By: Alexis Lee
HHS Finalizes The Final Rule
On May 8 2019, a “Final Rule” was issued by the Department of Health and Human Services (HHS) from the Centers for Medicare and Medicaid Services (CMS), implementing a portion of President Trump’s “American Patients First” blueprint. President Trump proposed this blueprint in order to reduce the price of drugs. The primary purpose of the “Final Rule” is to address the increase in costs of drugs and how it has affected the United States.
Final Rule Proposal
This new rule has forced companies to publish the actual price of their drugs, and when the price is shown in television advertisements, the font size of the price be greater than all other text to add emphasis on the price for the consumers to be fully aware of the actual listing price of the drugs. The rule became effective July 9, 2019.
Health Insurance Plans
It is important for consumers purchasing these drugs to be aware of the variations in health insurance plans and their coverage. This also falls on the responsibility of the television advertisers to ensure that they include a statement explaining that the cost of drugs may vary. Some insurance companies may cover the entire purchase for consumers, others may require a small copay fee, or consumers may even have to cover the entire cost out of their own pocket. If companies are afraid of putting the actual prices of the drugs in television advertisements, that should infer, that changes clearly should be implemented. Could this new rule now make patients be in-control-of their own healthcare? If patients are complaining about how the cost of drugs are too high, companies may be forced to reduce the cost. Patients will also have the opportunity to have access to their own information in order to make better health care decisions for themselves.
Lanham Act
One of the leading issues with the “Final Rule” is the Lanham Act. The Lanham Act is the primary federal trademark statute in the United States. The Lanham Act prohibits false advertisements, infringement, etc. In regards to this specific issue, our focal point here is the advertisements. The Lanham Act serves a vital purpose due to the fact that drug companies can have a lawsuit brought against them under the Lanham Act if all of the required information from the “Final Rule” is not included in the television advertisements provided from the drug company. Could this new rule force drug companies to lower their drug prices?
Freedom of Speech Not Protected
Does the “Final Rule” violate their First Amendment rights? By forcing these advertisers to put the price of the drug in the advertisements, is it limiting their speech under the First Amendment? The CMS argues that the advertiser’s freedom of speech is not violated because the information being publicized is factual. The CMS’s claims are backed up under, 471 U.S. 626, 105 S. Ct. 2265, the case of Zauderer v. Office of Disciplinary Counsel of The Supreme Court. An attorney, Phillip Q. Zauderer, put out two advertisements for his legal firm. The first advertisement stated if he were to represent a defendant in a drunk driving case and the defendant were to be convicted of that particular offense, he would refund the defendant the fee. The second advertisement stated he would represent individuals on a contingent fee basis for those who wanted to file a personal injury lawsuit against a company who made a defective birth control device. The Office of Disciplinary Counsel argued “the first advertisement was deceptive in offering criminal representation on what amounted to a contingent fee basis, which was prohibited by attorney disciplinary rules, and that the second advertisement violated disciplinary rules regarding attorney advertising which prohibited self-recommendation, accepting employment resulting from unsolicited legal advice, and the use of illustrations, and was deceptive in failing to disclose a losing client’s liability for cost” (Zauderer v. Office of Disciplinary Counsel of Supreme Court). Zauderer was reprimanded for not stating in his first advertisement he would be representing the clients on a contingent fee basis. Zauderer was also reprimanded for not clearly stating in his second advertisement if the outcome of the case were not successful his clients would be liable. This issue presented to the Supreme Court was whether or not Zauderer’s First Amendment rights had been violated. The Supreme Court held his First Amendment rights were violated in his second advertisement, however not in the first advertisement. An attorney cannot be punished for simply advertising accurate and truthful information about their business in an advertisement.
Conclusion
The “Final Rule” is requiring direct-to-consumer televised advertisements to disclose the price of drugs that are regulated under Medicare and Medicaid. The primary purpose of The Final Rule is to ensure that the patients buying these drugs are arguing all of the correct and beneficial information in the hope that, hoping the patients will make the correct health and financial decisions for themselves.
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