In January 2020, the United States Court of Appeals for the District of Columbia heard arguments in Merck & Co., Inc. v. HHS, a case that may have lasting impacts on the First Amendment and the way it is interpreted towards drug makers.
The case was initially brought by Merck & Co., Eli Lilly and Co., and Amgen, Inc., along with the Association of National Advertisers (ANA), arguing that a Department of Health and Human Services (HHS) rule that would require drug makers to include the list price of prescriptions in any television advertisement should be set aside.
District Court Ruling
The district court found that HHS did overstep its statutory bounds and that HHS’s asserted “ability to regulate the health care marketplace” in the name of lowering program costs represented an “expansion of regulatory authority” that “Congress surely did not envision.” United States District Judge Amit P. Mehta wrote that HHS lacked the statutory authority to issue the rule and that if the rule were permitted to stand, it could “swing the doors wide open to any regulation, rule or policy that might reasonably result in cost savings to Medicare and Medicaid programs, unless expressly prohibited by Congress.”
Oral Arguments
During the oral arguments before the U.S. Court of Appeals for the District of Columbia, the three-judge panel expressed their skepticism about HHS’s continued argument that forcing the wholesale acquisition price to be advertised in TV commercials would provide clarity to consumers. More specifically, Judge Patricia Millett noted during the arguments, “You say the list price, people think it means something, but I don’t think it does.”
HHS argues is that it introduced the rule “to mitigate a crisis in prescription drug costs that threatens the sustainability of Medicare and Medicaid” and that providing the list price in advertising would help the HHS and the Centers for Medicare & Medicaid Services more efficiently regulate the industry by providing a starting point, or “anchor,” for doctors and patients to have a conversation about drug costs.
Judge Harry Edwards expressed his skepticism, saying, “I don’t see how it falls within the efficiency at all.”
Richard Bress of Latham and Watkins LLP, representing the drug makers, argued that the rule will “mislead, confuse and intimidate” consumers, and that revealing the list prices will actually be “dangerous.”
First Amendment Issues
The lower level did not address any of the First Amendment issues that are actually raised throughout the case. The drug makers argue that HHS cannot compel their speech and require them to include the list price in advertisements, especially because the list price can be misleading since actual out-of-pocket costs vary depending on insurance coverage and other factors.
HHS, on the other hand, maintains not only that it has the ability to issue such a rule, but that commercial speech has less First Amendment protections than other forms of speech.
Craig Whitney, a partner at Frankfurt Kurnit Klein & Selz PC, noted that if the Court of Appeals finds that HHS does not have the ability to enact the rule, it may be extrapolated to cover other situations and may lead to the government being limited in its ability to enact rules and regulations. However, if HHS is successful, such a ruling may allow more latitude for the government to enact rules and regulations not explicitly covered in law.