Drug companies claim HHS rule violates their first amendment rights, but added web links to drug prices in their TV ads anyway

Will American consumers ever see the prices of their prescription drugs? That almost happened this summer, when a Trump administration healthcare transparency initiative would have required pharmaceutical companies to include prices in drug advertisements. But that requirement was halted by a federal judge one day before it was scheduled to take effect.

The measure, which passed in May, was intended to provide healthcare consumers with price transparency for some prescription medications and help lower prescription costs. However, a federal judge placed the new law on hold citing government over-reach.

This is a significant development for clinical laboratory managers, pathologists, and others watching efforts that will enable patients to see the cost of their medical care in advance of service. Also, few were surprised to learn that this court case was filed by pharmaceutical companies with the goal of preventing prescription drug prices from being disclosed in these advertisements.

HHS Tells Big Pharma to ‘Level with People’ About Drug Costs

Reducing prescription drug prices is a critical issue for healthcare consumers. Therefore, any policy that helps lower costs should provide benefits for both patients as well as the healthcare industry overall. That’s why President Trump signed the initiative that required pharmaceutical companies to include drug prices in television advertisements.

“We are telling drug companies today: You’ve got to level with people [about] what your drugs cost,” Health and Human Services (HHS) Secretary Alex Azar (above) stated after Congress passed the President’s proposal, STATreported. “Put it in the TV ads. Patients have a right to know, and if you’re ashamed of your drug prices, change your drug prices. It’s that simple.” [Photo copyright: Washington Times.]

The controversial proposal, which would have applied to all prescription drugs that cost more than $35 for a one-month supply, was scheduled to go into effect over the summer until it was blocked by Federal Judge Amit Mehta of the US District Court for the District of Columbia.

Judge Mehta ruled that HHS does not have the regulatory power to force pharmaceutical companies to include the prices of prescription drugs in their TV ads and that the agency had violated laws passed by Congress.

“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, HHS cannot do more than what Congress has authorized,” Mehta wrote in his decision, NPR reported.

Drug companies Amgen (NASDAQ:AMGN), Eli Lilly (NYSE:LLY) and Merck (NYSE:MRK) along with the Association of National Advertisers (ANA) filed lawsuits over the regulation stating it was a violation of their free speech rights. They won the reprieve on July 8, just one day before the regulation would have gone into effect.

Mehta stated in his opinion that the Social Security Act, which HHS used as its basis for the regulation, does not “empower HHS to issue a rule that compels drug manufacturers to disclose list prices,” Fierce Pharma reported.

In August, the Trump administration filed an appeal after the federal judge struck down the regulation. The exact basis for that appeal has not been disclosed. 

Drug Companies Decry New Law as Unconstitutional

Many drug makers are not happy with the rule. Drug industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA) believes that mandating drug companies to disclose pricing in TV commercials is a violation of their First Amendment rights, STAT reported.

Nevertheless, PhRMA proposed that pharmaceutical companies provide a web link in their TV advertisements that directs consumers to pricing information online. And some companies also are experimenting with going a step further and voluntarily complying with the original regulation.

In a news release, PhRMA states, “To help patients make more informed healthcare decisions, [PhRMA] member companies today announced their commitment to providing more transparency about medicine costs. PhRMA member companies’ direct-to-consumer (DTC) television advertisements will soon direct patients to information about medicine costs, including the list price of the medicine, out-of-pocket costs, or other context about the potential cost of the medicine and available financial assistance. The biopharmaceutical industry will also launch a new platform that will provide patients, caregivers, and providers with cost and financial assistance information for brand-name medicines, as well as other patient support resources.”

However, Azar said that action is not in compliance with the rule. “They put $4 billion a year into television advertising because the television ad is where people are getting their information, and to point them to the internet would be the equivalent of saying that they should simply be putting their ads on the internet and not running them on TV,” he told the press, STAT reported.

Opponents of the rule noted that actual drug costs for consumers can vary widely depending on coverage and that patients might forgo their medications if they are concerned about the costs, reported Politico following passage of the measure in May.

Critics also claimed that that there were no enforcement mechanisms outlined for companies that did not comply with the ruling, and that it relied on the pharmaceutical industry to police itself. If a particular company failed to include the required information in its TV ads, competitors could file suit against it under the deceptive and unfair trade practice provisions of the Lanham Act, Politico noted.

Solutions to the public’s demand for price transparency in healthcare may be forthcoming. However, at press time, no further information concerning the status of this HHS regulation was available. Dark Daily will continue to monitor the situation and inform readers of any developments.

Meanwhile executives and pathologists at the nation’s clinical laboratories should continue to develop strategies to serve patients who want to know the prices of their medical laboratory tests before they arrive to have their specimens collected.

This summer, several pharma companies may have succeeded in getting a federal court to stop this particular rule to disclose prescription drug prices. But the trend toward price transparency has deep roots and will continue forward.

—JP Schlingman

Related Information:

Drug Makers Will Have to Include Prices in TV Ads as Soon as This Summer

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

Appeal Shows Trump’s HHS Isn’t Giving Up on Putting Drug Prices in TV Ads

Trump Finalizes Rule to Require Drug Prices in TV Ads

Johnson and Johnson Will List Drug Prices in TV Commercials

PhRMA Members Take New Approach to DTC Television Advertising

What You Need to Know about Putting Drug Prices in TV Ads

Why Putting List Prices in Drug Ads Matters