Court Tosses Rule Mandating Drug Price Disclosure in Ads

Advertising Law

A Washington, D.C., federal court judge sided with pharmaceutical companies and the Association of National Advertisers (ANA), halting a new rule that mandated the inclusion of the list price, also known as the wholesale acquisition cost (WAC), in television ads for certain prescription drugs.

Together with Merck & Co., Eli Lilly and Company, and Amgen, the ANA filed suit against the Department of Health & Human Services (HHS), arguing that (1) the agency lacked the statutory authority to impose the rule and (2) the rule violates the First Amendment.

The rule, which was scheduled to go into effect on July 9, required that direct-to-consumer television advertisements of drugs covered by Medicare and Medicaid programs include the “list price” or WAC for a 30-day supply of the drugs if they cost more than $35 per month.

As the source of its authority to issue the rule, HHS pointed to its general power under the Social Security Act to make rules necessary for the efficient administration of the Medicare and Medicaid programs. But U.S. District Judge Amit P. Mehta agreed with the plaintiffs that HHS overstepped its bounds, stating, “Neither the Act’s text, structure nor context evince an intent by Congress to empower HHS to issue a rule that compels drug manufacturers to disclose list prices.”

Having determined the agency exceeded its authority, the court did not reach the plaintiffs’ First Amendment challenge.

To read the memorandum opinion in Merck & Co., Inc. v. United States Department of Health and Human Services, click here.

Why it matters: According to HHS, the WAC rule was HHS’ attempt to “introduce[ ] price transparency that will improve the efficiency of the Medicare and Medicaid programs.” While the court did not question HHS’ motive, and expressly did not opine on the merits of disclosing drug prices to counter the rising cost of prescription drugs, the court did not hesitate to strike down a rule that the court deemed to have been outside the issuing agency’s statutory authority.



pursuant to New York DR 2-101(f)

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