AARP is the latest organization to add its voice to an appeal of a lower court's decision siding with big pharma's objections to posting drug prices in television ads.
On September 30, AARP and AARP Foundation filed an amicus brief urging the appeals court to reverse the district court ruling and permit the direct-to-consumer rule to go forward.
The Department of Health and Human Services filed its appeal on September 23, in the U.S. Court of Appeals for the District of Columbia
The court case is over HHS's rule requiring pharmaceutical manufacturers to post the prices of their drugs in television advertising.
Merck, Eli Lilly, Amgen and the Association of National Advertisers sued and won their case in U.S. District Court on July 8, a day before the rule was to have gone into effect.
Oral arguments in the appeal have yet to be scheduled.
WHY THIS MATTERS
The cost of prescription drugs has been increasing for years, HHS said in its appeal, and the Centers for Medicare and Medicaid Services is the single largest payer of prescription drugs in the nation.
HHS adopted the rule to introduce price transparency that "will help improve the efficiency of the Medicare and Medicaid programs by reducing wasteful and abusive increases in drug and biological product list prices," according to court documents.
THE LARGER TREND AND BACKGROUND
In May, HHS published a final rule requiring drug manufacturers to disclose in television ads the list price -- also known as the wholesale acquisition cost -- of a 30-day supply of the drug.
The drug manufacturers and the marketing trade association successfully argued in the U.S. District Court for the District of Columbia that the rule was unlawful.
The district court said HHS lacked authority to implement the rule because neither the law nor Congress had empowered HHS to compel drug manufacturers to disclose their list prices. The court vacated the rule.
"But no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized," the court ruled. "For a regulation to have the force of law, Congress must communicate through legislation, either expressly or impliedly, its intent for the agency to make rules in that specific area. When Congress has not communicated such intent, the agency has no power to act."
The drug makers also argued that the advertised prices would mislead and confuse consumers, as they wouldn't capture the actual out-of-pocket costs that most Americans pay for drugs due to insurance coverage and patient assistance programs.
HHS, on appeal, disagrees. The Supreme Court has long held that, absent congressional intent to the contrary, regulations will be sustained so long as they are reasonably related to the purposes of the statutes, the department said.
"The direct-to-consumer rule does not contravene congressional intent and is reasonably related to promoting the efficient administration of the Medicare and Medicaid programs," HHS said.
Also, the district court wrongly believed that drug manufacturers are not "direct participants" in the Medicare and Medicaid programs, even though those manufacturers must enter into contracts with HHS in order for their drugs to be eligible for coverage, it said.
Finally, the district court erred in treating the rule as an agency policy of "vast economic and political significance" to which more stringent standards of judicial review apply, given that it would cost pharmaceutical companies only a tiny fraction of what they pay on television advertising, HHS said.
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