Federal judge rules against Trump’s mandate that pharma companies show drug prices in TV ads

By | July 9, 2019

A federal judge on Monday blocked the Trump administration from implementing a rule that pharmaceutical companies must display the list prices of their drugs in their TV ads.

U.S. District Judge Amit Mehta in Washington, D.C., sided with drug manufacturers Amgen, Merck, and Eli Lilly in his decision to halt the Department of Health and Human Services from implementing the rule, which was meant to take effect Tuesday.

Mehta ruled the department does not have the authority to force pharmaceutical companies to display wholesale prices in advertisements.

“To be clear, the court does not question HHS’s motives in adopting the [rule],” Mehta wrote. “Nor does it take any view on the wisdom of requiring drug companies to disclose prices. That policy very well could be an effective tool in halting the rising cost of prescription drugs. But no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized. The responsibility rests with Congress to act in the first instance.”

HHS Secretary Alex Azar announced the rule on May 8, in the hopes of compelling companies to decrease the exorbitant costs of brand-name drugs and increase price transparency so that a patient doesn’t go to the pharmacy counter only to find out their drug comes with a massive bill.

“Put it in the TV ads. Patients have a right to know, and if you’re ashamed of your drug prices, change your drug prices. It’s that simple,” Azar said when the rule was announced.

As part of the May rule, drug companies would need to list the price of a 30-day supply of a drug covered under Medicare and Medicaid if it costs at least $ 35 per month.

Merck, Eli Lilly, and Amgen filed their lawsuit alongside the Association Of National Advertisers on June 14, arguing that the administration’s rule would force companies to disclose a price not taking into account consumers with insurance, and thus confuse them or dissuade them from seeking medical care.

The argument of the manufacturers is part of the industry’s wider opposition to disclosing list prices, not only because they don’t reflect prices for someone with insurance, but also that the list prices do not take into consideration discounts and rebates that come as a result of negotiations between pharmacy benefit managers and insurers.

The companies also argued in the suit that the Health and Human Services rule violated their First Amendment right to free speech, but the judge ruled that the free speech argument was invalid, since HHS didn’t have the authority to enact the rule in the first place.