Topics
More on Medicare & Medicaid

Drug makers sue HHS over rule mandating they post the list price of drugs in TV ads

Rule misleads patients about their out-of-pocket costs for prescription drugs, a factor the manufacturers say HHS already concedes.

Susan Morse, Senior Editor

Three pharmaceutical companies and the Association of National Advertisers  have sued the Department of Health and Human Services over its rule requiring the list price of prescription drugs be posted in television ads.

Merck, Eli Lilly, Amgen and the association brought the lawsuit on Friday in U.S. District Court in Washington, D.C. They want the rule declared invalid as it includes a disclosure of the "Wholesale Acquisition Cost" of the product.

The WAC disclosure is unlawful because HHS has no statutory authority to impose the rule, and it violates the First Amendment allowing for free speech, the drug makers said.

Also, the rule will mislead patients about their out-of-pocket costs for prescription drugs, a factor the manufacturers say HHS already concedes. The price required in ads is the amount offered to wholesalers, before rebates, discounts or other adjustments. It fails to account for insurance coverage, they said.

"As a result, the 'list price' that the rule requires manufacturers to convey to patients is often multiple times higher than the out-of-pocket price that a substantial majority of Americans would pay for the advertised products," the lawsuit said.

WHY THIS MATTERS

The lawsuit does not come as a surprise as the rule was controversial when it was finalized in May.

The rule aims for transparency, and in shaming drug makers for their drug prices.

HHS Secretary Alex Azar said then that if pharmaceutical manufacturers are ashamed of their drug prices, then they can change them. If patients are more aware of a drug's list price, more attention will be paid and drug makers will lower the list price.

TREND

The Centers for Medicare and Medicaid Services rule goes into effect 60 days after its May publication. It applies only for drugs that cost $35 or more per month, which represents the average copayment.

Drug companies are being required to post the price for a 30-day supply, along with the name of the product. Drug manufacturers can include a statement that those who have health insurance that covers drugs could be paying a different amount.

The 10 most commonly advertised drugs have list prices ranging from $488 to $16,938 a month, according to HHS.

It applies only to TV ads because, out of the $5 billion annual pharma industry spend on advertising, $4 billion is for television ads, Azar said.

ON THE RECORD

"Manufacturers' general practice of not including pricing information in the context of short television advertisements reflects, in part, the same concern about misleading patients that the FDA itself has voiced, given that the complicated system of payment, pricing, and insurance coverage in our country's multi-layered pharmaceutical distribution system leads to varying out-of-pocket costs," the lawsuit said.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com