necessary to the efficient administration of medicare and medicaid efficient means acting with a minimum of waste war expense administration in this context means the management of a government or large institution so c m s as role is therefore to manage the medicare and medicaid programs with a minimum of waste and expense in other words c m s is goal is to pay for drugs and services without wasting money artificially inflated prices not requiring the disclosure of list prices in direct to consumer advertisements is closely connected to the efficient administration of medicare and medicaid the united states is experiencing a crisis in prescription drug costs cost per beneficiary have increased forty percent over the last decade or two the problem is the lack of transparency overpriced and so requiring price disclosure will encourage manufacturers to compete on price promote consumer understanding of the cost of drugs and encourage conversations between consumers and doctors about about lower cost alternatives now the district court concluded that drug manufacturers do not participate in medicare medicaid well that's just not true as my colleagues on the underside on the other side now can see as a condition for paying for their drugs c m s requires drug manufacturers to pay rebates to the states to pay rebates to of the w a c so it is closely tied to that and then medicare beneficiaries in turn frequently pay coinsurance on the negotiated price so they're effectively paying a percentage of a metric that  closely related to the to the list price and along those lines i point out your honor that many of the drugs that are going to be subject to this rule tend to be the higher cost more profitable drugs and they tend to be this is just to people who just for companies that want to participate in these programs i'm trying to figure out if that's one hundred percent well drug manufacturers or or a manufacturer selecting out of any programs because you've got a big population offering right here i'm not sure if any drug manufacturers don't participate of medicare medicaid all i mean i would suspect that you know if you have an f d a approved drug that you know one of the benefits of that is that you with respect to which the that you generally pertains your phone no your honor that's not our position on carbon i don't see the close connection which i thought post morning you have to have your own we believe there is a very efficient markets and what will happen here is if you know a consumer who sees an ad on television for an extremely high cost drug but maybe doesn't know what the prices is far more likely to go ask a doctor to prescribe a drug and what that study shows is that when the consumer sees a high price associated with a particular drug that consumer loses interest in that drug now when there's a disclaimer included that because every price may be as low as zero then the consumer is more likely to talk to the doctor about that drug and so you can see you know if the consumer goes to the doctor about a high priced drug and said if you informs the doctor i want this drug doctor but if the t v ad says it cost many twenty drugs most frequently advertised on television you can see from that table that the list price the higher list price almost always means higher out of pocket cost to the consumer and a lower list price means a lower out of pocket con have here is that this is a regulation that is targeted at the particular drugs and services that c m s actually pays for many of the hypotheticals and the other side's brief and some of the ever because briefs of all regulating particular with that although i'm not totally sure i would say that even in medicaid there is some connection i don't want to overstate the connection but there is some connection between w a c and the price that consumers pay i mean that's when you say there's some connection but i don't want to overstate it it makes me sound like it's pretty remote no i don't think it's that remote your honor i think one of the experts on the other side has acknowledged this is well i mean the connection is that higher cost specialty and non preferred drugs tend to be on non this rule tend to be the very high cost specialty and on preferred drugs i said i thought all fronts for somebody is that most of them are fall under the thirty five dollars exception oh no what i'm saying your honor is that as a practical matter the drugs that are advertised most often on television time to be the specialty or non preferred drugs there are preferred drugs advertising dollars as well and the will definitely does apply to those drugs but as a practical matter the ones that are that are subject to it to the is still in district court i just want to emphasize that the only question that's up here in front of this court is a question of statutory authority is this the kind of rule that it is that falls within  something your honor we respectfully disagree with that we think this is a closely bounded grant of authority here that is the theory that we're advocating here and i have a number of limiting principles on this on this make doctors just close their prices i think when you're talking about disclosure requirements your honor it is a lot disclosure requirements of the prices of the very goods and services c m s actually pays for i don't think that is particularly beyond c m s is authority i think when you start getting beyond the services and products that you're nothing in this rule is limited to what medicare medicaid pays for right this requires disclosure of the  that's one hundred percent of all drugs it's really not much of a distinction i think it's the majority of drugs your honor i think it's possible there could be some cosmetic drugs out there that are ok probably to be talking about i'd really like to know is the number here majority could be fifty one percent it could be ninety nine percent and as you said people want to get f d a approval and then they can get medicare medicaid reimbursement it's we're told statistically it's like fifty percent of pharmacy payments in this country it would help me in understanding your theory here is