Amy Zink, Class of 2021, Belmont Law
On May 10, 2019, the Department of Health and Human Services (“HHS”) finalized a rule called the “WAC Disclosure Rule” that would require the disclosure of drug prices in direct-to-consumer television advertisements of drugs covered by Medicaid and Medicare. This rule was first pushed by President Trump’s Administration as one way to better regulate the high prices of prescription drugs within the U.S. HHS adopted the rule over numerous objections by pharmaceutical companies across the United States. Pharmaceutical companies’ chief complaints were that the HHS lacked the authority to promulgate this rule under the Social Security Act and that the inclusion of the price of the drug in advertisements would only increase the likelihood of misleading and confusing consumers.
Judge Amit P. Mehta, of the United States District Court in the District of Columbia, first noted that HHS did not have the express grant of authority to regulate under the Social Security Act. Therefore, Judge Mehta completed further analysis of the question to determine whether HHS had the implicit authority to regulate by Congress. By reviewing the statutory text, Judge Mehta determined that the power Congress gave to the Secretary of HHS was to establish rules and regulations for “running” or “managing” the federal public health insurance programs through CMS. However, the rule that HHS promulgated here was meant to regulate the conduct of market actors that are not direct participants in the Medicare or Medicaid programs. Therefore, because the statutory text does not allow HHS to directly regulate the health care market itself or market actors that are not direct participants in the insurance programs, Judge Mehta concluded that HHS exceeded its authority under the Social Security Act by promulgating the “WAC Disclosure Rule” at issue here. This holding effectively blocks the HHS rule from taking effect in the United States.
Merck & Co., Inc, et al. v. U.S. Dept of Health and Human Services, 385 F. Supp. 3d 81 (2019)