[Ip-health] The National Law Review: Federal Appeals Court Affirms Lower Court Ruling: Drug Pricing Transparency Rule Exceeds HHS’s Regulatory Authority

Thiru Balasubramaniam thiru at keionline.org
Tue Jun 30 22:56:49 PDT 2020


The National Law Review

July 1, 2020Volume X, Number 183

Federal Appeals Court Affirms Lower Court Ruling: Drug Pricing Transparency
Rule Exceeds HHS’s Regulatory Authority
Thursday, June 18, 2020

A panel of federal appellate judges has sided with drugmakers by upholding
a lower court ruling from 2019 that struck down a regulation proposed by
the Department of Health and Human Services (HHS). In a closely watched
case, the United States Court of Appeals for the District of Columbia
Circuit issued a decision on June 16, 2020 affirming the district court’s
judgement that vacated the HHS Drug Pricing Disclosure Rule. This ruling is
yet another example of a court invalidating the Drug Pricing Disclosure
Rule, which sought to require drugmakers’ television advertisements to
disclose the list prices of their prescription drug products. For more
information on this subject, take a look at our previous posts: HHS appeals
lower court holding
, HHS files Brief for appeal to D.C. Circuit
, DC District Court strikes down Drug Pricing Disclosure Rule
and pharmaceutical companies challenge Drug Pricing Disclosure Rule

The DC Circuit Court explained in the June 16 decision
"[b]ecause there is no reasoned statutory basis for its far-flung reach and
misaligned obligations, the Disclosure Rule is invalid and is hereby set
aside.” Specifically, the court noted that the Drug Pricing Disclosure Rule
strayed from facilitating the actual administration of the HHS Secretary’s
duties to the Medicare and Medicaid programs (which was the Department’s
argument in support of the rulemaking) for four main reasons:


   Disclosure of a prescription drug product’s “list price” is unrelated to
   the price that either the federal government or Medicare and Medicaid
   beneficiaries pay for their drugs.

   Disclosure of a drug product’s list price is unlikely to inform
   consumers in making “critical health care decisions related to their
   treatment with prescription drugs or biological products.” In fact, the
   court opined that it likely would have the opposite impact: intimidation
   and confusion caused by the high list prices would deter consumers from
   contacting physicians about possible drug treatments.

   The Drug Pricing Disclosure Rule “regulates advertising directed at the
   general public and not communications targeted specifically, or even
   predominantly, to Medicare or Medicaid recipients,” as the Department
   attempted to argue.

   The broad scope of the regulatory authority claimed by HHS stresses the
   unreasonableness of the Department’s claim that it is merely engaged in
   general “administration” and would open the door for HHS to assert its
   authority “as long as [such regulations] ultimately resulted—even
   indirectly—in reduced Medicare or Medicaid expenditures or increased price

The court emphasized that based on the plain reading of the governing
statute, HHS does not have “the general administrative authority to commend
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.” However, the court concluded that HHS is not
foreclosed from regulating pharmaceutical advertisements in the future
under a more appropriate exercise of regulatory authorities delegated by
Congress. It will be interesting to watch how this appellate decision
impacts various political initiatives aiming to reduce high drug prices
over the coming months as we get closer to the November 2020 elections.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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