(1) of title 21, 12 Code of Federal Regulations (or any successor regu- 13 lation) also include an appropriate disclosure of pric- 14 ing information, as described in subsection (b), with 15 respect to such drug or biological. 16 ‘‘(2) EXEMPTION.—The requirement under 17 paragraph (1) shall not apply to a drug or biological 18 for which the wholesale acquisition cost for a 30-day 19 supply of (or, if applicable, a typical course of treat- 20 ment for) such drug or biological is less than $35. 21 ‘‘(b) APPROPRIATE DISCLOSURE OF PRICING INFOR- 22 MATION.—For the purposes of subsection (a), an appro- 23 priate disclosure of pricing information, with respect to 24 a drug or biological, shall— 25 VerDate Sep 11 2014 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •S 1250 IS ‘‘(1) disclose the wholesale acquisition cost for 1 a 30-day supply of (or, if applicable, a typical course 2 of treatment for) such drug or biological; and 3 ‘‘(2) be presented clearly and conspicuously. 4 ‘‘(c) RULEMAKING.—Not later than 1 year after the 5 date of enactment of this section, the Secretary, acting 6 through the Administrator of the Centers for Medicare 7 and Medicaid Services, shall promulgate final regulations 8 to carry out this section, including— 9 ‘‘(1) the visual and audio components required 10 to communicate the wholesale acquisition cost in the 11 appropriate manner for the medium of the advertise- 12 ment; 13 ‘‘(2) the reasonable amount of time a manufac- 14 turer has to update any direct-to-consumer adver- 15 tisement to reflect any change to the wholesale ac- 16 quisition cost of the advertised drug or biological; 17 and 18 ‘‘(3) the way in which a manufacturer may in- 19 clude a brief statement explaining that certain con- 20 sumers may pay a different amount depending on 21 their insurance coverage. 22 ‘‘(d) SANCTIONS.—Any manufacturer of a drug or bi- 23 ological, or an agent of such manufacturer, that violates 24 the requirement of this section may be subject to a civil 25 VerDate Sep 11 2014 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •S 1250 IS money penalty of not more than $100,000 for each such 1 violation. The provisions of section 1128A (other than 2 subsections (a) and (b)) shall apply to civil money pen- 3 alties under the preceding sentence in the same manner 4 as they apply to a penalty or proceeding under section 5 1128A(a). 6 ‘‘(e) PUBLIC REPORTING SYSTEM.—In order to en- 7 force the requirement under this section, the Secretary 8 may establish a public reporting system— 9 ‘‘(1) to build awareness of such requirement; 10 and 11 ‘‘(2) allow for reporting of manufacturers that 12 fail to comply with such requirement. 13 ‘‘(f) DEFINITIONS.—In this section: 14 ‘‘(1) DRUG AND BIOLOGICAL.—The terms 15 ‘drug’ and ‘biological’ have the meaning given such 16 terms in section 1861(t). 17 ‘‘(2) WHOLESALE ACQUISITION COST.—The 18 term ‘wholesale acquisition cost’ has the meaning 19 given such term in section 1847A(c)(6)(B). 20 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 21 are authorized to be appropriated such sums as may be 22 necessary for the purposes of carrying out this section.’’. 23 Æ VerDate Sep 11 2014 21:41 Apr 25, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S1250.IS S1250 pbinns on DSKJLVW7X2PROD with $$_JOB