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A Federal Judge Blocks the Trump Administration's Plan to Lower Drug Prices

President Donald Trump pledged to lower drug costs by forcing companies to disclose their list prices in ads. But would the plan have even worked in the first place?
Pills prescription drug pricing

A federal judge has blocked the Trump administration's signature attempt to lower drug costs: forcing drug companies to list their sticker prices in ads.

The judge issued his decision on Monday. The rule was supposed to go into effect on Tuesday.

In his opinion, Judge Amit P. Mehta, of the United States District Court for the District of Columbia, writes that he isn't taking a stance on whether the rule would be effective at curbing drug prices in America. Instead, he argues the Department of Health and Human Services doesn't have the legal authority to make such a rule:

To be clear, the court does not question HHS's motives in adopting the WAC Disclosure Rule. Nor does it take any view on the wisdom of requiring drug companies to disclose prices. That policy very well could 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.

Was the rule expected to work in the first place? In May, I looked at the evidence and found that it's uncertain:

But how will people really react to seeing list prices in drug ads? Will they seek lower-priced options and apply pressure to companies that are charging more?

It turns out it can be hard to answer these questions with data. Only one study has directly examined the possible effects of a policy like this. That study was promising—in it, people were wary of the pricier version of a fictional drug—but, because it's a single study with specific conditions, it's hard to say for sure if that's how most Americans will react to the new rule.

Drug-ad researchers who spoke with me generally supported the rule, but some pointed to possible unwanted consequences, such as people seeing sky-high prices in an ad and then concluding that they shouldn't go to the doctor at all. In reality, treatment might still be affordable to them because of insurance, other patient programs, or the existence of a cheaper, alternative drug that isn't getting advertised.

The block comes after the rule was challenged in court by the drugmakers Merck, Eli Lilly, and Amgen, as well as the Association of National Advertisers. Eli Lilly and Amgen are among the five top pharmaceutical advertisers in the country, STAT reported in 2018. The two companies spent a combined $421 million on ads that year.

Officials at HHS are consulting with the Department of Justice about what to do next, a spokeswoman has told the New York Times.