PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

SBE Council Opposes Proposed Senate Amendment to Mandate List Prices of Drugs in Advertisements

By at 22 August, 2018, 11:48 am

Dear Member of the United States Senate:

The Small Business & Entrepreneurship Council (SBE Council) strongly opposes a proposed amendment to the Defense-Labor-HHS Appropriations package that would force biopharmaceutical companies to include list prices in direct-to-consumer (DTC) advertisements. This regulation would only confuse the public and waste valuable resources that are needed to bring new and breakthrough drugs to the marketplace.

SBE Council understands the sentiment behind the Durbin-Grassley amendment, but it will not help to lower drug prices. Creating new costs for biopharmaceutical companies, and particularly on smaller firms in the industry, through this government mandate to bring consumers list-price data will only confuse consumers because it is not relevant to what they pay given health insurance coverage, discounts and other programs.

There is also significant First amendment concerns with this proposed government mandate. As noted in a July 27 coalition letter to all members of the U.S. Senate signed by SBE Council:

“In addition to the drawbacks for patients and misdirected resources, however, perhaps the most dangerous/unsettling/disturbing aspect of requiring disclosure of list prices in DTC ads is that it raises First Amendment concerns regarding compelled speech. Only limited exceptions allow the government to compel speech, and none of those exceptions apply in this case. As an initial matter, advertising for pharmaceutical products constitutes commercial speech, and the Supreme Court has made clear commercial speech is protected by the First Amendment. Consequently, courts have repeatedly ruled that the government can only compel disclosure of ‘purely factual and uncontroversial information.’ 

Compelled disclosure of list prices simply does not meet these conditions. List prices are not ‘purely factual,’ but rather potentially mislead because payers receive discounts, and rebates and most patients pay a different amount out of pocket. Additionally, that information is far from ‘uncontroversial in the current environment, and disclosure in consumer ads of prices higher than what is actually charged would promote controversy. 

With a unified goal of providing beneficial factual information to healthcare consumers, real solutions come from advancing thoughtful public policy discussions, not counterproductive and unconstitutional proposals that create additional regulation to confuse consumers, deter patients from care and raise First Amendment concerns regarding compelled speech.”

SBE Council is also very concerned about the precedent this proposed mandate establishes for the federal government requiring other pricing information in advertising for products and services.  Where would this end?

Please remember that the biopharmaceutical industry is not just about big business. Indeed, it’s just the opposite. For example, among pharmaceutical and medicine manufacturing firms, 57 percent have less than 20 workers, 79 percent less than 100 employees, and 91 percent less than 500 workers. This critical industry is about small entrepreneurial businesses and government mandates that re-direct or waste capital away from innovation, bringing drugs to market, or competing with larger firms only hurts consumers and the quality of our nation’s health care system.

SBE Council remains engaged and concerned about health care and health coverage costs, as this is a big challenge for our members and their employees.  But as we have seen with other mandates and red tape heaped upon our health care system, intrusive government regulation only reduces competition and choice in the marketplace and increases costs. The barriers to entry for entrepreneurial firms and innovation also grow higher, or become more entrenched.

Thank you for considering SBE Council’s views. We urge you to oppose the Durbin-Grassley amendment.

Sincerely,

Karen Kerrigan, President & CEO

News and Media Releases