- A federal court has struck down the Trump administration's rule requiring drugmakers to disclose prices in direct-to-consumer advertising, handing a win to the pharmaceutical industry that sued over the policy.
- The Department of Health and Human Services has the authority to regulate the content of drug advertisements regarding efficacy and safety, but does not have any power to dictate price transparency, the U.S. District Court for the District of Columbia ruled.
- An HHS spokesperson said the administration is working on other ways to ease drug prices.
The proposal seeks to shame biopharma companies into lowering their prices through public pressure.
HHS published the rule in May, arguing that price disclosure would allow Medicare and Medicaid beneficiaries to make informed decisions about their own out-of-pocket costs. It was due to go into effect today.
Merck & Co., Eli Lilly and Amgen, along with the National Association of Advertisers, sued HHS, claiming violations of First Amendment free speech rights, along with challenging HHS authority to regulate price transparency in advertising.
But the court ruled that Congress had given HHS no explicit authority to force drugmakers to disclose the prices of drugs in direct-to-consumer advertisements.
The Food, Drug and Cosmetic Act, HHS and the Food and Drug Administration can regulate the content of drug advertising to ensure that biopharma companies do not make false claims about their safety or efficacy.
Pricing, however, is a matter for finance and public insurance programs, which are regulated under the Social Security Act via the Centers for Medicare and Medicaid Services, meaning the government overstepped its authority, District Judge Amit Mehta ruled.
HHS spokeswoman Caitlin Oakley said Trump and HHS Secretary Alex Azar remain committed to improving drug price transparency.
"Although 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, and as seen from the President’s executive order, we are working on many different avenues for delivering transparency,” she wrote in an emailed statement.
The ruling invalidates one part of the administration's drug-pricing strategy. Still, other rules seem likely to be subject to court challenges from the biopharma sector, including one seeking to index drug prices to international ones that Trump teased last week.
Pressed by the government, the sector has responded with some voluntary disclosure, although inclusion of the wholesale acquisition cost, as would have been mandated under the government rule, is not common.
"Patients need more transparency about their medicine costs, which is why we updated our DTC Principles and our member companies voluntarily began in their DTC television advertising to direct patients to links to cost information," the industry trade group Pharmaceutical Research and Manufacturers of America said in a statement.