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U.S. Court of Appeals, D.C. Circuit Upholds Decision Against Drug Pricing Rule

June 19, 2020

In May 2019, the Centers for Medicare & Medicaid Services ("CMS") finalized a rule to require drug manufacturers to include a product's wholesale acquisition cost ("WAC") in television advertisements ("WAC Disclosure Rule"). On June 14, 2019, three pharmaceutical companies and the Association of National Advertisers, Inc. ["Plaintiffs"] filed a complaint in the U.S. District Court, District of Columbia, against Defendants United States Department of Health and Human Services ("DHHS") and CMS ["Defendants"]. On July 8, 2019, the Court entered a final, appealable Order vacating the WAC Disclosure Rule, and Opinion stating that DHHS does not have the statutory authority to require drug prices in television advertisements.

On August 22, 2019, the Defendants filed a Notice of Appeal in the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") asserting that the DHHS has the authority to require the disclosure of pricing information by companies whose drugs are covered by the Medicare and Medicaid programs and that the rule is "necessary to the efficient administration of the Medicare and Medicaid programs."

In an Opinion filed on June 16, 2020, the three-judge panel of the D.C. Circuit affirmed the lower court's decision stating that DHHS, "acted unreasonably in construing its regulatory authority to include the imposition of a sweeping disclosure requirement that is largely untethered to the actual administration of the Medicare or Medicaid programs." The panel found that there is no "statutory basis for its far-flung reach and misaligned obligations."

For more information, and to view a copy of the Opinion and additional court filings, please visit the Federal Drug Price Disclosure section of the Transparency and Limitations Database.

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