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Federal Judge Strikes Down Price Disclosure in Ads

Earlier this month, US District Judge Amit Mehta ruled that the US Department of Health and Human Services (HHS) “lacked authority from the US Congress to compel drug manufacturers to disclose list prices,” as per reports. In mid-June, Merck & Co., Eli Lilly & Co, and Amgen, along with the Association of National Advertisers, filed a lawsuit on the grounds that requiring pricing information in ads would confuse consumers as that pricing would not accurately reflect actual out-of-pocket costs for consumers due to different insurance plans and coverage, as well as further discounts and rebates. Mehta’s 27-page ruling, which sided with this group, came out one day before the disclosure rule was to go into effect.

Mehta wrote in his decision: “The court finds that HHS lacks the statutory authority under the Social Security Act to adopt the WAC [wholesale acquisition cost] Disclosure Rule. Neither the Act’s text, structure, nor context evince an intent by Congress to empower HHS to issue a rule that compels drug manufacturers to disclose list prices. The Rule is therefore invalid. In view of this holding, the court does not reach Plaintiffs’ First Amendment challenge.

“To be clear, the court does not question HHS’s motives in adopting the WAC Disclosure Rule. Nor does it take any view on the wisdom of requiring drug companies to disclose prices. That policy very well could be an effective tool in halting the rising cost of prescription drugs. But no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized. The responsibility rests with Congress to act in the first instance. ”

Several outlets – including HHS, the White House, and AARP – released statements expressing their disappointment with the court’s ruling.

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