Direct-to-Consumer Advertising and Promotional Labeling Transparency and Pricing Requirements for Pharmaceutical Manufacturers


Government and regulatory agencies have recently provided guidelines regarding the importance of transparency in Direct-to–Consumer (DTC) advertising through proposed regulation and guidance documents.

  1. Centers for Medicare and Medicaid Services (CMS) DTC Regulation

Medicare and Medicaid Programs: Regulation to Require Drug Pricing Transparency requires pharmaceutical manufacturers to include a medication’s list price in its DTC television advertising after the wholesale acquisition price hits $35 for a 30-day supply of medication. CMS explained that “[t]o have the necessary information in making critical decisions related to prescription drugs, consumers need some idea of the magnitude of the cost of the advertised drug.”  This is especially significant given a recent survey cited by CMS in which one in eight adults said they had been prescribed a specific medication “after asking a doctor about it as a result of seeing or hearing an advertisement.”

CMS states that its goal is “to improve the efficient administration of the Medicare and Medicaid programs by ensuring that beneficiaries are provided with relevant information about the costs . . . so they can make informed decisions that minimize not only their out-of-pocket costs, but also unreasonable expenditures borne by Medicare and Medicaid, both of which are significant problems.” The proposed regulation does not provide guidance on the applicability to media other than television or the font size or screen time requirements for the disclosure.

CMS is seeking comments from the pharmaceutical industry and the public on a number of issues, including the following:

  • “[H]ow providing consumers with the list price of a medication may influence interactions with prescribers, the selection of the drug products, and the perceived efficacy of the prescribed drugs.”
  • The specifics of the proposal, including what price should be used as the “list price,” whether the 30-day supply is the appropriate metric to gauge cost, whether the threshold of $35 is appropriate, and whether an expiration date for this price should be required.
  • “[W]hether the final rule should include more specific requirements with respect to the textual statement, such as specific text size, contrast requirements, and/or duration and specifically what those requirements should be.”
  • “[H]ow to treat an advertised drug that must be used in combination with another non-advertised drug or device.”
  • Whether the regulation should be applied to “other media formats and, if so, what the presentation requirements should be.”
  • “[W]hether compliance with this rule should be a condition of payment, directly or indirectly, from these federal health programs.”
  • “[W]hether the following approaches could support price transparency and informed decision making, either in addition to or in lieu of the measures proposed in this notice of proposed rulemaking –
    • An enhanced CMS drug pricing dashboard,
    • A new payment code for drug pricing counseling, and
    • Intelligent plan selection or use of intelligent plan assignment.”
  • “[W]hether manufacturers or others submitting additional information such as list price, typical out-of-pocket cost, therapeutic alternatives, pharmacoeconomic research, and other data, could be helpful for consumers and what information would be most useful.”

The comment period closed December 17, 2018. The full release is available here.

  1. Pharmaceutical Research and Manufacturers of America (PhRMA) Guiding Principles

The same day CMS released its proposed regulation, PhRMA updated its Guiding Principles: Direct-to-Consumer Advertisements About Prescription Medicines, to address inclusion of product pricing.

PhRMA established the voluntary Guiding Principles “[t]o express the commitment of PhRMA members to deliver DTC communications that serve as valuable contributors to public health.” These principles provide voluntary guidelines for companies using DTC advertisements and touch on topics including:

  • Parameters for celebrity endorsements.
  • Supporting claims with appropriate evidence.
  • Providing balance between benefits and risks.
  • Fostering responsible communication between patients and providers.
  • Inclusion of FDA MedWatch information.
  • Alternatives to medication.

Principle 19, the newly added principle regarding pricing, states:

“All DTC television advertising that identifies a prescription medicine by name should include direction as to where patients can find information about the cost of the medicine, such as a company-developed website, including the list price and average, estimated or typical patient out-of-pocket costs, or other context about the potential cost of the medicine.”

PhRMA acknowledges that “DTC communications, particularly DTC television advertising, can be a powerful tool for reaching and educating millions of people, and [they] are committed to ensuring that . . . DTC communications provide accurate, accessible and useful health information to patients and consumers. DTC advertising of such important and innovative products as prescription drugs should be responsibly designed to achieve these goals and to encourage the appropriate use of these products.”

The Guiding Principles will be effective April 15, 2019, and are available here.

  1. FDA DTC Guidance

The FDA DTC Guidance, entitled Presenting Quantitative Efficacy and Risk Information in Direct-to-Consumer Promotional Labeling and Advertisements, also focuses on providing consumers and patients additional safety and warning information. The DTC Guidance “outlines FDA’s recommendations for how firms that include quantitative efficacy or risk information in DTC promotional materials for their drugs can make the language and presentation more consumer-friendly.”

The FDA emphasizes the importance of providing information in a manner consumers can easily digest, noting “[r]ecent research on the communication of treatment information [that] suggests that consumers can recall and comprehend efficacy and risk information when it is provided quantitatively.” Additionally, “[w]hen compared to qualitative descriptions of efficacy and risk information, quantitative information can improve consumers’ accuracy in estimating the drug’s benefits and risks.”

The FDA provides the following topline analysis on the impact of DTC promotional materials, as well as recommendations (not legally enforceable responsibilities):

  • “Firms presenting quantitative efficacy or risk probabilities in DTC promotional materials should convey the information in terms of absolute frequencies (e.g., 57 out of 100) or percentages (57%).”
  • “Research suggests that consumers do not understand relative frequencies (e.g., 33% reduction in symptoms; 3 times as likely to experience a side effect) in health communications as easily as they understand other formats for presenting probabilities, such as absolute frequencies or percentages.”
  • Firms “should present information in the same numerical format throughout a promotional labeling piece or advertisement . . . [and] consistently characterize efficacy or risk information quantitatively.”
  • Advertisements should “use frequencies with the same denominator when providing more than one absolute frequency and consider using denominators that are multiples of 10.”
  • Materials should “[e]xpress probabilities using whole numbers to the extent that the probabilities in whole numbers accurately reflect the numerical value being described in the promotional piece.”

When DTC promotional materials contain qualitative or risk information, visual aids such as graphs, tables and icon arrays can illustrate the information and place the numerical values in context. These “can improve consumers’ ability to accurately understand how well a medication works and support decision making.”

Materials using visual aids should:

  • “Explain the purpose of the aid and accurately define the elements displayed.”
  • “Make visual displays of numeric information proportionate to the quantity being described.”
  • “Include visual representations of both the numerator and denominator in ratios of frequencies.”
  • Include information from both the treatment group and relevant control group, as “[i]nformation from the control group plays an important role in evaluating the [medication’s] benefits and risks.”

The FDA DTC Guidance is available here. The comment period closed December 15, 2018.

  1. Conclusion

The government and pharmaceutical industry are focusing on recent research related to the impact of DTC advertising on consumers. Transparency of information in DTC advertisements and promotional labeling is a trend for manufacturers to continue monitoring and incorporating into marketing and promotional strategies.

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