By Sheldon Bradshaw
October 11, 2018 at 5:00 am ET
Congress is currently considering legislation that would unconstitutionally compel pharmaceutical companies to engage in government-required speech when advertising their drug products.
And, if running afoul of the First Amendment is not reason alone to oppose the legislation, the required speech would only serve to mislead and harm consumers.
One version of the proposed legislation would require pharmaceutical companies to disclose the list price — or more precisely, the wholesale acquisition cost — of the medications they sell in both direct-to-consumer advertising and in any marketing materials they provide to health care practitioners. If they fail to comply, they would be subject to large civil penalties and potential criminal prosecution as the legislation would deem the drug to be misbranded under the Federal Food, Drug and Cosmetic Act. In addition, the manufacturer would be accused of engaging in an unfair or deceptive act or practice under the Federal Trade Commission Act.
Another version would direct the Food and Drug Administration to adopt regulations to require disclosure of pricing information pursuant to purported existing statutory authority. The FDA, however, has no such existing statutory authority. Although the FDA may require advertisements to include a fair balance of risk and benefit information, that authority does not extend to pricing information. Moreover, the FDA’s primary role in ensuring advertising and labeling are neither false or misleading cannot reasonably be understood to allow the agency to mandate the disclosure of potentially misleading pricing information.
Yet another version, recently adopted by the Senate, appropriates funds for the Department of Health and Human Services to issue regulations, perhaps to be promulgated by the Centers for Medicare and Medicaid Services, requiring an appropriate disclosure of pricing information in direct-to-consumer advertising. While it is no wonder that the Senate has moved away from calling upon the FDA to issue regulations under authorities it clearly does not have, other entities within HHS similarly lack the requisite authority.
Whether directed by Congress or a federal agency, requiring inclusion of the list price in drug advertising is ill-conceived. Compelling such a disclosure would be directly contrary to basic constitutional requirements and seriously misguided as a policy matter. Importantly, the “list price” is rarely the price a consumer actually pays out-of-pocket for medications. As a result, such government-required speech would only serve to dissuade consumers from taking therapeutically important medications that ultimately may cost the consumer little to nothing out-of-pocket.
The Constitution’s First Amendment prohibits the government from compelling companies or individuals to engage in speech to convey a particular message favored by the government. The Supreme Court has long held that the Constitution limits its ability to regulate the content of speech by forcing companies to communicate particular pricing information to consumers and others.
As a result, laws that compel speech — including laws that regulate how sellers may communicate their prices — are subject to heightened judicial scrutiny. Those types of laws are permissible under our Constitution only if they are narrowly tailored to serve an especially compelling governmental interest.
Compelled disclosure of the list price would not be narrowly tailored because the government has numerous other ways it may disseminate pricing information about drugs. It already shares information on drug costs to Medicare Part D beneficiaries, for example. It does not need to take control over companies’ marketing and advertising materials. There is also no compelling government interest in requiring companies to disclose the list price of the drugs they sell. In fact, requiring companies to disclose that price could be terribly misleading.
The list price has no concrete meaning to customers because they rarely pay that price. Instead, list prices are subject to a full range of potential rebates and discounts and, after those rebates and discounts are applied, the amount of actual out-of-pocket costs faced by a customer depends on insurance copay and deductible requirements.
There is therefore a serious risk that by requiring companies to disclose irrelevant pricing information in their marketing and advertising materials, patients will be confused and dissuaded from seeking and filling prescriptions for a drug that would benefit them or may be essential. Patients may be deterred from using drugs with high wholesale acquisition costs, even if the patients would face little to no actual out-of-pocket costs.
While access to safe and efficacious drugs is critical to the public health, that goal can be achieved without trampling the Constitution and misleading consumers.
Sheldon Bradshaw served as a deputy assistant attorney general in the Department of Justice’s Office of Legal Counsel and as the chief counsel of the Food and Drug Administration during the George W. Bush administration, and he is currently a partner at King & Spalding.
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