Two things became apparent this week after a federal judge blocked President Trump’s requirement that drug prices be disclosed in TV commercials — a move intended to shame pharmaceutical companies into being friendlier to patients.
First, the ruling highlighted the limitations of Trump’s I-don’t-need-no-stinking-Congress approach to policy. Once again a court has ruled that Trump exceeded his authority.
Second, pharmaceutical companies have no interest in being friendlier to patients.
Trump’s price-disclosure rule was challenged in court by our friends at Merck, Eli Lilly and Amgen, who argued that the White House was overstepping its bounds and that the companies’ 1st Amendment rights were being violated.
They also maintained that the requirement would “confuse” patients by forcing disclosure of a list price that may not be anywhere close to the price negotiated by insurers.
This means drug companies, despite their best efforts to be upstanding citizens, inadvertently would “mislead tens of millions of Americans about the price they would actually pay for important medicines that might improve their health or even save their lives,” the companies claimed in their lawsuit.
Because as we all know, improving health and saving lives is what drug companies care about, not gouging patients with stratospheric prices that in no way reflect actual costs.
The court decision was one of two drug-related setbacks for Trump this week. He also dropped a proposal to prevent drugmakers from providing rebates to insurers and pharmacy benefit managers — a move intended to lower prices for consumers but that probably would have raised Medicare premiums.
U.S. District Judge Amit Mehta didn’t address the drug companies’ 1st Amendment argument in his ruling. He focused instead on whether the Department of Health and Human Services has the authority to require price disclosure in TV ads.
He said neither the “text, structure nor context” of existing law “evince an intent by Congress to empower [administrative agencies] to issue a rule that compels drug manufacturers to disclose list prices.”
“No matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized,” Mehta concluded.
The drug companies that sued to protect consumers from unwanted confusion wasted no time in claiming the moral high ground.
“We believe strongly in providing patients and their caregivers the meaningful information they need to make more informed healthcare decisions,” Merck said in a statement. “That is why we initiated this action and we will continue to put patients first and foremost in our unwavering commitment to deliver medically important vaccines and medicines that make a significant difference to society.”
Lilly said in its own statement that “we are committed to working with stakeholders across the healthcare system to find better solutions for the larger issue — namely, lowering out-of-pocket costs for Americans who still struggle to pay for their medicines.”
No one at Amgen responded to my request for comment.
If you believe that drug companies “put patients first” and are committed to “lowering out-of-pocket costs for Americans,” you can stop reading right now.
If, on the other hand, your experience of the pharmaceutical industry has been one of unmitigated greed and insensitivity toward some of the most vulnerable members of society, by all means read on.
Drug companies don’t give two figs about upholding free-speech rights and they don’t care about safeguarding patients from confusion. They care about sales. And the reason they don’t like having to disclose prices in their ubiquitous TV ads is because the last thing they want people thinking about is how badly they’re being ripped off for name-brand medicine.
It’s true the list prices for many drugs are much higher than insured prices, but the pharmaceutical industry would rather people didn’t worry their pretty heads about that either.
They don’t want consumers asking uncomfortable questions about why prices lack transparency and why prices for many drugs move in only one direction, and that’s up.
“The fact that the drug companies filed a challenge means they were concerned that the rule would hurt their bottom line,” said Vivian Ho, director of the Center for Health and Biosciences at Rice University’s Baker Institute for Public Policy.
After a series of strikingly bad moves — increasing the number of people who are uninsured, running up debt for tax cuts, withdrawing from the international climate-change treaty, to name just a few — Trump hit upon disclosure of drug prices as a way to fulfill a campaign pledge that he’d make medicine more affordable.
Price disclosure wouldn’t do that. You can’t shame an industry that has no shame.
Also, what’s really being accomplished?
“The list price of a drug means about as much as the sticker price on a car,” said Anupam B. Jena, an associate professor of healthcare policy at Harvard Medical School. “Without patients knowing what price they themselves will pay, it is hard to expect them to vote with their feet.”
But at least this was a step in the right direction — an attempt to shine some sunlight on powerful businesses that prefer operating in the shadows.
Speaking of which, the companies that sued Trump (and their leaders) are doing just fine, thank you very much:
- Merck reported profit of $6.2 billion last year. Its chief executive, Ken Frazier, received compensation of $20.9 million.
- Lilly saw profit of $3.2 billion, and CEO David Ricks pocketed compensation of $17.2 million.
- Amgen posted profit of $9.6 billion, and its CEO, Robert Bradway, enjoyed compensation of $18.6 million.
If Trump wants to get serious about lowering drug prices, most experts say he and Congress need to do two things.
They need to empower Medicare to negotiate on behalf of its 57 million beneficiaries. Right now, that’s against the law (thanks, Republicans!).
And they need to make the U.S. drug market more competitive by allowing consumers to import prescription meds from abroad. A good place to start would be adopting import rules for reasonably priced, well-regulated Canadian drugs.
Any drug company that believes in putting patients first and lowering out-of-pocket costs for Americans would embrace these common-sense ideas.
In fact, the industry has spent years fighting them both.
But thanks anyhow, guys, for saving us from all that confusion.