WASHINGTON — A federal judge on Monday blocked a Trump administration regulation that requires drug makers to include their sticker prices in ads.
The decision, which came just hours before the rule was set to take effect at midnight on Wednesday, came after three major drug makers sued the administration in June, arguing the Department of Health and Human Services did not have the authority to require these disclosures and that requiring them violated the drug makers’ First Amendment rights.
Judge Amit Mehta of the D.C. District Court found that HHS had overstepped its authority in requiring such disclosures. However, he did not rule on the drug makers’ First Amendment concerns.
“To be sure, the costs imposed by the … Rule amount to a rounding error for the pharmaceutical industry,” Mehta wrote. “But that argument misses the point. It is the agency’s incursion into a brand-new regulatory environment, and the rationale for it, that make the Rule so consequential.”
It’s a big loss for the Trump administration. The proposal was the first major drug pricing policy finalized by the administration since releasing its sweeping drug pricing plan in May 2018. Other Trump proposals, like its plan to peg what Medicare pays for drugs to what other countries pay, are likely years away from being enacted.
It is not immediately clear how the Trump administration will proceed, but an HHS spokeswoman said the agency will work with the Department of Justice “on next steps related to the litigation.”
“Although we are not surprised by the objections to transparency from certain special interests, putting drug prices in ads is a useful way to put patients in control and lower costs, and as seen from the President’s executive order, we are working on many different avenues for delivering transparency,” said spokeswoman Caitlin Oakley, seemingly referencing comments Trump made last week about a forthcoming executive order aimed at ensuring the U.S. pays less than other countries for medicines.
A more explicit authorization from Congress to require such disclosures would likely shore up the concerns raised by Mehta, and such a proposal has already been introduced by Sens. Chuck Grassley (R-Iowa) and Dick Durbin (D-Ill.) The Trump administration could also choose to appeal the ruling to the D.C. Circuit Court of Appeals.
Under the Trump administration’s original rule, drug makers that make medicines that cost more than $35 would be required to disclose their sticker prices in TV ads.
The challenge to the rule was brought by drug makers Merck, Amgen (AMGN), and Eli Lilly, as well as the Association of National Advertisers.