Three of the largest U.S. drugmakers sued the Trump administration over its requirement forcing manufacturers to disclose the list prices of their medicines in television advertisements aimed at consumers.
Amgen Inc., Eli Lilly and Co. and Merck & Co. Inc. said the requirement from the U.S. Department of Health and Human Services violates the companies freedom of speech under the U.S. Constitution and exceeds the agency's statutory authority.
They were joined in the suit by the Association of National Advertisers.
HHS finalized its rule in May, telling drugmakers that beginning July 9 they had to start including in their TV ads the list price for a 30-day supply of any medicine with a cost over $35 that is covered by the federal government's Medicare program for seniors and disabled Americans and Medicaid, which covers people with low incomes.
The ads must also state "If you have health insurance that covers drugs, your cost may be different."
HHS Secretary Alex Azar said requiring list prices in TV ads would provide more transparency for U.S. consumers and would help drive the costs of medicines down by shaming companies into lowering them.
"If you are ashamed of your drug prices, change your drug prices," Azar said during a May 8 briefing.
But in a complaint filed in the U.S. District for the District of Columbia, the drug companies argued that the list prices would mislead and confuse U.S. consumers about what they would pay for their medicines out of pocket and that the requirement failed to account for the differences among insurance, treatments and patients themselves.
"Americans deserve accurate information about the price they will pay for prescription drugs," the drugmakers said.
The list price may end up being "multiple times higher than the out-of-pocket price that a substantial majority of Americans would pay for the advertised products," the drug companies said. "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."
Amgen, Lilly and Merck argued that few patients viewing a TV ad may understand that the list price being disclosed may be much higher than their actual out-of-pocket costs and may cause them to conclude it is not worth asking their doctors about the product, "even though the treatment might save or significantly improve the quality of their lives."
The companies noted that even HHS acknowledged that consumers might believe they are being asked to pay the list price rather than a copayment or coinsurance and wonder why they are paying so much when they already paid a premium for their drug plan.
"Even worse, HHS is actually counting on that misleading effect," the drugmakers said.
The companies said the price disclosure requirement may cause patients to decide not to seek treatments because of their perception that they may not be able to afford the medicines.
HHS had acknowledged that discouraging patients from using medicines may cause them to forgo those treatments and end up increasing the total cost of care.
The agency also admitted that it could not definitively state whether forcing list price disclosures would ultimately save the government money in its Medicare and Medicaid programs.
Amgen, Lilly and Merck said they supported a voluntary approach established by the Pharmaceutical Research and Manufacturers of America to have companies include information in their TV ads that point consumers to websites and other resources where they may find publicly available information.
"This approach provides patients with much-needed transparency about the pricing that is actually relevant to them, rather than providing them with a gross wholesale price that is typically several times higher than what a patient would actually pay," the three drugmakers argued in their complaint.
But Azar said the voluntary approach was not acceptable.
HHS plans to rely on the drug industry to be the enforcers of the rule, depending on companies to file lawsuits under the Lanham Act against violators. The Lanham Act is the "appropriate mechanism for enforcing against deceptive trade practices," HHS stated in the final rule.
But some legal scholars said relying on competitors to enforce the rule may not be effective since many of the new drugs will not have competitors.