Drugmakers Sue HHS for Trying to Add Prices to DTC Ads

Amgen, Merck, Eli Lilly and the Association of National Advertisers on Friday sued the Department of Health and Human Services (HHS) because of a rulemaking that would require pharmaceutical list prices to be shown in direct-to-consumer (DTC) drug advertisements on television.

The rule, which was finalized in May and is set to take effect in July, requires that television advertisements for prescription drugs or biological products with a list price of $35 or more contain a statement indicating the Wholesale Acquisition Cost (also referred to as WAC or the list price) for a typical 30-day regimen or for a typical course of treatment.

But in their lawsuit, file in the US District Court for the District of Columbia, the drugmakers took issue with the fact that consumers do not pay the list prices that would be advertised under the rule.

“The rule thus directs manufacturers to advertise to consumers the price that manufacturers charge to wholesalers, even though these are two entirely different concepts,” the complaint says. “And because third-party payers (like insurance plans or government health programs) generally cover the bulk of the costs of a branded drug, the overwhelming majority of patients do not pay anything remotely close to the Wholesale Acquisition Cost of an advertised drug at the pharmacy or through their provider.”

For instance, rarely does anyone on Medicaid, HHS’ program to help those with limited incomes or resources, pay more than an $8 co-pay, the suit claims.

“Beyond being entirely unnecessary, bad for patients, and detrimental to health care,” the drugmakers also claim that the rule is unlawful for two reasons: HHS lacks the statutory authority to impose the rule and it violates the First Amendment.

The government “bears a heavy burden to justify laws compelling speech, even in the commercial arena,” the suit says, noting that HHS has “no legitimate interest, much less a substantial one, in forcing pharmaceutical manufacturers to make statements in direct-to-consumer messaging that it concedes may mislead patients about their out-of-pocket costs for medications.”

As far as HHS’s statutory authority, the suit says this “claim to have discovered such expansive power in a pair of decades-old general rulemaking provisions of the Social Security Act is simply not credible.

“Originally, HHS indicated that it hoped the FDA—long recognized as the primary regulator of pharmaceutical advertising—would adopt a price disclosure requirement using authority delegated by Congress in the FDCA. But after commenters pointed out that the FDA has long conceded the FDCA does not authorize price disclosure mandates, HHS abandoned that course,” the suit says.