A federal judge has stepped in to save drug companies from a new rule that would have forced them to disclose drug prices in TV ads, ruling that the Department of Health and Human Services lacks authority over the industry.
“No matter how vexing the problem of spiraling drug costs may be, [Health and Human Services] cannot do more than what Congress has authorized,” US District Court Judge Amit Mehta ruled on Monday, blocking the order, which was due to go into effect on Tuesday.
Amgen, Merck, and Eli Lilly, three of the largest US drug companies, and the Association of National Advertisers filed the lawsuit last month, claiming HHS lacked the legal authority to enforce the rule, which would have mandated that pharmaceutical ads display the list price of a 30-day supply of any drug covered under Medicare or Medicaid costing more than $35. The suit also claimed the order violated their First Amendment rights to freedom of speech, but Mehta’s ruling didn’t address that argument.
Drug companies complained the rule would “confuse” and “intimidate” patients because insurers, including Medicare and Medicaid, negotiate discounts with drug companies, meaning the list price, often much higher, could cause sticker shock. But that argument got little sympathy from HHS secretary Alex Azar, who told the companies when he announced the rule in May:
If you’re ashamed of your drug prices, change your drug prices. It’s that simple.
The US is one of only two countries worldwide where direct-to-consumer advertising of prescription drugs is legal, and it is a massive market – $5.2 billion in 2016, according to CBS. According to HHS, the 10 most-advertised drugs have list prices from $488 to $16,938 per month or for a typical therapeutic course, numbers that would surely terrify the average consumer. President Donald Trump has made lowering the costs of prescription drugs one of his signature domestic issues, and the HHS rule was designed to bring those costs down, under the reasoning that pharmaceutical companies would be so embarrassed to float those gargantuan numbers on their ads that they’d cut the prices voluntarily.
Much of pharmaceutical advertising remains TV-based and the pharmaceutical industry has argued that it should be allowed to include pricing information on a dedicated website named in the ad. While it might seem absurd to expect consumers to drop everything and open their web browsers after seeing a TV ad they weren’t looking for in the first place, drug companies’ influence in Congress – they spent $4.1 billion on lobbying over the last 20 years, according to OpenSecrets.org, more than any other industry – means they tend to get what they want.