The Trump administration cannot force drug manufacturers to disclose prices in their pharmaceutical ads to consumers, a federal judge ruled Monday.
U.S. District Judge Amit Mehta said HHS didn't have the authority to require drugmakers to publish list prices, a blow to the administration's strategy to curb pharmaceutical costs. The agency hoped the final rule would boost pharmaceutical price transparency.
But Congress didn't give HHS the power to issue such a rule, according to the decision.
"No matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized," the judge wrote. "The responsibility rests with Congress to act in the first instance."
The Food and Drug Administration already regulates direct-to-consumer ads and cracks down on companies that fail to list side effects. However, HHS proposed the rule through the CMS rather than through the FDA.
While the CMS can regulate providers and insurers that participate in Medicare and Medicaid, drugmakers are not "direct participants" in those programs and fall outside the agency's purview, Mehta said.
"Their pricing decisions, of course, affect the cost of pharmaceutical benefits offered under the Medicare and Medicaid programs," he wrote. "But those decisions impact costs in an indirect way."
Mehta said that his opinion didn't take a stance on the transparency initiative itself and acknowledged that posting list prices "could be an effective tool in halting the rising cost of prescription drugs."
Merck & Co., Eli Lilly and Co., Amgen and the Association of National Advertisers sued HHS in June over the final rule, challenging the agency's authority to issue the policy and claiming it would violate their First Amendment rights. Mehta didn't rule on the freedom of speech claims.
The CMS' rule was part of a broader Trump administration strategy to tackle high drug prices that has rankled pharmaceutical companies. Drugmakers have blamed supply-chain companies for their role in point-of-sale prices.
AARP said in a statement it was disappointed in Mehta's ruling.
"Drug list prices have been shrouded in secrecy for too long," said Nancy Leamond, AARP's executive vice president and chief advocacy and engagement officer. "Thanks to Merck, Eli Lilly, and Amgen who collectively filed suit to prevent the new rule from taking effect, millions of Americans will be prevented from seeing the astronomical price tags of the drugs being advertised on TV."