Woman watching TV The ruling is ablow to the Trump administration and its plan to bring down drugprices. (Photo: Shutterstock)

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More than a year after the Department of Health and HumanServices finalized a rule that would require drugmakers to includepricing information in TV ads, the rulecontinues to be mired down in court challenges.

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In the latest blow, a three-judge federal appealscourt has ruled that the HHS does not have the authority to compelthe price disclosures. The decision affirms a previous ruling by afederal judge last summer in response to a lawsuit filed by Merck& Co., Eli Lilly & Co. and Amgen Inc..

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Related: Federal judge shoots down rule requiring drug pricedisclosures in TV ads

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"The Department's construction of the statute would seem to giveit unbridled power to promulgate any regulation with respect todrug manufacturers that would have the arguable effect of drivingdown drug prices—or even health care costs generally—based onnothing more than their potential salutary financial benefits forthe Medicare or Medicaid program," the judges wrote.

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The judges questioned whether the rule would have its intendedeffect of driving down prices, and cited four reasons it felloutside the scope of the duties of the HHS:

  1. "List prices" for drugs have little bearing on what consumersactually pay for the drug.
  2. The administration can't support its claim that disclosures"may inform" consumers' health care decisions
  3. The rule targets the general public and not Medicare andMedicaid recipients, underscoring the "marginal relevance" of thelist price disclosures.
  4. The breadth of authority being claimed by the HHS "underscoresthe unreasonableness of the Department's claim that it is justengaged in general 'administration.'"

The ruling is a blow to the Trump administration and its plan tobring down drug prices. It may also serve as a bellwether for thefate of another administration rule that will require hospitals to disclose prices beginning nextyear. While the rule requires negotiated rates as opposed to listprices–a key difference between the two rules–other arguments madeby the drugmakers could also be used by the hospital groupsinvolved in the price transparency challenge.

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Another commonality between the two cases is the assertion thatprice disclosures violate the affected companies' First Amendmentrights–an issue that was not addressed in either the federaljudge's ruling or that of the appeals court.

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Emily Payne

Emily Payne is director, content analytics for ALM's Business & Finance Markets and former managing editor for BenefitsPRO. A Wisconsin native, she has spent the past decade writing and editing for various athletic and fitness publications. She holds an English degree and Business certificate from the University of Wisconsin.