Judge Blocks Pharma Prices in TV Ads Rule From Taking Effect

US District Court Judge Amit Mehta late Monday ruled that the US Department of Health and Human Services (HHS) lacks the authority to require drugmakers to post list prices in pharmaceutical direct-to-consumer (DTC) television advertisements.

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

But in June, Amgen, Merck, Eli Lilly and the Association of National Advertisers sued HHS over the rule, claiming that the list prices are not what patients pay and that the agency does not have the authority for such a rulemaking.

Mehta sides with the pharmaceutical companies and says the rule is invalid, while acknowledging that “the costs imposed by the WAC Disclosure Rule amount to a rounding error for the pharmaceutical industry. But that argument misses the point. It is the agency’s incursion into a brand-new regulatory environment, and the rationale for it, that make the Rule so consequential. To accept the agency’s justification here would swing the doors wide open to any regulation, rule, or policy that might reasonably result in cost savings to the Medicare and Medicaid programs, unless expressly prohibited by Congress.”

He also explains how Congress did not delegate HHS the necessary authority under the Social Security Act (SSA) to compel drug price disclosures. “Neither the text, structure, nor context evince an intent by Congress to empower HHS to issue a rule that compels drug manufacturers to disclose list prices,” the ruling says.

And Mehta also discusses how Congress has legislated on DTC advertising of pharmaceuticals multiple times under the Food, Drug, and Cosmetic Act, but HHS chose the Centers for Medicare and Medicaid Services and not the US Food and Drug Administration as the issuing sub-agency for the rule.

“The WAC Disclosure Rule feels like agency action in search of a statutory home,” the ruling adds.

Ruling