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Appeals Court Eyes Feds' TV Drug Ad Price Disclosure Mandate

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D.C. Circuit Judge Harry Edwards (Photo: Diego M. Radzinschi/ ALM) D.C. Circuit Judge Harry Edwards (Photo: Diego M. Radzinschi/ ALM)

A federal appeals court appeared poised Monday to rule against a Trump administration rule requiring that drug manufacturers include the price of prescription drugs in television ads.

A three-judge panel for the U.S. Court of Appeals for the D.C. Circuit, appointed by presidents from both parties, heavily questioned U.S. Department of Justice attorney Ethan Davis on how the requirement is tied to the U.S. Department of Health and Human Services’ administration of Medicaid and Medicare.

(Related: CMS to Drug Makers: Put Your Prices in TV Drug Ads)

Davis said imposing the requirement on manufacturers who participate in the health care programs will lead to more transparency around drug prices, and can lead to conversations between patients and doctors about what other prescriptions are available at a lower cost.

But the judges weren’t buying the argument that the Trump administration has the power to enact the measure.

“I don’t understand the connection between this rule and effective administration” of the health care programs, Senior Judge Harry Edwards, appointed by President Jimmy Carter, told Davis.

When Davis said that more transparency about drug prices could lead to a drop in those prices, Edwards replied, “How do we know that?”

And he asked if there was a specific portion of the rule about it leading to lower drug costs. Davis said there was not and repeatedly referenced economic principles that more transparency around prices can lead to reductions in those prices.

Davis argued that showing the wholesale price of a prescription drug can provide an “anchor” for consumers, even if reductions Americans receive through their health care coverage means they won’t necessarily pay that price.

However, the judges sounded skeptical.

“How is it going to help if they put in a cost they’re not going to pay?” Judge Karen LeCraft Henderson asked.

Henderson, a President George H.W. Bush appointee, said she has “watched a lot of ads on TV for drugs” and has never once seen a price shown on the commercial. Henderson later echoed Edwards’ concern that the rule doesn’t fall within the administration of Medicaid and Medicare.

Judge Patricia Millett, tapped for the seat by President Barack Obama, diligently questioned attorneys from both parties about the mechanics of the federal healthcare programs.

Richard Bress, a partner with Latham & Watkins representing several drug manufacturers challenging the rule, argued the requirement goes beyond the conditions of coverage as laid out by Congress.

And he touched upon the argument that the drug manufacturers have made previously, that requiring companies to disclose the drug prices is a violation of the First Amendment.

The Centers for Medicare and Medicaid Services, an arm of administration, first proposed the requirement in October 2018, as part of its efforts to lower prescription drug costs.

Several pharmaceutical companies — Amgen, Merck and Eli Lilly — were joined by the Association of National Advertisers in challenging the rule.

U.S. District Judge Amit Mehta of the District of Columbia last year blocked the rule, finding that HHS did not have the authority to enact the regulation. He avoided ruling on the First Amendment portions of the case.

— Read 7 Key Points From Trump’s Drug Cost Fight Blueprint, for Agentson ThinkAdvisor.

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