WASHINGTON (CN) — A D.C. Circuit panel on Tuesday upheld a federal judge’s decision to strike down a Trump administration rule requiring the disclosure of drug prices in TV ads.
The unanimous panel ruled in favor of pharmaceutical companies that challenged a rule announced a year ago by the Department of Health and Human Services. The plaintiffs include Merck & Co., Eli Lilly and Co., and Amgen.
The rule requires drug manufacturers to disclose in televised advertisements the list prices of medications covered by Medicare or Medicaid that cost $35 or more for a one-month supply. The state purpose of the disclosure requirement is to drive down drug prices.
“What I say to the companies is if you think the cost of your drug will scare people from buying your drugs, then lower your prices,” Health and Human Services Secretary Alex Azar said when the regulation was announced.
But a three-judge panel of the D.C. Circuit found Tuesday that in most cases, the price drugmakers are forced to disclose “bears little resemblance to the price beneficiaries actually pay.”
“The Department 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,” wrote U.S Circuit Judge Patricia Millett, a Barack Obama appointee.
“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,” she added.
Upholding a federal judge’s decision to block the rule last year July, the D.C. Circuit agreed with the drugmakers’ argument that the disclosures would mislead consumers. The panel also held that Azar’s administrative authority is “undoubtedly broad” but “not boundless.”
“To qualify as administering the Medicare or Medicaid statutes, a program of such intrusive regulation must do more than identify a hoped-for trickle-down effect on the regulated programs,” the 19-page opinion states.
Millett was joined on the panel by U.S. Circuit Judges Karen Henderson and Harry Edwards, appointed by George H. W. Bush and Jimmy Carter, respectively.
The Department of Health and Human Services did not immediately respond to a request for comment.
The judges clarified that Tuesday’s ruling does not broadly forbid Azar from regulating pharmaceutical advertisements.
“We leave that question for another day and hold only that no reasonable reading of the Department’s general administrative authority allows the secretary to command the disclosure to the public at large of pricing information that bears at best a tenuous, confusing, and potentially harmful relationship to the Medicare and Medicaid programs,” Millett wrote. “Although the secretary’s regulatory authority is broad, it does not allow him to move the goalposts to wherever he kicks the ball.”