A federal rule that requires drug companies to state the “list price” of prescriptions in television and streaming video ads would mislead consumers, because the “list price” often differs from the actual retail price, the Association of National Advertisers and three pharmaceutical companies argue in new court papers.
“Far from offering 'transparency' into drug pricing, the government-scripted statement that this rule demands is highly misleading,” the ANA, Merck, Eli Lilly and Amgen write in papers filed this week with the D.C. Circuit Court of Appeals. “A drug’s 'list price' is not, as viewers will likely infer from a consumer-focused advertisement, an actual or even suggested retail price.”
The groups are urging the appellate court to uphold a decision issued by U.S. District Court Judge Amit Mehta, who blocked the rule from going into effect.
The ANA and pharmaceutical companies sued over the mandate in June, arguing that the Department of Health and Human Services lacked authority to issue the rule, and that the disclosures would be misleading because the list price of drugs is higher than the out-of-pocket cost for many consumers.
Mehta sided against the administration, ruling that the agency had no authority to regulate the marketing of prescription drugs.
The White House is now appealing that decision, arguing that the mandate is justified by the government's authority to administer Medicare and Medicaid.
“HHS has statutory authority to regulate price information in [direct-to-consumer] pharmaceutical advertising because doing so is 'necessary' to the 'efficient administration' of the Medicare and Medicaid programs,” the government argues in an appeal filed earlier this year. “The rising cost of drugs is placing an increasingly serious financial burden on the federal government, as well as individual patients, and providing consumers with information about the cost of drugs has the potential to reduce that burden by supporting informed consumer choices and increasing competition.”
But the ANA and pharmaceutical companies write that rule amounts to “agency overreach, plain and simple.”
“This rule goes well beyond ... implementing facets of Medicare and Medicaid,” the ANA and others argue. “Instead, it directly regulates private actors’ marketing of their products to the American public, in the hope of reducing prices economy-wide.”
The ANA and pharmaceutical companies add that the rule violates the First Amendment by compelling the disclosure of misleading information.
They argue that the list price “vastly exceeds the out-of-pocket cost for the overwhelming majority of consumers,” given that the list price doesn't account for rebates, discounts or insurance coverage.
The AARP, a nonprofit for Americans over 50, sided with the Trump administration. The group argued in a friend-of-the-court brief that the rule would help shred the “cloak of secrecy” surrounding drug prices, which would enable people to “seek viable, cost-reducing solutions.”
Others, including the National Association of Broadcasters and NCTA -- The Internet & Television Association, have said they plan to weigh in with the ANA and drug companies.
The D.C. Circuit will hear arguments in the case on January 13.