Merck, Lilly and Amgen sue HHS to thwart rule requiring list prices in TV ads

A coalition of pharma companies struck back at the Trump administration with a lawsuit Friday aiming to gut a proposed rule that would force drugmakers to put list prices in TV ads.

The move comes five weeks after the Department of Health and Human Services (HHS) announced it would adopt the controversial mandate, first floated more than a year ago.

Merck & Co., Eli Lilly and Amgen, along with the Association of National Advertisers (ANA), sued HHS and the Centers for Medicare & Medicaid Services (CMS) to block the rule they call unnecessary and unlawful. The rule was set to take effect July 9, but Dan Jaffe, head of ANA government relations, said the District Court will likely act before then.

The lawsuit was not unexpected; after the rule was first announced, Jaffe told FiercePharma that ANA was considering options to block it, including legal action.

In an email Saturday, Jaffe said the case is "extremely important … because if the government can force companies to carry mandated messages that will be inaccurate for literally millions of viewers who would see them, then this will create very dangerous precedents for not only  pharma companies but numerous other categories."

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Lilly was one of four drugmakers—along with Pfizer, Sanofi and Johnson & Johnson—to file formal written concerns about the rule during the government's 60-day comment period. Placing list prices in advertising has the potential to confuse consumers, the companies said in questioning the rule's effectiveness.

The new lawsuit posits the list price rule should be tossed out for two reasons: The HHS has no statutory authority to create the rule in the first place, the suit claims, and even if it did, the rule violates the First Amendment.

Along with HHS and CMS, the lawsuit names as co-defendants HHS Secretary Alex Azar, who once served as president at Eli Lilly, and CMS chief Seema Verma.

In the filing, the plaintiffs tore into HHS’ contention that its rule wouldn't violate the First Amendment—and into its justification for that argument.

When HHS announced the mandate in May, it tried to get in front of free speech criticisms by citing Supreme Court precedent. In Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, the court specified that “required disclosures of factual, noncontroversial information in commercial speech may be subject to more deferential First Amendment scrutiny.”

But according to the new lawsuit, the required disclosures in this case—list prices for drugs—are not “purely factual and uncontroversial” as the Supreme Court stipulated in Zauderer. That’s in part because the price paid by consumers is usually much lower than the list price and varies across different types of insurance coverage.

“The Zauderer case states that government-mandated disclosures must be factual and uncontroversial. Clearly, forcing companies to disclose what will be highly inaccurate information in many instances clearly fails this test,” Jaffe said.

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Amgen released its own statement allowing that patients need clear and relevant information to understand what they’ll pay for medicines.

But that doesn't mean Amgen agrees with the rule. “What Amgen doesn’t agree with is a government-prescribed approach as required in the new DTC rule," the company said in its statement. "Not only does the rule raise serious freedom of speech concerns, it mandates an approach that fails to account for differences among insurance, treatments, and patients themselves, by requiring disclosure of list price.”

While the suit asks for a vacating of the rule, the plaintiffs' complaint does note that they back the PhRMA trade group's DTC Principles plan. Under that plan, drugmakers include a link in TV ads to websites where consumers can find list prices along with more details about potential out-of-pocket costs for insured and uninsured consumers.