WASHINGTON -- In a major legal setback for President Donald Trump on a high-profile consumer issue, a federal appeals court has ruled that his administration lacks the legal authority to force drug companies to disclose prices in their TV ads.
The ruling denies Trump an easy-to-understand win on a major reelection priority for the White House, bringing down the cost of prescription medicines. Where most plans to overhaul the cost of drugs are complex, mandating that companies disclose prices is something any consumer can relate to.
Separate from the court case, legislation that would lower drug costs for Medicare beneficiaries with high bills is stuck in Congress. It's unclear that Trump can get it moving, since it would require some hard compromises for both Republicans and Democrats. There's also a separate bill that would mandate drug companies to disclose their prices in consumer advertising.
Trump, however, is not empty-handed. His administration recently brokered an agreement with drug companies and insurers that would give Medicare recipients taking insulin the ability to limit their copays to $35 a month, starting next year.
On TV ads, the unanimous decision by a panel of the U.S. Court of Appeals for the District of Columbia Circuit did not address a core argument of the pharmaceutical industry, that forcing companies to disclose their prices in advertising violates their free speech rights. Instead the three-judge panel ruled that the Department of Health and Human Services overstepped its legal authority by requiring disclosure under the umbrella of its stewardship of Medicare and Medicaid. The panel issued its decision Tuesday.
In a scathing rebuke to the administration, Judge Patricia Millett wrote for the court that HHS “acted unreasonably” in asserting it had authority to impose "a sweeping disclosure requirement that is largely untethered to the actual administration of the Medicare or Medicaid programs.
“Because there is no reasoned statutory basis for its far-flung reach and misaligned obligations, the disclosure rule is invalid and is hereby set aside,” the judge added.
Responding to the ruling, HHS spokesman Michael Caputo tweeted, “If the drug companies are embarrassed by their prices or afraid that the prices will scare patients away, they should lower them.”
When the disclosure rule was announced last year, administration officials were confident that it would be in effect by now.
Trump tweeted at the time that “Historic transparency for American patients is here.”
Drug pricing details were expected to appear in text toward the end of commercials, when potential side effects are disclosed.
The government hoped that patients armed with prices would start discussing affordability with their doctors, and gradually that would pressure drugmakers to keep costs of brand-name drugs in check. AARP was among the organizations supporting disclosure.
The idea was part of a multilevel blueprint Trump announced in 2018 to try to lower prescription drug costs.
In Congress, a bipartisan bill from Sens. Dick Durbin, D-Ill., and Chuck Grassley, R-Iowa, would achieve essentially the same results as the Trump administration rule, requiring companies to list prices of their prescription drugs in their consumer advertising. Although an act of Congress would may carry more weight in the courts, its path forward also seems unclear.
Democrats see an opportunity to make far bigger changes. The House passed Speaker Nancy Pelosi's bill authorizing Medicare to negotiate prices directly with the industry. That's a nonstarter for Republicans, though Trump once supported it.
Pelosi's bill would plow billions from prescription price cuts into providing new benefits for Medicare recipients, such as vision, dental and hearing aids. Democratic presidential candidate Joe Biden also backs Medicare negotiations.