Nov. 18, 2019 – Amgen, Eli Lilly, Merck & Co. and the Association of National Advertisers (ANA) are once again striking back at the U.S. Department of Health and Human Services (HHS) effort to mandate drug prices in direct-to-consumer (DTC) television ads. Although the four entities sued HHS over its recent regulation calling for the wholesale acquisition cost (WAC) to be included in DTC TV ads and the U.S. District Court for the District of Columbia set aside the government’s regulation in July, HHS appealed that ruling in August to the U.S. Court of Appeals in the District of Columbia.
In its new court brief (2019 11 12 () Appellee Brief (1) (1)), the appellee companies argue that this is a “case of ‘agency action in search of a statutory home,’” and state that HHS’ move is “agency overreach, pure and simple.” The companies assert that the District Court’s ruling that the regulation is invalid due to a lack of HHS jurisdiction should be upheld because the HHS regulation “goes well beyond interstitial rulemaking implementing facets of Medicare and Medicaid. Instead, it directly regulates private actors’ marketing of their products to the American public, in the hope of reducing prices economy-wide.”
Because the WAC is not an accurate metric for what most patients actually pay for prescription drugs, Dan Jaffe, Group EVP of the ANA, said in a statement that requiring these prices in DTC TV ads could also undermine the public’s faith in the accuracy of the other information in DTC ads. “The so called ‘list price’ government mandated ad disclosure would be highly inaccurate for a vast number of consumers,” he said, adding that “HHS’ own data shows that the mandated list price disclosures, in many instances, will substantially overstate the real costs of prescription drugs to consumers.”
Jaffe concluded, “ANA and our co-plaintiffs are strongly urging the Court of Appeals to affirm the lower court’s decision striking down this misguided rule, which is beyond HHS’s authority, and clearly violates First Amendment protections of commercial speech.”
U.S. District Court Judge Amit P. Mehta said in the July 8 opinion that “no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized.” His opinion states that the basic power given to HHS under the Social Security Act (SSA) was to “establish rules and regulations for ‘running’ or ‘managing’ the federal public health insurance programs through CMS. HHS seeks to do more than that here.”
The Nov. 12 appellee brief states that if Congress wished to give HHS the authority to regulate anything that might conceivably affect healthcare prices in the United States, “it would not have buried that breathtaking power in generalized provisions giving HHS the authority to operate public programs.”
The jurisdictional issue would become moot, according to Coalition for Healthcare Communication Executive Director Jon Bigelow, if a bill co-sponsored by Sen. Charles Grassley (R-Iowa) and Sen. Dick Durbin (D-Ill.) — the “Drug-price Transparency in Communications Act” (S. 1437) – is passed. The two Senators are trying to bring this bill, which passed the Senate easily last year but died in the then-Republican-led House, to a vote separate from a broader package of legislation on drug pricing; their effort has been delayed by procedural opposition from Sen. Pat Toomey (R-Pa.), and negotiations continue.
“Even if the Grassley-Durbin measure does not move forward as a separate bill, it still could be folded into a larger drug pricing package,” noted Bigelow. “Either way, although the legislation would clarify HHS’ jurisdiction, the measure would have the same practical and legal flaws as the CMS rule and could itself be challenged as unconstitutional.”
In their court filing, Jaffe concluded that “ANA and our co-plaintiffs are strongly urging the Court of Appeals to affirm the lower court’s decision striking down this misguided rule, which is beyond HHS’ authority, and clearly violates First Amendment protections of commercial speech.” If the District Court decision is upheld by the appellate court, HHS would have to appeal to the U.S. Supreme Court if it wished to pursue the matter further.
The Washington Legal Foundation, the Goldwater Institute, the National Association of Broadcasters, NCTA – The Internet & Television Association, and Cato Institute have filed amicus briefs or motions for leave to participate as amici before the Court in support of the ANA-led lawsuit. On the other side, the AARP Foundation and AARP filed an amicus brief in support of the HHS position.