The Department of Health & Human Services lacks the authority to require drug manufacturers to disclose the list price of drugs in television advertising, a district court judge has ruled.
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“The court finds that HHS lacks the statutory authority under the Social Security Act to adopt the [Wholesale Acquisition Cost] Disclosure Rule,” Judge Amit P. Mehta of the U.S. District Court for the District of Columbia, said in his July 8 ruling.
“Neither the [Social Security] Act’s text, structure, nor context evince an intent by Congress to empower HHS to issue a rule that compels drug manufacturers to disclose list prices. The rule is therefore invalid,” according to the ruling.
The ruling stems from a case brought against HHS by Merck & Co. Inc., Eli Lilly and Company, and Amgen Inc., along with the National Association of Advertisers Inc., in response to the May 8 final rule that required pharmaceutical manufacturers to include the wholesale acquisition cost (WAC) if above $35, in all television advertising. The final rule also required a disclaimer that if a person had health insurance that covers drugs, “your cost may be different.”
In addition to not having authority, the court took exception to the HHS issuing the rule through the Centers for Medicare & Medicaid Services.
“It has adopted a rule that regulates the conduct of market actors that are not direct participants in the Medicare or Medicaid programs,” the ruling states. “Pharmaceutical manufacturers are not health care providers, private plan carriers, or beneficiaries – each of whom plays a direct role in the public health insurance programs. They do not receive payment for their products from CMS. Their pricing decisions, of course, affect the cost of pharmaceutical benefits offered under the Medicare and Medicaid programs. But those decisions impact the program costs in an indirect way.”
The American Medical Association expressed disappointment that the final rule is not moving forward.
“The AMA supported the Trump Administration’s effort to require pricing information in direct-to-consumer television advertising of prescription drugs,” AMA President Patrice Harris, MD, said in a statement. “Last year, the AMA called for regulations requiring the ads to include the manufacturer’s list price of those drugs, and we have supported similar legislative efforts.”
Dr. Harris noted that having the list price would provide a vital piece of information when patients and their physicians are discussing treatment options, as it would “help patients have a more complete picture when faced with prescription drug ads. While current ads outline the potential benefits and side effects, a crucial factor for patients – the drug’s price – is not included. Patients, especially those who pay a drug’s list price or whose cost-sharing is based on the list price, would benefit by having another tool in their toolbox as they work with their physicians to determine their prescription drug regimens.”
Likewise, AARP also expressed disappointment in the decision, calling it “a step backward in the battle against skyrocketing drug prices and providing more information to consumers. Americans should be trusted to evaluate drug price information and discuss any concerns with their health care providers.”
Judge Mehta noted in his ruling that “the court does not question HHS’ motives in adopting the WAC Disclosure Rule. ... 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.”
