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Judge Mehta Strikes Down Drug Pricing Disclosure Rule

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The challenge, opponents say, is that a drug's list price and estimates of what people can expect to pay vary widely depending on coverage.

In a lawsuit filed last month by drugmakers Merck, Eli Lilly and Amgen as well as a trade group for advertisers, U.S. District Judge Amit Mehta ruled that the Department of Health and Human Services does not have the authority from Congress to force drugmakers to disclose their prices. While these companies' pricing decisions do impact Medicare and Medicaid, a reading of the statutory text, says the decision, does not plainly support the idea that Congress meant to give HHS the authority to regulate prescription drug marketing. That policy very well could be an effective tool in halting the rising cost of prescription drugs. The drug companies challenging the rule were Merck & Co., Eli Lilly and Co. and Amgen Inc.

The Trump Administration's plans to force drug companies to include pricing information in drug ads just failed in a big way.

A federal judge Monday blocked a major White House initiative on prescription drug costs, saying the Trump administration lacked the legal authority to require drugmakers to disclose their prices in TV ads. Disclosing list prices or general data doesn't help most Americans since their rates are determined by their insurance - and deductibles - so this information will not tell them much about what they are on the hook for and could even dissuade them from pursuing care.

The rule, announced in May, was the first to be implemented from the administration's blueprint to lower drug costs, which was released in 2018.

The Final Rule had its roots in the 2018 Trump Administration blueprint titled American Patients First, The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, which described a transparent drug pricing system created to lower high prescription drug prices and bring down out-of-pocket costs. HHS said the 10 most commonly advertised drugs had list prices of $488 to $16,938 per month or for a usual course of therapy.

"Requiring the inclusion of drugs' list prices in TV ads is the single most significant step any administration has taken toward a simple commitment: American patients deserve to know the prices of the health care they receive", Azar said at the time. Critics noted, for example, that it would have allowed the industry to police itself, with no other enforcement mechanism.

The average price increase was 10.5%, or around five times the background rate of inflation, and suggest Trump's claims to have had an impact on drug pricing since the blueprint was published past year have no weight.