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, 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.

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“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.

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  • Actually, I think that requiring manufacturers to advertise the price of their product can only lead to price-fixing and reduced competition. In fact, the so-called Manufacturer’s Suggested Retail Price was either outlawed or struck down in court something like 50 years ago. What might be sensible would be for the pharmacies to make it easier to determine prices. This whole thing is gnarly because of the drug benefit management business. Maybe that should be broken up.

  • It’s hard to see the “free speech” argument being successful.

    It’s settled law that the government can place requirements for commercial speech that would be unacceptable for non-commercial speech.

    For decades there’s been a federal requirement for nutrition labels on packaged foods and it hasn’t been struck down. There are federal rules on the use of terms like “organic” in commercial trade. There are federal regulations that require labeling of drugs in certain ways. The list of “federally compelled commercial speech” is very long and well established.

    States have all sorts of requirements that require pricing to be displayed. In my state, prices must be displayed on the shelf and/or on each item in a supermarket. There are also quite precise requirements on where and how gasoline prices must be displayed at gas stations (for example, visible from all streets on which there is an entrance to the station). Rules such as this have been in place for decades.

    The First Amendment has long since been “incorporated” onto state and local governments as well as, of course, applying to the federal government. Surely somewhere these disclosure rules would have been challenged successfully over the past decades if they were, in fact, in violation of the First Amendment.

    The argument that the average consumer doesn’t pay list price for drugs is a non-starter. If I’m a member of a gasoline discount group, I don’t pay list at the pump, but all the signs show the “list price” — that which anyone can buy the fuel without any negotiating or membership in some group. That’s just what “list price” is for drugs — the price that they will be sold to a buyer without negotiation or a special relationship.

  • Lawsuits prove its working. Big pharma is scared. Tip of the cap to the administration and HHS for actually trying to do something about the exploitative prices charged to American patients and taxpayers.

  • What are they all so afraid of? Besides, those of us with high deductibles pay list price and pbms and plan sponsors receive rebates on a good number of drugs, which can be around 50% of list. These monies are taken from the sick and presumably used to subsidize premiums for the healthy. Some unexpected rebates are kept as profit. Last year, rebates (also called the gross-to-net bubble) amounted to about $150-180B. List prices also drive up premiums, which insureds pay directly and indirectly. People who are only concerned about out-of-pocket don’t understand our opaque, convoluted system. Who can blame them?

  • I find really frivolous to sue over a policy that will do pretty much nothing in terms of prices reduction. At most, some temporary public outrage.
    I guess, they want just to remind everyone who is in charge

  • People are only concerned about what their out of pocket expense will be.
    Does anybody really care what the suggested retail price is ? It will confuse the
    average person and really has no value.

    • Jeff has it right. Outrage over something patients will never pay is purely a politically-motivated move heading into election season. A $2M gene therapy cure has no more bearing on a co-pay for that or any drug, than a given pro baseball player’s $100M multi-year pay package has on ticket prices, and fans don’t seem outraged at paying this for entertainment, much less their own or a loved one’s health. The debate in the US should be about the viability of health care being dependent on one’s employer and employment status.

  • so the drug makers are admitting that they screw the drug companies and somehow we dont care. geez .The prices for insurance is horrible ..but dont worry .

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