Prescription Drug Ad Proposal Threatens to Violate the First Amendment

October 19, 2018

We are now once again facing a major mandatory advertising disclosure proposal, this time from the federal government. The Trump Administration, which has made prescription drug costs a centerpiece of its legislative agenda, just proposed a new rule requiring the mandatory disclosure of prescription drug prices in many direct to consumer television (DTC) ads.

Just this August, ANA and others in the ad community, were successful in combating a proposed mandatory disclosure amendment to the Defense-Labor-HHS-Education appropriations package. This amendment by Senators Dick Durbin (D-IL) and Chuck Grassley (R-IA) would have mandated that pharmaceutical companies disclose drug prices in DTC television advertising and provided the Department of Health and Human Services $1 million dollars in funding for enforcement.

Such mandates are unnecessary when the industry provides the means to enable consumers to be fully informed. In an important self-regulatory step, member companies of the Pharmaceutical Research and Manufacturers of America (PhRMA) this week initiated efforts to provide increased transparency in regard to prescription drug costs. All PhRMA member company advertisements will now include pathways to information for consumers about the cost of medicines, including the list price of the medicine, the out-of-pocket costs of the medicine, further information about potential costs, and ways in which consumers can get financial assistance when acquiring medicine.

Despite these proactive steps, Secretary of Health and Human Services (HHS) Alex Azar, on October 15th announced a new regulation regarding the mandatory disclosure of prescription drug pricing. This new regulation would require companies which sell any drug covered by Medicaid or Medicare that costs more than $35 per month to include a standard price (list price) in their television advertisements. Secretary Azar nevertheless dismissed the proactive steps taken by the industry saying “placing information on a website is not the same as putting it right in an ad. And it’s taken them five months since the president’s blueprint to start skating to where the puck is going."

ANA will file comments in opposition to this proposed rule because we believe that government-mandated disclosures would be more likely to mislead consumers and would seriously violate the First Amendment. The proposed rulemaking itself makes clear that a large percentage of consumers will not pay the list price for drugs and that the price variations could be significant. Therefore, this government mandated disclosure would not be “factual and uncontroversial,” as the Supreme Court required in the Zauderer case. Instead, given the complexity and variation in the information to be provided, such government imposed disclosures would be confusing and misleading.

The Supreme Court has also stated in the Thompson v Western States Medical Center case that “if the First Amendment means anything, it means regulating speech must be a last — not first  resort.” The government’s proposed action clearly violates this requirement as there are many non- speech related steps the government could take in this area.

The claim that these disclosures would bring down drug prices is based on very weak evidence and questionable logic. It is the government’s burden to demonstrate that restrictions on advertising will “materially advance a substantial state interest,” and the proposals advanced by the Administration lack the necessary support for this proposition.

There are other serious issues with the proposal that we will detail in our filing, and we hope that HHS will carefully reconsider this proposal and withdraw it.

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