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Analysis

Judge Vacates HHS Rule That Would Require Drug Price Disclosure in TV Ads

By Jack O'Brien  
   July 08, 2019

The ruling is likely to be challenged at the United States Court of Appeals for the District of Columbia Circuit.

United States District Court Judge Amit P. Mehta ruled in favor of three major pharmaceutical companies Monday evening, blocking the Trump administration's final rule to disclose prescription drug list prices in direct-to-consumer television advertisements.

The plaintiffs in the case included three large drugmakers, Merck & Co., Eli Lilly and Co., Amgen Inc., as well as the Association of National Advertisers, Inc, challenging the Department of Health and Human Services' (HHS) requirement that drugmakers post the list prices of prescription drugs equal to or greater than $35 for a month's supply.

Related: Final Rule Requires Drug Price Disclosures in TV Ads

The decision came one day before the rule, which was finalized in early May, was set to go into effect.

The final rule was first proposed in May 2018 and has been a core element of the Trump administration's push to increase prescription drug price transparency for consumers, led by HHS Secretary Alex Azar, former president of Eli Lilly's domestic division.

Related: Drug Pricing Proposals Put Pharma at Greater Financial Risk

Judge Mehta granted the plaintiffs' motion to stay the final rule's effectiveness, writing that the Social Security Act does not authorize HHS to require wholesale drug prices from pharmaceutical companies.

"Having applied the tools of statutory interpretation here, the court finds that HHS's adoption of the WAC Disclosure Rule exceeds the rulemaking authority that Congress granted the agency under the SSA," Mehta wrote. 

The ruling is likely to be challenged by HHS at the United States Court of Appeals for the District of Columbia Circuit, with a decision expected within three to eight months.

Related: Drug-Pricing Policies Find New Momentum as 'A 2020 Thing'

Drugmakers have spent the first half of 2019 navigating policy proposals and questions coming out of Washington, D.C., both from HHS and on Capitol Hill.

In February, Merck CEO Kenneth Frazier and six other pharmaceutical executives testified in front of the Senate Finance Committee about ways to address rising prescription drug prices.

In response to Monday's decision, Tom Kottler, CEO of HealthPrize Technologies, told HealthLeaders that requiring pharmaceutical companies to display prices won't result in lowering prescription drug prices. He said that drugmakers should embrace business strategies outside of price hikes that both improve patient outcomes and increase revenue.

"If the U.S. healthcare system was functioning properly, everyone would know how much prescription drugs cost, but it doesn’t," Kottler said. "We have a convoluted, complicated system that confuses everyone – patients, doctors and drug manufacturers alike."

Editor's note: This story has been updated to include commentary from Tom Kottler, CEO of HealthPrize Technologies.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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