The Department of Health and Human Services appeared before an appeals court on Monday to argue its TV list price disclosure rule should not be overturned.
The HHS attorneys leaned on many of the same arguments and justifications from the initial rule. It argued that requiring drugmakers to include the list price, or Wholesale Acquisition Cost (WAC), would increase market competition and bring prices down. It also argued that the disclosure rule would give consumers an “anchor point” for the potential cost of their medicines.
HHS attorney Ethan Davis also attempted to refute the original decision from last July, which said HHS and the Centers for Medicare and Medicaid Services did not have the authority to issue this rule.
Davis said HHS has the “authority to publish rules and regulations that may be necessary to the efficient running of Medicaid and Medicare.”
He further argued that the ultimate goal of the disclosure rule is to lower drug prices. Therefore, the disclosure rule contributes to a more efficient Medicare and Medicaid as the government would pay less for these medicines.
The three-judge panel had several concerns about that argument. One judge continued to question whether the disclosure rule fell within HHS’ authority. He seemed to believe that the rule was too broad or wide-reaching to fit within the “efficient running of Medicare and Medicaid” explanation. He said if HHS could implement this rule, it would open up other agencies to issue regulations not necessarily under their purview.
“All [an agency] would have to do is show that they’re regulating something with respect to what the statute refers. As long as you’re in an area with respect to which the statue generally pertains, you’re good [to regulate],” the judge said.
The HHS attorney argued that the rule was limited to only drugs that are paid for or reimbursed by CMS. A second judge said that would likely include the majority of drugs and drug companies.
The judges also questioned how effective disclosing the list price in ads would be at bringing prices down and helping consumers choose medicines.
“The problem isn’t that someone sees an ad on TV and says, ‘This is a drug that I could use, but the price is too high,’” a judge said. “You say you have to put the WAC cost in, but it’s not the price [consumers] will ever pay. How does that not add to the confusion?”
Another judge suggested the list price alone would likely not be enough. She said unless the ad shows prices actually paid by consumers or compares the price to similar drugs’ list prices, it probably wouldn’t have an effect.
HHS argued that the “anchor point” of a list price could give consumers an idea of their medicine cost, although the HHS attorney acknowledged that people rarely pay the list price. The attorney also compared a drug’s list price to a car’s MSRP (Manufacturer Suggested Retail Price), which is also included in TV ads to give consumers an idea of what a certain car should cost.
The attorney representing Merck, Eli Lilly, Amgen and the Association of National Advertisers also made many of the same arguments that won the earlier case in July. He claimed the list price may confuse consumers and deter them from seeking care, that the rule infringed upon the drugmaker’s First Amendment rights and that HHS does not have the authority to issue this rule.
The judges’ decision is still to come.