HR-3789-119
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by David Taylor (R-OH)
What it does
This bill would require manufacturers to include the wholesale acquisition cost (WAC) — the list price — in direct-to-consumer (DTC) advertisements for prescription drugs and biological products covered by Medicare or Medicaid, for any drug with a 30-day supply costing $35 or more. The Secretary of HHS would be directed to issue regulations by July 1, 2026 specifying how the price must be displayed in each advertising medium. Manufacturers that violate the requirement could face civil money penalties of up to $100,000 per violation.
Who benefits
Patients with high-deductible health plans, who often pay list price until their deductible is met and who may currently be unaware of drug costs before receiving a prescription. Medicare and Medicaid beneficiaries, who are exposed to WAC-based coinsurance on non-preferred drug tiers. Generic and lower-cost drug manufacturers, who may gain competitive advantage if consumers become more price-aware. Physicians and pharmacists, who may face fewer patient requests for expensive brand-name drugs that are not clinically optimal. Taxpayers and federal programs, if greater price awareness reduces Medicare and Medicaid spending on heavily advertised drugs.
Who is hurt
Brand-name pharmaceutical manufacturers, whose DTC advertising effectiveness may decline if consumers are deterred by disclosed list prices. Advertising agencies and media companies that carry pharmaceutical ads, which could see reduced ad spending if manufacturers pull or scale back campaigns. Patients who rely on manufacturer copay assistance programs, since the disclosed WAC may not reflect their actual out-of-pocket cost and could cause unnecessary alarm. Smaller or newer drug manufacturers with high list prices for rare or complex conditions, who may face disproportionate reputational impact from price disclosure even when patient costs are lower due to insurance.
Supporters argue
Supporters argue that consumers already receive mandatory disclosures of side effects and contraindications in drug ads, and that price information is equally essential to informed decision-making. They cite a 2019 JAMA study finding that patients dramatically underestimate out-of-pocket costs until they learn the WAC, and a GAO finding that 58% of Medicare drug spending between 2016 and 2018 went to advertised drugs — costing Medicare and Medicaid a combined $34 billion for just the 20 most-advertised drugs in 2018 alone. They further contend that markets function more efficiently when consumers have price information, and that the American Medical Association has formally supported price transparency requirements in DTC advertising.
Opponents argue
Opponents argue that the WAC is a list price that few consumers actually pay, making mandatory disclosure potentially misleading rather than informative — a 2013 Oncologist study cited in the bill itself shows patients already forgo prescriptions due to cost concerns, and displaying an inflated list price could cause patients to abandon medically necessary treatment. They further contend that compelled commercial speech requirements face First Amendment scrutiny, and that a prior HHS rule mandating WAC disclosure in drug ads was vacated by a federal court in 2019 on the grounds that the agency lacked clear statutory authority — a concern that post-Loper Bright judicial review makes even more salient for any implementing regulations.
Constitutional context
The bill relies on Congress's Taxing and Spending Clause authority and its power to regulate commercial activity under the Commerce Clause (Art. I, §8). A directly relevant precedent is the 2019 D.C. Circuit decision vacating an HHS rule requiring WAC disclosure in drug ads (Merck v. HHS), which found the agency lacked statutory authority — this bill attempts to supply that authority explicitly. Post-Loper Bright (2024), courts will independently assess whether the statutory language grants HHS sufficient authority to implement the disclosure regulations, without deferring to the agency's own interpretation.
Checks and balances
Congress grants HHS new rulemaking authority to mandate price disclosures; HHS is checked by judicial review under the post-Loper Bright independent-judgment standard, and manufacturers may challenge implementing regulations on First Amendment compelled-speech or statutory authority grounds.
Historical precedent
In 2019, HHS issued a rule requiring WAC disclosure in television drug ads, but the U.S. District Court for D.C. vacated it in Merck v. HHS, finding the agency lacked statutory authority — the same gap this bill seeks to close.