Drug Makers Seek To Block Price Disclosures in TV Ads

A group of major drug companies, along with an advertising association, have filed a lawsuit against the federal government seeking to block legislation that would require the disclosure of pharmaceutical prices on television ads.

Eli Lily & Co., Amgen, Merck & Co., and the Association of National Advertisers say in their drug price disclosure lawsuit that the proposed legislation will confuse consumers about how much they will pay for drugs advertised on television.

The law, proposed by the U.S. Department of Health and Human Services, would require drug companies to provide a price for consumers in their advertising.

While drug companies have faced criticism for transparency when it comes to the ever-increasing prices of pharmaceuticals, according to Fortune, the drug price disclosure lawsuit says that the law would infringe on their freedom of speech. Additionally, the drug companies say that advertising the prices may shy consumers away from necessary drugs.

“Relying on an unprecedentedly broad construction of the agency’s statutory authority to enact regulations necessary for the ‘efficient administration’ of the Medicare and Medicaid programs, the rule at issue requires virtually all direct-to-consumer pharmaceutical television advertisements to include a specific, government-scripted statement highlighting what the rule describes as the ‘list price’ of the advertised product,” the drug price disclosure lawsuit states.

The drug companies argue that the price they will be required to disclose in television advertisements will not necessarily reflect what consumers pay out-of-pocket once rebates and discounts are applied.

“Far from promoting transparency and improved decision-making, therefore, the rule would instead force pharmaceutical companies to mislead tens of millions of Americans about the price they would actually pay for important medicines that might improve their health or even save their lives,” contends the complaint.

At issue, say the drug makers, is the law’s requirement that the wholesale price of the pharmaceutical be disclosed. However, the wholesale price of the drug will be much more than what the consumer pays, according to the complaint. Most consumers pay less than the wholesale price, allege the drug makers, after insurance and other discounts are applied.

“Few patients viewing an advertisement…will appreciate that the ‘list price’ it describes may in fact be many times higher than their likely out-of-pocket cost to obtain the advertised product,” states the drug price disclosure lawsuit. “The Rule is therefore likely to cause many patients to overestimate how much they would have to pay for treatment, and indeed to cause many patients to conclude—incorrectly—that it is not worth asking their doctors about the advertised product even though the treatment might save or significantly improve the quality of their lives.”

The Department of Health and Human Services is standing by its proposed rule with a spokesperson for the agency noting in a statement “If the drug companies are embarrassed by their prices or afraid that the prices will scare patients away, they should lower them.”

The drug companies are represented by Richard P. Bress, Daniel Meron, Michael E. Bern, Sarah M. Gragert and Benjamin W. Snyder of Latham & Watkins LLP and Robert Corn-­Revere and Ronald G. London of Davis Wright Tremaine LLP.

The Drug Price Disclosure Lawsuit is Merck & Co. Inc., et al. v. U.S. Department of Health and Human Services, et al., Case No. 1:19-­cv­-01738, in the U.S. District Court for the District of Columbia.

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