Three Drug Makers Sue HHS, CMS Over Drug Prices in Advertising

Amgen, Eli Lilly, and Merck, together with the Association of National Advertisers, have filed a lawsuit against HHS and CMS in the United States District Court for the District of Columbia over the Trump administration’s rule requiring disclosure of list prices for drugs in direct-to-consumer television advertisements.

The rule, finalized in April 2019, requires drug manufacturers to disclose their list prices for pharmaceutical products or biologics in television ads for drugs covered by Medicare or Medicaid if the wholesale acquisition cost, or list price, is $35 or more for a month’s supply. HHS says that the rule, part of the administration’s blueprint to lower drug prices, aims to improve the quality, accessibility, and affordability of government healthcare programs.

However, according to the drug makers, the rule relies on “unprecedentedly broad construction of the agency’s statutory authority,” constitutes a violation of the First Amendment, and could create confusion among consumers because most patients will not likely pay list prices for their therapies.

As a result of such confusion, says the June 14 complaint, patients may overestimate how much they would have to pay for treatment, and they incorrectly conclude that they should not discuss a given therapy with their healthcare professionals. Approximately half of Americans, says the complaint, are only responsible for copayments on prescriptions, while those covered under Medicaid pay $8 or less for drugs under their plans. The complaint states that even for the approximately 9% of Americans without insurance, out-of-pocket costs may be lower than the list price of a drug if a given patient is eligible for need-based assistance.

The drug makers point to Pharmaceutical Research and Manufacturers of America guidelines for advertisements, which have led some drug makers to voluntarily provide patient information to help determine out-of-pocket costs, as 1 alternative to the administration’s rule. Some drug makers, such as Johnson & Johnson, had already begun to roll out patient cost information in advertising prior to the rule’s finalization.

HHS’ list of drugs with the highest direct-to-consumer advertising expenditures includes Lilly’s diabetes drug Jardiance (with a list price of $493 per month), Amgen’s rheumatology drug Enbrel (which carries a list price of $5174 per month and which has 2 approved but unlaunched biosimilar competitors in the United States), and Merck’s oncology drug Keytruda (with a list price of $4719 per month).