Advertising Industry Wins Important Victory in HHS Case

FOR IMMEDIATE RELEASE

Advertising Industry Wins Important Victory in HHS Case

WASHINGTON (June 17, 2020) - Yesterday the ANA, along with co-plaintiffs Merck, Eli Lily, and Amgen, won an important victory for the advertising industry when the United States Court of Appeals for the District of Columbia Circuit struck down a rule requiring a mandatory disclosure rule for prescription drug prices in television ads. The rule would have required disclosure of the “wholesale acquisition cost” (WAC), which the court noted few consumers actually pay and would do more to confuse than inform them.

The rule, adopted by the Department of Health and Human Services (HHS) as a means to control drug prices, never went into effect because it was invalidated by the district court last year. The D.C. Circuit agreed that HHS lacked statutory authority to adopt the disclosure requirement. The Court explained that “[t]he Department’s construction of the statute would seem to give it unbridled power to promulgate any regulation with respect to drug manufacturers that would have the arguable effect of driving down drug prices—or even health care costs generally—based on nothing more than their potential salutary financial benefits for the Medicare or Medicaid program,” ending with, “[a]lthough the Secretary’s regulatory authority is broad, it does not allow him to move the goalposts to wherever he kicks the ball.”

ANA and its co-plaintiffs also argued that the rule is an unconstitutional assault on the free commercial speech of advertisers. Furthermore, the ANA has previously stated that this rule would mislead the public because the “list price” of a prescription drug is not a strong indicator of what the consumer will ultimately pay. This could cause individuals to forgo seeking the correct medication due to a belief that it is too expensive.

The Court agreed. It explained that price disclosures mandated by the rule bear “little resemblance to the price beneficiaries actually pay under the Medicare and Medicaid programs,” that the disclosures would mislead consumers, and might actually do more harm than good. It found that, if presented with misleading disclosures, consumers may be deterred from contacting their physicians about drugs or medical conditions and may be discouraged from using beneficial medications. 

Dan Jaffe, ANA’s Group Executive Vice President, Government Relations stated, “The court’s reasoning, by pointing out the numerous very serious defects with the rule, makes it highly probable that it would be found violative of the First Amendment as well.”

ABOUT THE ANA: 

The Association of National Advertisers (ANA) is the definitive voice of the marketing industry. Since 1910, we have set and advanced the agenda for marketing transformation, connecting over 1,600 member companies to an influential global network, insights and resources that drive growth. Our members represent 20,000 brands and $400 billion in annual marketing investment. Through industry-leading research, the CMO Growth Council, and our proprietary Growth Agenda and Practices, the ANA empowers marketers to shape the future of marketing and create lasting impact for their organizations and the industry.

MEDIA CONTACT:
Dan Jaffe
Group EVP, Government Relations, ANA
Phone: 646.369.4886
Email: [email protected]