Trump administration’s drug price transparency rule blocked by federal judge
Wednesday, July 17, 2019
A recent Trump administration rule received a blow at the hands of a federal judge in early July 2019. The judge blocked a drug transparency rule that drugmakers have opposed — requiring that prices be listed in any television ads for the drugs.
The original rule was announced in May 2019 by the Centers for Medicare and Medicaid Services (CMS) and required drug manufacturers that sell drugs covered by Medicare and Medicaid to include the cost for a typical course of treatment — such as a 30-day supply of medication for a chronic condition.
The U.S. and New Zealand are the only countries that allow for direct-to-consumer pharmaceutical adverting that includes product claims.
Merck & Co., Eli Lilly, and Amgen, along with the Association of National Advertisers, sued the Department of Health and Human Services (HHS) and CMS to block the rule they call unnecessary and unlawful. It was set to take effect July 9.
In his decision, U.S. District Judge Amit Mehta for the U.S. District Court for the District of Columbia said the HHS rule would exceed the agency’s statutory authority, even as he clarified he was not opining on HHS' motives for adopting the rule. "That policy very well could be an effective tool in halting the rising cost of prescription drugs," Mehta wrote. "But no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized."
He also said the policy "is far afield of any other type of rulemaking authority HHS has previously exercised" under the Social Security Act and that it would have far broader policy implications.
An HHS spokesperson said HHS will work with the Department of Justice on next steps related to the litigation, and that “President Trump and Secretary Azar remain focused on lowering drug prices and empowering patients through more transparency in healthcare costs. Putting drug prices in ads is a useful way to put patients in control and lower costs, and as seen from the President’s executive order, we are working on many different avenues for delivering transparency."
During the launch of the original rule, HHS said that because drug companies benefit from selling directly to consumers via the TV, they should disclose costs via the same channels as cars and other direct-to-consumer goods being sold on the medium.
Billions are spent each year by drugmakers marketing their wares directly to the public, most of which comes in the form of the 30- or 60-second television spots. "We're telling drug companies today that you've got to level with people what your drugs cost," HHS Secretary Alex Azar said on a call with reporters in May. "Patients have a right to know and, if you're ashamed of your drug prices, change your drug prices."
The rule would have required direct-to-consumer television advertisements for prescription drug and biological products covered by Medicare or Medicaid to include the list price — the Wholesale Acquisition Cost.
The 10 most commonly advertised drugs have list prices ranging from $488 to $16,938 per month for usual course of therapy. "Patients deserve to know what a drug costs as they discuss their options with their doctor," HHS said in its statement.
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