US Court of Appeals Sides with Pharma, Price Disclosure Rule Vacated


A federal appeals court struck down the pricing disclosure rule for DTC advertising on June 16th. The US Court of Appeals for the District of Columbia Circuit ruled in favor of Merck & Co, Eli Lilly & Co, and Amgen on the grounds that the US Department of Health and Human Services (HHS) “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.”

According to the ruling from the Courts, the “Disclosure Rule strays far off the path of administration for four reasons”:

  1. The list price (wholesale acquisition cost, in this situation) differs from what Medicare and Medicaid beneficiaries actually pay. “Beneficiaries typically pay only a fraction … either in the form on a copay or coinsurance.”
  2. The claim that such a pricing disclosure “‘may inform’ consumers” does not clearly indicate if this is directed at Medicare and Medicaid consumers or consumers generally, suggesting an “administrative overreach.” Additionally, with the Secretary’s acknowledgment that a disclosure of such information may backfire by deterring consumers from contacting their healthcare professionals, the federal court ruling stated that “Generating potentially harmful confusion through disclosures to the general public of information that is largely disconnected from Medicare and Medicaid pricing is not a plausible means of administering the programs.”
  3. The Disclosure Rule “regulates advertising directed at the general public and not communications targeted specifically, or even predominantly, to Medicare or Medicaid recipients.”
  4. “The Department’s construction of the statute would seem to give it unbridled power to promulgate any regulation with respect to drug manufacturers that would have the arguable effect of driving down drug prices—or even healthcare costs generally—based on nothing more than their potential salutary financial benefits for the Medicare or Medicaid program. This suggests a staggering delegation of power, far removed from ordinary administration,” noted the federal court’s ruling.

Click here to read the full decision from the US Court of Appeals.


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