Drugmakers sue over rule requiring prices in TV ads

Three large US drugmakers and a marketing trade group are suing the Trump administration over claims that a new rule that forces them to include drug prices in their TV advertisements hinders their free speech.

The lawsuit filed Friday by Amgen, Merck, Eli Lilly and the Association of National Advertisers challenges a rule announced in May that will require the list price of any drug that costs over $35 for a month’s supply or a normal course of treatment to be displayed in TV ads. 

The companies claim the rule exceeds the authority of the federal agency that issued it, the health and human services department, and violates First Amendment speech protections. They protest that the “list price” often has little relation to how much a patient will pay

The gap between a drug’s list price and its net price is often down to rebates that go to middlemen called pharmacy benefit managers, and the proportion of the cost that a patient must contribute depends on their insurance plan. That can make it seem more expensive than it actually is, the groups say.

“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,” the companies said in the complaint. 

The rule was introduced to try to tackle rising drug prices and soaring out-of-pocket contributions from patients, which have become an issue at the ballot box for many voters. Both Republicans and Democrats are trying to pressure the pharmaceutical industry to lower drug costs. 

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When it was announced, Alex Azar, the health and human services secretary, challenged the drugmakers’ claim that list prices do not matter. “You’ve got to level with people what your drugs cost,” Mr Azar said. “Put it in the TV ads. Patients have a right to know — and if you’re ashamed of your drug prices, change your drug prices.” 

The department did not respond to a request for comment after the lawsuit was filed. 

Many large pharmaceutical companies have begun to direct consumers to their website for more personalised information on pricing, following guidelines produced by the industry association PhRMA.

But not all are resisting the rule. Johnson & Johnson, the world’s largest healthcare group, became the first drugmaker to voluntarily display the list price of a drug in an advert, before the rule was even announced. 

Eli Lilly said it agrees that patients need more and better information but added: “The impetus for the lawsuit is drug prices in TV ads, but the crux of it is HHS not having the authority to mandate this action.”

Merck said: “Not only does the rule raise serious freedom of speech concerns but the rule is not in the best interest of patients because it fails to inform them — and indeed may cause them to be misled — about what they will pay for their medication.” 

Amgen said: “Most importantly, it does not answer the fundamental question patients are asking: ‘What will I have to pay for my medicine?’”

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