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Federal Judge Strikes Down HHS Drug Pricing Disclosure Rule

In follow-up to our previous post, the pharmaceutical industry gained a win on July 8th when a federal judge struck down the Trump administration’s rule that would have required drugmakers to include list prices for drugs in TV ads (see full opinion here). Judge Amit P. Mehta of the United States District Court for the District of Columbia said that Congress did not give the U.S. Department of Health and Human Services (HHS) through the Social Security Act (SSA) the authority to compel drug price disclosure as a means to “introduce[] price transparency that will help improve the efficiency of the Medicare and Medicaid programs.” Mehta opined that “to accept the agency’s justification here would swing the doors wide open to any regulation, rule, or policy that might reasonably result in cost savings to the Medicare and Medicaid programs, unless expressly prohibited by Congress.” According to the court, the SSA's text, structure, and content provided no evidence of Congress’s intent to empower HHS with adopting the Wholesale Acquisition Cost Disclosure Rule.

Interestingly, the opinion did not focus on the drugmakers’ argument that a disclosure requirement violates the First Amendment right of free commercial speech. Instead, the court analyzed the agency’s statutory authority. The court made sure to note that it did not question HHS’s motive in adopting the disclosure rule even stating that the policy could be an effective tool in addressing the rising cost of prescription drugs. However, it reiterated that the “responsibility rests with Congress to act in the first instance,” effectively placing the fate of such a policy in the hands of the legislative branch.

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Author

Elizabeth Conti is a Mintz attorney who focuses her practice on regulatory compliance and enforcement defense matters for health care, life sciences, and consumer product companies.