The rule that would require pharma to include the list price in TV drug ads has been defeated, again, in appeals court.
Judges from the D.C. Circuit Court of Appeals agreed with a previous ruling that the Department of Health and Human Services (HHS) did not have the authority to issue the role.
The court held arguments for the appeal in January, where the panel of judges appeared skeptical that the rule should be allowed to continue.
The opinion reads, “The Department acted unreasonably in construing its regulatory authority to include the imposition of 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 defendants, Merck, Eli Lilly, Amgen and the Association of National Advertisers, challenged the rule last summer. On the day before it went into effect, a D.C. judge overturned the rule, writing, “The disclosure rule feels like agency action in search of a statutory home.”
In the latest opinion, issued on Tuesday, a three-judge panel agreed that HHS did not have the authority in the Social Security Act to make the rule. The court focused on the HHS Secretary’s authority to “administer” Medicare and Medicaid programs, and decided that this particular rule did not fall within the definition of administering the government health plans.
The court had four reasons why the disclosure rule did not fall within HHS’ authority.
First, that the list price is too far removed from what the government or Medicare and Medicaid members pay for a drug. Second, consumers seeing the list price may be confused by the cost that is far from what they pay for their medicine.
Third, the rule does not apply to advertising only for Medicare and Medicaid beneficiaries, rather the general public, removing it even further from the programs. Fourth, allowing the rule to go ahead would give HHS “unbridled power” for further regulations on drugmakers.
The judges closed by saying that the opinion does not bar HHS from regulating drugmakers at all, only that the disclosure rule did not go about it correctly.
“In closing, we emphasize that nothing in this opinion holds that the Secretary is categorically foreclosed from regulating pharmaceutical advertisements,” the opinion reads. “We leave that question for another day and hold only that no reasonable reading of the Department’s general administrative authority allows the Secretary to command the disclosure to the public at large of pricing information that bears at best a tenuous, confusing, and potentially harmful relationship to the Medicare and Medicaid programs. Although the Secretary’s regulatory authority is broad, it does not allow him to move the goalposts to wherever he kicks the ball.”