WASHINGTON — A trio of pharmaceutical manufacturers on Friday filed suit to overturn one of the most impactful drug pricing policies the Trump administration has enacted to date: a requirement that the companies include a medicine’s list price in direct-to-consumer advertising.
The drug makers — Amgen (AMGN), Merck, and Eli Lilly — were joined by the Association of National Advertisers on the lawsuit. In a press release, Amgen said the rule raises “freedom of speech concerns” and that it “fails to account for differences among insurance, treatments, and patients themselves.”
The rule is set to go into effect this summer.
“Americans deserve accurate information about the price they will pay for prescription drugs,” the lawsuit reads.
But while the rule “purports to further that objective,” the drug makers argue, it “will instead frustrate it by misleading patients about their out-of-pocket costs for prescription drugs in a manner that even HHS admits may ‘confuse’ and ‘intimidate’ patients.”
In a supporting legal analysis, Ravi Dhar, a Yale professor and paid consultant to the plaintiffs, argued that advertisements’ inclusion of wholesale acquisition cost — a common industry pricing benchmark — is “likely to mislead consumers into overestimating their actual out-of-pocket costs and is not likely to lead to more informed choices.”
Almost immediately after the Trump administration first proposed the policy, drug makers began to question the federal government’s legal standing for requiring the price disclosures. They also argued that list prices are often not effective barometers of patient expense, given the variance between insurers, providers, and patient assistance programs, among other factors.
In the document rolling out the policy, the federal government included a lengthy legal justification, relying on the argument that the price disclosures will bolster the efficiency of federal health programs like Medicare and Medicaid.
“We are telling drug companies today: You’ve got to level with people [about] what your drugs cost,” Health and Human Services Secretary Alex Azar said when the Trump administration finalized the rule last month. “Put it in the TV ads. Patients have a right to know, and if you’re ashamed of your drug prices, change your drug prices. It’s that simple.”
Legal scholars remain split on whether the policy violates the First Amendment. Arguments will likely center on the federal government’s rationale for requiring the price disclosures and whether they will help consumers and government programs — or whether they are focused on shaming companies making costly drugs.
The free speech issue has sunk Food and Drug Administration regulations in the past. The FDA’s previous proposal to require graphic warnings on cigarette cartons was struck down in 2012, because the court found the FDA couldn’t prove the graphic images it was requiring would actually lower smoking rates.
“If the drug companies are embarrassed by their prices or afraid that the prices will scare patients away, they should lower them,” Caitlin Oakley, a spokeswoman for the Department of Health and Human Services, said in a statement. “President Trump and Secretary Azar are committed to providing patients the information they need to make their own informed healthcare decisions.”
Nicholas Florko contributed reporting.