Drug Manufacturers File Suit to Block HHS Rule Requiring That Drug Prices Be Included in TV Ads
On June 14, 2019, several pharmaceutical companies filed suit against the Department of Health and Human Services (“HHS”), seeking to block a recently finalized rule from the Centers for Medicare and Medicaid Services (“CMS”) requiring direct-to-consumer (“DTC”) television ads for prescription drugs to include the list price in the TV ad. The rule applies to prescription drugs that are covered by Medicare or Medicaid, and that cost $35 or more for a one-month supply, or for the usual course of therapy.
The rule originated in the President Trump’s American Patients First blueprint to rein-in prescription drug prices. The blueprint identified four strategies for doing so – one of which is to create incentives for lower drug list prices. The rationale behind the rule is that if patients know how much a drug costs, they will discuss their options with their doctor and possibly choose a less expensive therapeutic alternative.
HHS Secretary, Alex Azar, lauded the rule, noting that making drug prices “more transparent is a significant step … to reform our prescription drug markets and put patients in charge of their own healthcare.”
Merck & Co., Inc., Eli Lilly and Co., and Amgen, Inc., together with the Association of National Advertisers filed suit in the US District Court for the District of Columbia to invalidate the rule, arguing that HHS exceeded the scope of its authority in promulgating the rule. The plaintiffs argue that HHS does not have the specific authority to require such a disclosure, and further that HHS’ general statutory authority must be “interpreted particularly narrowly when the assertion of power encroaches on First Amendment interests.”
The plaintiffs also argued that the “compelled” disclosure violates the manufacturers’ First Amendment rights by requiring them to “deliver misleading, and potentially harmful, messages to patients.” They assert that the government “bears the burden of showing that the regulation in question directly and materially advances a substantial government interest that could not be served just as well by means that do not regulate speech to the same degree.” The plaintiffs argue that HHS cannot meet this burden, in part, because the rule is intended to increase transparency into drug prices. However, the plaintiffs assert that the rule will likely have the opposite effect “because of its reference to a ‘list price’ that is many times higher than the price most ‘CMS customers’ who see the direct-to-consumer advertisement would pay for the product.”
However, some stakeholders are supportive of the new rule. The American Medical Association, which previously called for a complete ban on DTC ads of prescription drugs, noted that the rule is a “step in the right direction” and that “[t]his small dose of transparency will help patients have a more complete picture when faces with prescription drugs ads.”