“Not only does CMS lack the statutory authority to compel drug manufacturers to display irrelevant list prices for the products in their television ads, but doing so would run roughshod over manufacturers’ well-established First Amendment right not to speak.”
—Cory Andrews, WLF Senior Litigation Counsel

WASHINGTON, DC—Washington Legal Foundation (WLF) today urged the Centers for Medicare and Medicaid Services (CMS) to withdraw its proposed rule that would require drug makers to convey the wholesale acquisition cost, or “list price,” of any prescription drug or biological product advertised in direct-to-consumer (DTC) television ads.

CMS’s latest proposal is touted as part of the administration’s effort to reduce overall healthcare costs. But as WLF’s comment makes clear, no matter how well-meaning its intentions, CMS may exercise only the limited regulatory authority that Congress granted to it by statute. Yet no statute authorizes CMS to require disclosure of list prices in DTC television ads. And recent attempts to amend federal law to give the Secretary of Health and Human Services (HHS) the very authority that CMS now claims have been unsuccessful. Because it would make no sense for Congress to grant HHS statutory authority that it already enjoys, that failed legislation is strong evidence that CMS lacks the statutory power to mandate list-price disclosures in DTC ads.

But lacking any statutory basis is not the only fatal flaw in CMS’s proposed rule. WLF’s comment also shows that CMS’s list-price-disclosure mandate would violate drug makers’ First Amendment right to speak truthfully about their products. The First Amendment protects a speaker’s choices about both what to say and what not to say. And by compelling drug makers to speak a particular message in their DTC ads, the proposed rule seeks to alter the content of their speech. Under Supreme Court precedent, CMS’s proposed rule violates the First Amendment unless CMS can show that the rule (1) “directly advances” CMS’s substantial interest in reducing costs and (2) is no “more extensive than is necessary to serve that interest.” As WLF’s comment demonstrates at length, the proposed rule flunks both of those requirements.

In light of these deficiencies, WLF has asked CMS to withdraw the proposed rule in its entirety.

Celebrating its 41st year, WLF is America’s premier public-interest law firm and policy center advocating for free-market principles, limited government, individual liberty, and the rule of law.