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August 22, 2019

HHS appeals court ruling against requiring TV ads to disclose drug prices

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    HHS on Wednesday appealed a federal judge's ruling that struck downfinal rule that would require drugmakers to disclose their products' list prices in consumer-directed television advertisements, The Hill reports.

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    Final rule details

    The final rule, which HHS released in May, would 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, and that the text should include a statement noting that patients with health insurance might pay a different sum for the treatment.

    HHS under the rule would 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.

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

    Lawsuit details

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

    The drugmakers and ANA also claimed that the final rule would have a "misleading effect," because a drug's list price does not represent the amount patients would pay out of pocket for a treatment after applying discounts, rebates, and other adjustments.

    They also argued that HHS did not provide evidence the final rule would lower drug prices, which the Trump administration has claimed is part of the rule's purpose.

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

    Judge Amit Mehta of the U.S. District Court for the District of Columbia last month ruled that HHS does not have the authority to require manufacturers to disclose their drugs' list prices in TV advertisements, and blocked the final rule from taking effect.

    HHS appeals ruling

    HHS on Wednesday filed a notice to appeal the ruling to the U.S. District Court of Appeals for the District of Columbia Circuit.

    According to STAT+, observers had expected HHS to appeal Mehta's ruling, because the ruling marked a significant loss in the administration's efforts to lower prescription drug costs. The administration has argued that including list prices in TV ads is a crucial step toward price transparency (Minemyer, FierceHealthcare, 8/21; Florko, STAT+, 8/21 [subscription required]; Weixel, The Hill, 8/21).

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