Judge Blocks Trump Rule Requiring Drug Companies to List Prices in TV Ads

July 9, 2019

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Source: New York TImes

A federal judge ruled on Monday that the Trump administration cannot force pharmaceutical companies to disclose the list price of their drugs in television ads, dealing a blow to one of the president’s most visible efforts to pressure drug companies to lower their prices.

Judge Amit P. Mehta, of the United States District Court in the District of Columbia, ruled that the Department of Health and Human Services exceeded its regulatory authority by seeking to require all drugmakers to include in their television commercials the list price of any drug that costs more than $35 a month. The rule was to take effect this week.

With the 2020 presidential election race underway, the Trump administration has searched for ways to appeal to Americans burdened by the high cost of health care and prescription drugs.

The Affordable Care Act was once a reliable campaign trail villain for President Trump, but leading Republicans in Congress have become reluctant to revisit repealing the federal health care law. An appeals court in New Orleans on Tuesday is set to hear oral arguments on the constitutionality of Obamacare.

In some ways, rising drug prices have provided a more populist issue for the president and members of Congress. Politicians in both parties have clamored to show they are doing something, but little has changed and many companies have continued to raise their prices.

The administration’s effort to provide transparency in drug pricing was seen as largely symbolic — a way to hold drugmakers accountable for their prices, even if it did not directly do anything to lower costs and even if those prices were not what consumers usually paid.

On Monday night, Judd Deere, a spokesman for the White House, said: “It is outrageous that an Obama-appointed judge sided with big pharma to keep high drug prices secret from the American people, leaving patients and families as the real victims.”

And Caitlin Oakley, a spokeswoman for H.H.S., said the administration was disappointed and was consulting with the Justice Department on what to do next. “Although we are not surprised by the objections to transparency from certain special interests,” she said, “putting drug prices in ads is a useful way to put patients in control and lower costs.”

A spokeswoman for the Justice Department did not immediately respond to phone calls and emails requesting comment on whether the administration would immediately appeal the ruling.

David Mitchell, the founder of Patients for Affordable Drugs, which advocates lower drug prices, said his group never thought the television-ad rule would get drugmakers to reduce their prices. “But if you take that away, at least it was something visible they could point to that they’d done,” he said.

Last week, the president said he would be issuing an executive order on drug pricing, but the breadth of the order remained unclear. His administration has proposed other moves, including allowing older adults to more directly benefit from drug rebates in Medicare, and tying the cost of some drugs to their price in other countries.

Republicans and Democrats in Congress have also put forward a range of legislation that would address the issue, from limiting out-of-pocket costs for people covered by Medicare to allowing the federal government to directly negotiate the price of drugs.

Merck, Eli Lilly and Amgen had sued to block the television-ad rulein June, arguing that forcing companies to disclose their list prices was beyond the reach of the federal government as well as a violation of the First Amendment. The companies also said many patients have health insurance that lowers their out-of-pocket costs, and seeing the higher list price might lead them to stop taking drugs they needed.

The Trump administration, including Secretary Alex M. Azar II of Health and Human Services, had argued that requiring such disclosure could shame the drugmakers into lowering their prices.

In a statement, Lilly said it was pleased with the ruling. “We are committed to working with stakeholders across the health care system to find better solutions for the larger issue, namely, lowering out-of-pocket costs for Americans who still struggle to pay for their medicines,” the company said.

AARP, which represents older Americans, expressed disappointment in the judge’s decision. “Today’s ruling is a step backward in the battle against skyrocketing drug prices and providing more information to consumers,” the group said. “Americans should be trusted to evaluate drug price information and discuss any concerns with their health care providers.”

Judge Mehta, who was nominated to his position by President Barack Obama in 2014, did not delve into whether the proposed rule violated the First Amendment. He relied instead on whether the Department of Health and Human Services had overstepped its bounds because it sought to issue the rule under the authority of the Social Security Act.

While saying the court did not question the agency’s motives, he wrote: “Nor does it take any view on the wisdom of requiring drug companies to disclose prices. 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, H.H.S. cannot do more than what Congress has authorized. The responsibility rests with Congress to act in the first instance.”

Last year, Senator Charles Grassley of Iowa, the Republican chairman of the Senate Finance Committee, and Senator Dick Durbin of Illinois, a Democrat, proposed legislation that was similar to the Trump administration’s proposal. It passed the Senate in August 2018, and in May, the senators said they were still pursuing the legislation.

Mr. Trump has faced hurdles — some of his own making — as he has sought to make changes either unilaterally or with the help of Democrats. In May, the president said during a speech in the Roosevelt Room that his administration would work with Democrats to eliminate surprise medical billing — the practice of billing patients with undisclosed costs at the time of care.

He also singled out the drug-price disclosure rule.

The rule was “going to be something, I think, very special,” Mr. Trump said. “You may have heard about it. Maybe not. But it’s the beginning of a plan of transparency.”

 

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