Direct to consumer d-t-c: Senator Angus King submits bipartisan bill to disclosure drug prices

 Senator Angus King Introduces Bipartisan Bill to Require Price Transparency in Prescription Drug Advertisements

Drug-Price Transparency for Competition Act comes on heels of GAO report detailing Pharma’s direct-to-consumer advertising’s colossal impact on Medicare spending* (check post-script)

The growth of the d-to-c category has been 40 to 50 percent year-over-year

WASHINGTON, D.C. – Today the Office of U.S. Senator Angus King (I-Maine) announced that Senators King, Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) have introduced the Drug-price Transparency for Competition (DTC) Act, a bill that would require price disclosures on advertisements for prescription drugs, in order to inform patients and reduce spending on medications. Specifically, the DTC Act would require DTC advertisements for prescription drugs and biological products to include a disclosure of the list price, so that patients can weigh options when inundated with drug commercials. The Senators’ legislation comes on the heels of a Government Accountability Office (GAO) report which found direct-to-consumer (DTC) advertisements of prescription drugs contribute to an enormous amount of Medicare costs.

“For decades, pharmaceutical companies have run ads detailing their fixes to serious ailments – but things get vague when you look for a drug’s price tag,” said Senator King. “Continuing to advertise these medications without prices creates challenges for patients trying to make informed decisions about their medical care and their household budgets. As we seek bipartisan solutions to lower prescription drug costs, establishing transparency requirements will help patients understand what they’re being sold and give them the ability to shop among competing pharmaceutical companies.”

Each year, the pharmaceutical industry spends $6 billion in direct-to-consumer (DTC) drug advertising to fill the airwaves with ads, resulting in the average American seeing nine DTC ads each day. Studies show that these activities steer patients to more expensive drugs, even when a patient may not need the medication or a lower-cost generic is available. This practice drives up the cost of health care, while undermining the role of providers. For these reasons, most countries have banned DTC prescription drug advertising—the United States and New Zealand are the only developed nations to permit this practice.

The DTC Act is endorsed by: AARP, American Medical Association, American Hospital Association, American College of Physicians, American Academy of Neurology, Public Citizen, and Campaign for Sustainable Rx Pricing.

Senator Angus King (I) Maine

The GAO report found a number of concerning statistics highlighting the cost of DTC advertising to Medicare and patients, including:

• Pharmaceutical manufacturers spent approximately $6 billion for each of the years 2016-2018 on DTC drug advertisements (increasing spending each year over year), half of which was concentrated among drugs that treat chronic conditions of arthritis, diabetes, and depression. Virtually all spending was for more expensive, brand-name drugs.

• Two-thirds of this spending ($12B out of $18B total) over this three-year period was concentrated on just 39 drugs, half of which had newly entered market. For each of those 39 drugs, their manufacturers spent over $100 million to run commercials. Humira was the highest-advertised drug, with $1.4 billion in DTC spending during 3 year window – followed by Lyrica ($913 million), and Trulicity ($655 million).
• During this three year period, Medicare spent a total $560 billion on drugs, and 58 percent were on drugs that were advertised.
• Advertised drugs accounted for 8 percent of total Medicare Part D drugs used but 57 percent of that spending.
• Among the top 10 drugs with the highest cost to Medicare, four were also in the top 10 for advertising spending (Humira, Eliquis, Keytruda, Lyrica).

Senator King has been a leader in working to reduce prescription drug costs and hold pharmaceutical companies accountable for the content of their ads. He has introduced legislation to prohibit pharmaceutical drug manufacturers from claiming tax deductions for consumer advertising expenses. In addition to his support of the legislation focused on DTC advertising, Senator King has supported a number of commonsense bills to drive down the costs of medication in the United States.

Last year, King-backed legislation to combat anticompetitive practices used by some brand-name drug companies to block entry of lower-cost generic drugs was signed into law. The proposal, which deters pharmaceutical companies from blocking cheaper generic alternatives from entering the marketplace, will save billions of dollars for both the federal deficit and American consumers. Senator King is a strong advocate for preventive healthcare as a way to cut costs and improve public health. In October 2019, he hosted a prevention-focused panel discussion in Bangor with local healthcare providers and public wellness experts on the best ways to use prevention strategies to improve health outcomes and reduce costs. He has also backed the Affordable and Safe Prescription Drug Importation Act, which would allow patients, pharmacists and wholesalers to import safe, affordable medicine from Canada and other major countries, and the Empowering Medicare Seniors to Negotiate Drug Prices Act, which would allow for Medicare to negotiate the best possible price of prescription drugs to cut costs for nearly 43 million seniors enrolled in Medicare Part D.

*Ferro: (article published by the AdCouncil news) "The growth of the d-to-c category has been 40 to 50 percent year-over-year for the last two to three years. What’s interesting is that it’s not the new brands but some of the first brands in the d-to-c wave that are now stepping up on the advertising side. Brands reach a certain point where the social reach isn’t necessarily incremental, and television allows them to come in with big moments and have a broad reach opportunity with their audience.

There are also brands our creators like to work with. When we go to our showrunners and heads of marketing and tell them who we are working with and why, they get very excited because they’re customers of those brands. They want to engage in telling those stories.

Sherman: Kate, What do you see as the role of TV in the d-to-c ecosystem?

Huyett: About two to three years in, 80 percent of our spend was on Facebook, which we knew didn’t make sense from a risk perspective. We actively tried to diversify, and we needed channels where we could spend multiple millions of dollars and have certainty that they would pay off. We tested direct mail, TV and radio, and all of them worked. Now, depending on the time of year, 35 to 50 percent of our marketing is offline.