An Obama appointed federal judge has stepped in to save drug companies from President Trump’s new rule that would have forced them to disclose drug prices in TV ads, ruling that the Department of Health and Human Services lacks authority over the industry.
“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.US District Court Judge Amit Mehta ruled on Monday, blocking the order, which was due to go into effect on Tuesday.
Under the rule, if a medicine’s list price was more than $35 a month, it would have to be stated during the commercial. The challenge, opponents say, is that a drug’s list price and estimates of what people can expect to pay vary widely depending on coverage.
The judge blocked the rule just hours before it was set to take effect, the latest setback for the White House as Trump administration officials continue to search for ways to pressure pharmaceutical companies into lowering their prices — a proposal made by the Trump administration in the runup to last November’s midterm election.
Amgen, Merck, and Eli Lilly, three of the largest US drug companies, and the Association of National Advertisers filed the lawsuit last month, claiming HHS lacked the legal authority to enforce the rule, which would have mandated that pharmaceutical ads display the list price of a 30-day supply of any drug covered under Medicare or Medicaid costing more than $35. The suit also claimed the order violated their First Amendment rights to freedom of speech, but Mehta’s ruling didn’t address that argument.
Drug companies complained the rule would “confuse” and “intimidate” patients because insurers, including Medicare and Medicaid, negotiate discounts with drug companies, meaning the list price, often much higher, could cause sticker shock. But that argument got little sympathy from HHS secretary Alex Azar, who told the companies when he announced the rule in May:
“If you’re ashamed of your drug prices, change your drug prices. It’s that simple.”
Mehta wrote that in halting the rule, the court was not questioning its wisdom, but resting the issue on the law set by Congress in the first place.
Last month, groups including drug manufacturers Merck, Eli Lilly and Amgen sued the Trump administration over the rule, arguing that it would violate the companies’ free speech rights.
Health and Human Services said in a statement that though it was hoping for a favorable ruling, the Trump administration is focused on lowering drug prices and creating more transparency in healthcare costs.
“We are not surprised by the objections to transparency from certain special interests, putting drug prices in ads is a useful way to put patients in control and lower costs,” said HHS spokeswoman Caitlin Oakley.
AARP, which represents older Americans, also expressed disappointment on Monday over the court’s ruling.
“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.”
The United States is one of only two countries worldwide where direct-to-consumer advertising of prescription drugs is legal, and it is a massive market – $5.2 billion in 2016, according to CBS. According to HHS, the 10 most-advertised drugs have list prices from $488 to $16,938 per month or for a typical therapeutic course, numbers that would surely terrify the average consumer.
President Trump has made lowering the costs of prescription drugs one of his signature domestic issues, and the HHS rule was designed to bring those costs down, under the reasoning that pharmaceutical companies would be so embarrassed to float those gargantuan numbers on their ads that they’d cut the prices voluntarily.