United States: New Developments In DTC Television Advertising: Disclosing Prescription Drug List Prices

Last Updated: September 19 2019
Article by Nicole Leon, Raqiyyah Pippins, Mahnu V. Davar and Atiq Chowdhury

Introduction

In May 2018, amidst mounting public discussion, the Department of Health and Human Services (HHS) released a sweeping document entitled "HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Cost." Among the Blueprint's many proposals was a call for the Food and Drug Administration (FDA) "to evaluate the inclusion of list prices in direct-to-consumer advertising."1 Commenters on the Blueprint raised a variety of objections, including the potential for confusion among patients (who typically do not pay list price), FDA's lack of statutory authority to regulate drug prices or to mandate pricing disclosures, and significant First Amendment concerns.2 Nevertheless, the proposal evolved, taking shape in the form of a final rulemaking by the Centers for Medicare and Medicaid Services (CMS)—not FDA—requiring prescription drug manufacturers to disclose list prices in their direct-to-consumer (DTC) television advertising. Industry has now also successfully challenged the Final Rule. On July 8, 2019, the U.S. District Court for the District of Columbia held that HHS lacked the statutory authority under the Social Security Act to adopt the Final Rule. The issue of DTC list price disclosures remains live, however, as Congress has examined proposals to enshrine disclosure requirements in statute. HHS, meanwhile, left open the door for potential appeal (as of this article's writing).3 All the while, industry has attempted to navigate these shifts through self-regulatory initiatives and modification of advertising practices.

This article briefly describes FDA's historical approach to regulating drug pricing information in advertising, provides an overview of the genesis of the Final Rule, and ends with some key legal issues and questions facing all prescription drug manufacturers who seek to continue to engage with consumers through broadcast advertising.

Background

Over the past two years, significant shifts have occurred in public debate on drug prices and their inclusion in advertising. FDA has historically avoided applying advertising and labeling requirements to prescription drug communications that merely communicate product price or insurance coverage information, particularly in the absence of an affirmative statement of safety or efficacy. Instead, FDA has focused on improper pricing comparisons that suggest one drug is clinically more effective than another without adequate substantiation or in a way that misleads viewers about the relative safety risks. The Blueprint and subsequent related rulemakings generated public discussion over whether FDA should regulate list price disclosures or whether the gap should be filled by another agency or by industry self-regulation.

FDA Regulation of Prescription Drug Advertising Before the Blueprint

While FDA has the authority to regulate prescription drug advertising under the Federal Food, Drug, and Cosmetic Act (FDCA),4 prior to the HHS "Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Cost," FDA had not attempted to weigh in on the criteria for substantiating pricing statements in prescription drug advertising. Instead, FDA's regulation of prescription drug advertising primarily focused on safety and efficacy claims, including those in DTC media. FDA monitors DTC promotion to help ensure that adequate contextual and risk information, presented in understandable language, is included both to fulfill the requirement for fair balance and to help the consumer accurately assess promotional presentations.5 FDA has been active in its enforcement and surveillance activities concerning DTC advertisements across various broadcast media types—often issuing enforcement letters (i.e., Untitled and Warning Letters) for allegedly non-compliant promotion. Issues commonly cited in enforcement letters include omission and minimization of risk information, overstatement of efficacy, failure to submit on Form FDA 2253 (relating to the submission of advertising and promotional labeling) at the time of initial use or dissemination, use of misleading and/or unsubstantiated claims, among others.6

Interestingly, at least since the 1970s, FDA has recognized that pricing information may be provided by manufacturers to consumers as part of a "price reminder advertisement"—a sort of subset of unbranded reminder advertising whose sole purpose is to provide consumers with information concerning the price charged for a prescription drug without making any representations about its safety, effectiveness, or intended uses.7 FDA also has generally declined to regulate pricing discussions between payors and manufacturers of drugs and devices, so long as the information that manufacturers provide to payors is unbiased, factual, accurate, and non-misleading, and is presented with certain other information necessary to contextualize discussion of unapproved uses.8 To the extent the agency has taken steps to affect drug pricing, the agency has generally taken a more holistic policy approach that influences pricing indirectly by encouraging fair competition, often in response to Congressional/statutory mandates, such as prioritizing review and approval of generic products9 and biosimilars10 and targeting "gaming" of the REMS system.11 Thus, the recent interest shown by FDA in entering the debate about consumer education around prescription drug pricing is largely unprecedented.

Footnotes

1. HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, 83 Fed. Reg. 22692, 22695 (May 16, 2018).

2. See, e.g., PhRMA, Comments of the Pharmaceutical Research and Manufacturers of America (July 16, 2018), available at regulations.gov.

3. Rachel Cohrs, "HHS Leaves Door Open For Potential DTC Ad Rule Appeal" Inside Health Policy (July 9, 2019).

4. FDA has the authority to regulate written, printed, graphic, or broadcast matter that accompanies a prescription drug in interstate commerce. 21 U.S.C. § 352; 21 C.F.R. § 201; Kordel v. United States, 335 U.S. 345 (1992). Prescription drug advertising cannot be false or misleading in any particular; and, where prescription drug safety or efficacy claims are made (i.e. where the material contains express or implied representations about a referenced prescription drug product's safety or effectiveness to treat a particular population or condition), the material must reveal material facts about the product being promoted, including facts about the consequences that can result from use of the product as suggested in the promotional piece. Section 502(n) of the FDCA requires advertisements to contain "information in brief summary relating to side effects, contraindications, and effectiveness." FDCA § 502(n); 21 U.S.C. § 352(n). FDA implementing regulations permit advertisements broadcast through media such as television, radio, or telephone communications systems to disclose the product's major risks in a summary fashion in either the audio or audio and visual parts of the presentation; this is sometimes called the "major statement." 21 C.F.R. 202.1(e)(1). On September 27, 2007, President George W. Bush signed into law H.R. 3580, the Food and Drug Administration Amendments Act ("FDAAA") (Public Law No. 110-85), which (among other things) amended the FDCA by adding to section 502(n) (21 U.S.C. § 352(n)) the provision that ''[i]n the case of an advertisement for a drug subject to section 503(b)(1) presented directly to consumers in television or radio format and stating the name of the drug and its conditions of use, the major statement relating to side effects and contraindications shall be presented in a clear, conspicuous, and neutral manner" (emphasis added) (Section 901(d)(3)(A) of FDAAA).

5. 60 Fed. Reg. 42581–82 (1995); See also 21 C.F.R. § 202.1(e)(5).

6. See "enforcement actions" posted on the Office of Prescription Drug Promotion's webpage, available at https:// www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/ucm109905.htm (last visited November 8, 2018)

7. See 21 C.F.R. § 200.200 (Prescription Drugs; Reminder Advertisements and Reminder Labeling to Provide Price Information to Consumers).

8. See, e.g., Drug and Device Manufacturer Communications With Payors, Formulary Committees, and Similar Entities—Questions and Answers: Guidance for Industry and Review Staff, at 19–20 (June 2018).

9. See, e.g., FDA Office of Generic Drugs, 2017 Annual Report, at 6 (Jan. 2018), https://www.fda.gov/media/111198/ download (describing updates to policies and procedures to priority review of generic drug applications until there are three generics approved for a brand product; and enhancing development and review of abbreviated new drug applications (ANDAs) for complex generic drug products).

10. Biosimilars Action Plan: Balancing Innovation and Competition, FDA (Jul 2018), https://www.fda.gov/media/114574/download.

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