Advertising Industry Wins Important Victory in HHS Case


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 ANA (Association of National Advertisers)’s mission is to drive growth for marketing professionals, for brands and businesses, and for the industry. Growth is foundational for all participants in the ecosystem. The ANA seeks to align those interests by leveraging the 12-point ANA Growth Agenda, which has been endorsed and embraced by the ANA Board of Directors and the Global CMO Growth Council. The ANA’s membership consists of nearly 1,600 domestic and international companies, including almost 1,000 client-side marketers and nonprofit fundraisers and 600 marketing solutions providers (data science and technology companies, ad agencies, publishers, media companies, suppliers, and vendors). Collectively, ANA member companies represent 20,000 brands, engage 50,000 industry professionals, and invest more than $400 billion in marketing and advertising annually.

Dan Jaffe
Group EVP, Government Relations, ANA
Phone: 646.369.4886