By Tina Bellon and Nate Raymond
(Reuters) - A federal judge on Monday dealt a blow to the Trump administration by striking down a new rule that would have forced pharmaceutical companies to include the wholesale prices of their drugs in television advertising.
U.S. District Judge Amit Mehta in Washington sided with drugmakers Merck & Co Inc, Eli Lilly (NYSE:LLY) and Co and Amgen Inc (NASDAQ:AMGN) by halting the U.S. Department of Health and Human Services (HHS) rule from taking effect on Tuesday as planned.
Mehta in his ruling set aside the entire rule as invalid, saying the HHS lacked authority from the U.S. Congress to compel drug manufacturers to disclose list prices.
"It is outrageous that an Obama appointed judge sided with big PhRMA to keep high drug prices secret from the American people, leaving patients and families as the real victims," White House spokesman Judd Deere said in a statement, referring to President Donald Trump's Democratic predecessor, Barack Obama.
PhRMA, the Pharmaceutical Research and Manufacturers of America, is the largest industry lobbying group.
HHS Secretary Alex Azar announced the rule on May 8, saying that forcing drugmakers to disclose their prices in direct-to-consumer TV advertising could help drive down skyrocketing prescription drug costs if the companies were embarrassed by them or afraid they would scare away customers.
The rule was originally suggested in May 2018 as part of Trump's "blueprint" to lower prescription drug costs for U.S. consumers.
The judge said such disclosures could well be an effective tool in halting the rising cost of prescription drugs. "But no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized," Mehta concluded.
Under the rule, the wholesale, or list, price would be included if it was $35 or more for a month's supply or the usual course of therapy. 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.
Many drugmakers have opposed the rule. PhRMA said the list prices could be confusing for patients and discourage them from seeking medical care.
Merck, Eli Lilly and Amgen filed their lawsuit alongside the Association Of National Advertisers trade group on June 14, arguing the rule would confuse consumers by forcing them to disclose a price irrelevant to patients with insurance.
Drugmakers have long argued that list prices do not reflect the actual cost of drugs as they do not take into account discounts and rebates negotiated with health insurers and pharmacy benefit managers to ensure patient access to the medicines.
The lawsuit alleged that HHS lacked authority to issue the rule and that it violated their free-speech rights under the First Amendment of the U.S. Constitution.
The U.S. Justice Department defended the rule in court, saying it met a standard the U.S. Supreme Court set in 1985, when it held the government could force advertisers to disclose factual, non-controversial information.