DTC Act of 2021
Bill: S.2304 | Sponsor: Sen. Durbin, Richard J. (D-IL)
Policy area: Health

Summary:
Drug-Price Transparency for Competition Act of 2021 or the DTC Act of 2021  This bill requires consumer advertisements for drugs and biologics covered under Medicare or Medicaid to include the drug's list price.  Each violation of this requirement is subject to a civil penalty of not more than $100,000.

To amend title XI of the Social Security Act to require that direct-to-
consumer advertisements for prescription drugs and biological products 
       include an appropriate disclosure of pricing information.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Drug-Price Transparency for 
Competition Act of 2021'' or the ``DTC Act of 2021''.

SEC. 2. FINDINGS; SENSE OF THE SENATE.

    (a) Findings.--Congress finds the following:
            (1) Direct-to-consumer advertising of prescription 
        pharmaceuticals is legally permitted in only 2 developed 
        countries, the United States and New Zealand.
            (2) In 2018, pharmaceutical ad spending exceeded 
        $6,046,000,000, a 4.8 percent increase over 2017, resulting in 
        the average American seeing 9 drug advertisements per day.
            (3) The most commonly advertised medication in the United 
        States has a list price of more than $6,000 for a one-month's 
        supply.
            (4) A 2021 Government Accountability Office report found 
        that two-thirds of all direct-to-consumer drug advertising 
        between 2016 and 2018 was concentrated among 39 brand-name 
        drugs or biological products, about half of which were recently 
        approved by the Food and Drug Administration.
            (5) According to a 2011 Congressional Budget Office report, 
        pharmaceutical manufacturers advertise their products directly 
        to consumers in an attempt to boost demand for their products 
        and thereby raise the price that consumers are willing to pay, 
        increase the quantity of drugs sold, or achieve some 
        combination of the two.
            (6) Studies, including a 2012 systematic review published 
        in the Annual Review of Public Health, a 2005 randomized trial 
        published in the Journal of the American Medical Association, 
        and a 2004 survey published in Health Affairs, show that 
        patients are more likely to ask their doctor for a specific 
        medication and for the doctor to write a prescription for it, 
        if a patient has seen an advertisement for such medication, 
        even if such medication is not the most clinically appropriate 
        for the patient or if a lower-cost generic medication may be 
        available.
            (7) According to a 2011 Congressional Budget Office report, 
        the average number of prescriptions written for newly approved 
        brand-name drugs with direct-to-consumer advertising was 9 
        times greater than the average number of prescriptions written 
        for newly approved brand-name drugs without direct-to-consumer 
        advertising.
            (8) The Centers for Medicare & Medicaid Services is the 
        single largest drug payer in the United States. Between 2016 
        and 2018, 58 percent of the $560,000,000,000 in Medicare drug 
        spending was for advertised drugs, and in 2018 alone, the 20 
        most advertised drugs on television cost Medicare and Medicaid 
        a combined $34,000,000,000.
            (9) A 2021 Government Accountability Office report found 
        that direct-to-consumer advertising may have contributed to 
        increases in Medicare beneficiary use and spending among 
        certain drugs.
            (10) The American Medical Association has passed 
        resolutions supporting the requirement for price transparency 
        in any direct-to-consumer advertising, stating that such 
        advertisements on their own ``inflate demand for new and more 
        expensive drugs, even when these drugs may not be 
        appropriate''.
            (11) A 2019 study published in the Journal of the American 
        Medical Association found that health care consumers 
        dramatically underestimate their out-of-pocket costs for 
        certain expensive medications, but once they learn the 
        wholesale acquisition cost (in this section referred to as the 
        ``WAC'') of the product, they are far better able to 
        approximate their out-of-pocket costs.
            (12) Approximately half of Americans have high-deductible 
        health plans, under which they often pay the list price of a 
        drug until their insurance deductible is met. All of the top 
        Medicare prescription drug plans use coinsurance rather than 
        fixed-dollar copayments for medications on nonpreferred drug 
        tiers, exposing beneficiaries to WAC prices.
            (13) Section 119 of division CC of the Consolidated 
        Appropriations Act, 2021 (Public Law 116-260) requires the 
        Secretary of Health and Human Services to increase the use of 
        real-time benefit tools to lower beneficiary costs. However, 
        there still remains a lack of available pricing tools so 
        patients may not learn of their medication's cost until after 
        being given a prescription for the medication. A 2013 study 
        published in The Oncologist found that one-quarter of all 
        cancer patients chose not to fill a prescription due to cost.
            (14) The Federal Government already exercises its authority 
        to oversee certain aspects of direct-to-consumer drug 
        advertising, including required disclosures of information 
        related to side effects, contraindications, and effectiveness.
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) a lack of transparency in pricing for pharmaceuticals 
        has led to a lack of competition for such pharmaceuticals, as 
        evidenced by a finding by the Department of Health and Human 
        Services that ``Consumers of pharmaceuticals are currently 
        missing information that consumers of other products can more 
        readily access, namely the list price of the product, which 
        acts as a point of comparison when judging the reasonableness 
        of prices offered for potential substitute products'' (84 Fed. 
        Reg. 20735);
            (2) in an age where price information is ubiquitous, the 
        prices of pharmaceuticals remain shrouded in secrecy and 
        limited to those who subscribe to expensive drug price 
        reporting services, which typically include pharmaceutical 
        manufacturers or other health care industry entities and not 
        the general public;
            (3) greater insight and transparency into drug prices will 
        help consumers know if they can afford to complete a course of 
        therapy before deciding to initiate that course of therapy;
            (4) price shopping is the mark of rational economic 
        behavior, and markets operate more efficiently when consumers 
        have relevant information about a product, including its price, 
        before making an informed decision about whether to buy that 
        product;
            (5) providing consumers with basic price information may 
        result in the selection of lesser cost alternatives, all else 
        being equal relative to the patient's care, and is integral to 
        providing adequate competition in the market;
            (6) the WAC is a factual, objective, and uncontroversial 
        definition for the list price of a medication, in that it is 
        defined in statute, reflects an understood place in the supply 
        chain, and is at the sole discretion of the manufacturer to 
        set;
            (7) there is a governmental interest in ensuring that 
        consumers who seek to purchase pharmaceuticals for purposes of 
        promoting their health and safety understand the objective list 
        price of any pharmaceutical that they are encouraged through 
        advertisements to purchase, which allows consumers to make 
        informed purchasing decisions; and
            (8) there is a governmental interest in mitigating wasteful 
        expenditures and promoting the efficient administration of the 
        Medicare program by slowing the growth of Federal spending on 
        prescription drugs.

