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June 17, 2019

Drugmakers sue HHS over rule requiring prices in TV ads

Daily Briefing

    Three pharmaceutical companies and the Association of National Advertisers on Friday filed a lawsuit challenging HHS' final rule to require drugmakers to disclose their products' list prices in consumer-directed television advertisements.

    Final rule details

    HHS released the final rule last month. It will require drugmakers to include list prices in television advertisements for Medicare- and Medicaid-covered drugs if the price for a typical course of treatment or a 30-day supply is greater than $35. The final rule states that the prices should appear in text that is large enough for most people to read. The text also must include a statement noting that patients with health insurance might pay a different sum for the treatment.

    HHS under the rule will maintain and publish a list of pharmaceutical companies that do not comply with the new requirements. Those companies also could be subject to litigation under the final rule.

    The final rule is scheduled to take effect July 9. CMS has estimated that the final rule will affect 25 pharmaceutical companies that run approximately 300 different drug ads on television each quarter. The agency projected that complying with the final rule will cost drugmakers $5.2 million during the first year of implementation and $2.4 million in subsequent years.

    Lawsuit details

    Amgen, Eli Lilly, Merck, and the Association of National Advertisers (ANA) jointly filed the lawsuit in the U.S. District Court for the District of Columbia. The lawsuit claims the final rule exceeds HHS' statutory authority and violates the First Amendment of the Constitution.

    The drugmakers and ANA claim the final rule will have a "misleading effect," because a drug's list price does not represent the amount patients will pay out of pocket for a treatment after discounts, rebates, and other adjustments are applied. The drugmakers and ANA in the lawsuit argue that "Americans deserve accurate information about the price they will pay for prescription drugs," and the final rule "purports to further that objective, but will instead frustrate it—by misleading patients about their out-of-pocket costs for prescription drugs in a manner that even HHS admits may 'confuse' and 'intimidate' patients."

    The lawsuit also argues that HHS does not provide evidence the final rule will lower drug prices, which the Trump administration has claimed is part of the rule's purpose.

    Further, the drugmakers and ANA claim the final rule "would be directly contrary to [the] … best interests" of patients because list prices "could discourage patients from using beneficial medications."

    HHS responds

    HHS spokesperson Caitlin Oakley said, "If the drug companies are embarrassed by their prices or afraid that the prices will scare patients away, they should lower them." She added, "President Trump and [HHS] Secretary [Alex] Azar are committed to providing patients the information they need to make their own informed health care decisions."

    HHS when it issued the final rule said it believed the rule is in line with Supreme Court precedent (Owens, "Vitals," Axios, 6/17; Ajmera, Reuters, 6/14; Weixel, The Hill, 6/14; Luthi, Modern Healthcare, 6/14; Cohrs, Inside Health Policy, 6/14 [subscription required]; Diamond, "Pulse," Politico, 6/17).

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