A federal appeals court has ruled that President Donald Trump’s administration lacks the legal authority to require drug companies to disclose prices in their TV ads.
The ruling denies Trump a victory on a major priority for the White House: bringing down the cost of prescription medicines.
While most plans to overhaul the cost of drugs are complex, mandating that companies disclose prices is something any consumer can relate to.
Legislation that would lower drug costs for Medicare beneficiaries with high bills is stuck in Congress. There is also a separate bill that would require drug companies to disclose their prices in consumer advertising.
Trump, however, is not empty-handed. His administration recently brokered an agreement with drug companies and insurers that would give Medicare recipients taking insulin the ability to limit their copays to $35 a month, starting next year.
On TV ads, the unanimous decision by a panel of the U.S. Court of Appeals for the District of Columbia Circuit did not address the pharmaceutical industry’s argument that forcing companies to disclose their prices in advertising violates their free speech rights.
Instead, the three-judge panel ruled that the Department of Health and Human Services overstepped its legal authority by requiring disclosure under the umbrella of its stewardship of Medicare and Medicaid. The panel issued its decision on Tuesday.
Obama-appointee Judge Patricia Millett wrote for the court that HHS “acted unreasonably” in asserting it had authority to impose “a sweeping disclosure requirement that is largely untethered to the actual administration of the Medicare or Medicaid programs.”
“Because there is no reasoned statutory basis for its far-flung reach and misaligned obligations, the disclosure rule is invalid and is hereby set aside,” the judge added.
Less than a year ago, another Obama-appointed judge ruled in favor of pharmaceutical companies on the same issue.
Responding to the ruling, HHS spokesman Michael Caputo tweeted, “If the drug companies are embarrassed by their prices or afraid that the prices will scare patients away, they should lower them.”
It’s pretty simple: If the drug companies are embarrassed by their prices or afraid that the prices will scare patients away, they should lower them. https://t.co/B8iPk96wPQ
— Michael R. Caputo (@SpoxHHS) June 17, 2020
When the disclosure rule was announced last year, Trump tweeted that “Historic transparency for American patients is here.”
Drug pricing details were expected to appear in text toward the end of commercials, when potential side effects are disclosed.
The government hoped that patients armed with prices would start discussing affordability with their doctors, which would gradually pressure drugmakers to keep costs of brand-name drugs in check. AARP was among the organizations supporting disclosure.
The idea was part of a multilevel blueprint Trump announced in 2018 to lower prescription drug costs.
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