Media Law in the News II

Part I: Summary

On October 15^th the Trump Administration announced a proposal that would make the Department of Health and Human Services demand that pharmaceutical companies include their manufacturer’s list price on drugs advertised in television commercials. The sole purpose of this proposal is to lower the price people have to pay for prescription drugs and biological products. This ruling would apply to drugs covered by Federal Health Insurance Programs. The Center for Medicare and Medicaid Services has the authority to regulate these companies. However, some argue that this regulation is unconstitutional on two different accounts. First, the Food Drug and Cosmetic Act nor the FDA mention that companies have to disclose prices in print or broadcast advertisements. Second, these companies can file a tort claiming the regulations are content-based.

https://www.bna.com/requiring-price-info-n73014483374/ 

Part II: Legal Questions Raised

·       Is this restriction based on speech content?

·       Does the government have a compelling interest to regulate pharmaceutical companies?

·       Is this regulation narrowly drawn?

·       Does this single out consumer advertisements?

Part III: Relevant Doctrine/ Precedent

Strict Scrutiny is the test for content-based restraints:

• The government has a compelling interest in restricting speech. Defined as protecting the public safety and welfare. 
• Narrowly drawn, least restrictive means.

Part IV: Conclusion

In this situation, the pharmaceutical companies could file a tort that states the new regulations are content-based restrictions. The regulations are making a lot of companies abide by Medicare parts and the Medicaid program, saying that “direct-to-consumer” T.V. advertisements of prescription drugs that are covered by Medicare and Medicaid must include the Wholesale Acquisition Cost (list price). The reasoning behind the Trump administration’s proposal is to improve Federal Health Insurance Programs so that citizens who use Medicare and Medicaid may be given important information on the products they consume. The government is making an effort to acknowledge the high costs consumers are burdened with when they have to pay out-of-pocket as well as bills from Medicare and Medicaid.

Furthermore, if these companies were to go to court, they would defend themselves by stating that the government does not have a compelling interest to rigidly apply this rule for advertisements. They do not want government programs to have the authority to restrict their ability to function as a business. Companies like Amgen Inc., an American owned company, have a lot of power over how they choose to sell to consumers and it is not always in the best of interest. Moreover, GlaxoSmithKline Plc. is a company owned in the United Kingdom that also does business in the United States and would be affected by this regulation. In the UK, there are different regulations on how companies disclose information to consumers. I think it is important to acknowledge different motivations companies like these would want to protect the way they operate and advertise to consumers. Therefore, the government is trying to look out for the interest of the people by making sure that pharmaceutical companies are not reasonably pricing their products.

This proposal is not content-based because when the strict scrutiny test applied, the government has the right to protect the welfare of the people and it is done in the least restrictive way possible. By making pharmaceutical companies show their list price the proposal is targeting broadcast advertisements, assuming that broadcast media has the largest audience. The federal government would need to make sure that this regulation would pass the First Amendment. If pharmaceutical companies were to challenge this regulation, the government would win the case.