SEC. 3. REQUIREMENT THAT DIRECT-TO-CONSUMER ADVERTISEMENTS FOR 
              PRESCRIPTION DRUGS AND BIOLOGICAL PRODUCTS INCLUDE AN 
              APPROPRIATE DISCLOSURE OF PRICING INFORMATION.

    Part A of title XI of the Social Security Act is amended by adding 
at the end the following new section:

``SEC. 1150D. REQUIREMENT THAT DIRECT-TO-CONSUMER ADVERTISEMENTS FOR 
              PRESCRIPTION DRUGS AND BIOLOGICAL PRODUCTS INCLUDE AN 
              APPROPRIATE DISCLOSURE OF PRICING INFORMATION.

    ``(a) In General.--The Secretary shall require that each direct-to-
consumer advertisement for a prescription drug or biological product 
for which payment is available under title XVIII or XIX includes an 
appropriate disclosure of pricing information with respect to the drug 
or product.
    ``(b) Appropriate Disclosure of Pricing Information.--For the 
purposes of subsection (a), an appropriate disclosure of pricing 
information, with respect to a prescription drug or biological 
product--
            ``(1) shall include a disclosure of the wholesale 
        acquisition cost (as defined in section 1847A(c)(6)(B)) for a 
        30-day supply of (or, if applicable, a typical course of 
        treatment for) such drug or product;
            ``(2) shall be presented clearly and conspicuously, as 
        appropriate for the medium of the advertisement; and
            ``(3) may include additional qualitative or quantitative 
        information regarding the price of such drug or product 
        explaining that certain patients may pay a different amount 
        depending on their insurance coverage.
    ``(c) Enforcement.--Any person who violates the requirement of this 
section may be subject to a civil money penalty of not more than 
$100,000 for each such violation or to another enforcement mechanism 
determined by the Secretary. Any civil money penalty shall be imposed 
and collected in the same manner as civil money penalties under 
subsection (a) of section 1128A are imposed and collected under that 
section.
    ``(d) Regulations.--The Secretary, acting through the Administrator 
of the Centers for Medicare & Medicaid Services, shall promulgate 
regulations to carry out this section. Such regulations shall determine 
the components of the requirement under this section, including the 
forms of advertising, the manner of disclosure, the appropriate 
sanctions, and the appropriate disclosure of pricing information.''.
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