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Rule Requiring Prescription Drug Price Disclosures in TV Ads Will Create Complex Lanham Act Enforcement Issues and First Amendment Implications

A Final Rule issued by the Centers for Medicare and Medicaid Services (CMS) on May 8 (the “Final Rule”) that requires direct-to-consumer (DTC) television advertisements for a prescription drug or biologic covered by the Medicare or Medicaid programs to disclose the product’s “list price,” will become effective on July 9, 2019. The Final Rule mandates price disclosures for any covered drug that is $35 or more for a one-month supply or the usual course of therapy, and includes a unique enforcement mechanism whereby CMS would rely for enforcement on private lawsuits filed pursuant to Section 43(a) of the Lanham Act. In a conference call with reporters, Department of Health and Human Services (HHS) Secretary Alex M. Azar II analogized the new requirement to mandatory price disclosures required for the automobile industry—despite the fact that cars are not reimbursed by the government, subject to co-pays, prescribed by third parties who function as gatekeepers, or subject to complex arrangements with prescription benefit managers (PBMs) and other healthcare providers. The strained analogy to automobile price disclosures reflects the legal complexities implicated by this requirement and the absence of relevant precedent.

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