Trump Rule to Put Prices in Drug Ads Is Shot Down by Judge

(Bloomberg) -- The Trump administration overstepped its authority with a rule to force drug companies to include the price of their medicine in advertisements, a federal judge ruled Monday.

Merck & Co., Eli Lilly & Co., Amgen Inc. and a trade group for advertisers sued the government last month to block the regulation, which would have required the companies to include drug list prices in the ads, which are a key part of pharmaceutical marketing.

But the law the Department of Health and Human Services said gave it the authority to do so “simply does not support the notion -- at least not in a way that is textually self-evident -- that Congress intended for the Secretary to possess the far-reaching power to regulate the marketing of prescription drugs,” U.S. District Court Judge Amit P. Mehta said in the ruling.

“We are disappointed in the court’s decision and will be working with the Department of Justice on next steps,” said Caitlin Oakley, a spokeswoman for the Department of Health and Human Services.

Lilly spokesman Mark Taylor said the company was pleased with the ruling, adding that Lilly is committed to helping find solutions for lowering consumers’ health-care costs. Representatives for Merck and Amgen didn’t respond to requests for comment. The Nasdaq Biotechnology Index, a barometer of investor sentiment about drug prices, was down about 0.4% at 9:33 a.m. in New York, in line with the market.

The ruling is a blow to the government effort to force down drug prices and consumer health costs. Led by President Donald Trump and Health and Human Services Secretary Alex Azar, the administration has written a blueprint of potential regulations.

But some of the most ambitious efforts, such as a plan to overhaul rebates organized by drug plans, and to tie some U.S. prices to what other countries pay, have yet to be finalized. And while there is broad agreement to act on drug prices in Congress, lawmakers have yet to pass any major legislation to do so.

Legal Authority

Without new law giving, Mehta said that the administration was outside the bounds of its authority.

“To accept the agency’s justification here would swing the doors wide open to any regulation, rule, or policy that might reasonably result in cost savings to the Medicare and Medicaid programs,” Mehta wrote. The regulation “represents a significant shift in HHS’s ability to regulate the health-care marketplace.”

Trump’s adviser Kellyanne Conway said the administration may continue to pursue the effort in the courts. “The president is not a quitter,” Conway told reporters at the White House Tuesday. “The president is very fond of the rule that would compel drug manufacturers to list their prices on TV. Again, what are they hiding? We want transparency.”

Many drugmakers, including Lilly and Amgen, have created websites to disclose prices, but argued that including them in ads could result in patients being scared away from seeking treatment. The Trump administration had said that forcing drugmakers to disclose prices for drugs, which have risen sharply in recent years, could push down list prices.

The case is Merck v. U.S. Department of Health and Human Services, 19-cv-1738, U.S. District Court, District of Columbia (Washington).

--With assistance from Riley Ray Griffin, Cynthia Koons and Josh Wingrove.

To contact the reporter on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Jeff Sutherland

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