to why this is so limited to know whether in fact the drugs that are coming the drug manufacturers of the drugs that are covered here are our a large percentage of drugs you're i think it is a large percentage of drugs that are coming here really doesn't rate but centaur north i'm not sure what the exact percentage is but i think it is a large percentage of drugs that's not what our limiting principle is tied to or limiting was really no way to advertise and the it goes to the whole public whether they're medicaid medicare consumers or not and the same with disclosing how much doctors are charging would be the exact same situation some percentage of them will be medicaid  post the prices they charge for services well your honor i think that at least medicaid medicare coverage services well i think if you're talking about medicare and medicaid covered services you're talking about the prices that doctors charge for services that are covered by medicare and medicaid you know i'm not sure why that is so far removed from i'm just trying to understand your theory here you are trying to say that it was limited but it's everything that medicare medicaid pays more in that price can be  so is that right well you're out there other limiting principles i did you did your st line on this efficiency connection anything that medicare medicaid pays for could be ordered disclosed so long regulatory so long as it is a   their price price whether it's for services or drugs or whatever it is that they're doing hospital beds you're on or under that part of your limiting principle i think that's correct ok but there are other ok going to be principles throughout the exercise any supervision or control over the practice of medicine no supervision or control over the manner in which medical services are provided no supervision or control all over the selection tenure or compensation of any officer or no supervision or control over the administration of any institution that provides health care services as we talked about the part d program also contains a separate restriction on him to go on the federal government interfering capability the court this court there acknowledged that that rule certainly involve decisions of great economic and political significance the court also acknowledged there that the agency's assertion of authority was new and that the agency had in fact previously disavowed the authority which is not the case here and yet the court dismissed concerns about the lack of a limiting principle like we do here the court observed the general grant of authority there has to be read in conjunction with other provisions and like we do here  was a statute that required the agency to issue rules governing closed captioned and then it immediately adjacent provision there was another provision that just required the agency to issue a report to congress about video description and what the court did want to compare those two and say well congress knew point how to require the agency to issue regulations on that instead of a video description it simply required the agency to issue a report  all of the f d a has authority under the from drug cosmetic act is directed at safety and efficacy and that's what congress was concerned about when it passed the drug and cosmetic act and so you can see from all of the provisions governing advertising and if you have a statute that says secretary doesn't say f d a secretary you may when it comes to drug prices you may require you major police and require disclosure designed to prevent false misleading dangers to health representations but no more secretary and then the secretary says well let me turn to this other statue go over here and then this prohibition on me as secretary in these things doesn't seem to apply i don't see any inconsistency between the two statutes and the the cia is a totally different sphere than the social security act of the i say that that's where congress thought that any decisions related to the safety or advocacy of drug drug advertising would be made but i don't think that there's any indication the f t c the statute simply occupies the field of all and seventy five federal register where at least then the secretaries i'm very careful to say we will make sure things advertisements are accurate but we're not statute bad talks about the efficient administration of medicare and medicaid i just think it's too much of a stretch to import some congressional import rational silence on the drug cosmetic act into the into the social security i mean it would be much clearer you know if the i c u master simply a different agencies and it's only the only reason this is this argument has official plausibility is because they happen to be under the same secretary but i think we all realize that if they were separation cities they would call them and then the fact that congress commanded the secretary not to do something with the matter i think i don't i don't think you can brush it off that lightly when congressmen come into the very same secretary that is issu don't participate in that you don't have to do this but none of that is contractual participation medicare medicaid or war and it wasn't i didn't sound factual i mean it's company that wants its products to be reimbursed by medicare medicaid needs enter into these contracts and that's how it works thank you for you sit down davis and me ask you something i've watched a lot of  the cost of prescription drugs i don't see that this is a solution to that i don't see this is a solution to a problem the problem isn't as you positive somebody saying on v oh this is a drug i can use but it's way too expensive i mean am i just in a different market i've never seen that's what the prices i think that's true your honor and i think that's the very problem  and why isn't that adding confusion where there isn't any i don't you keep saying that people don't get these drugs because they're told on t v that they're too expensive i'm just saying i've never ever seen an ad that says what the cost is any cost with your r r r point here is that that's true right now so how real is this i mean people are being stopped from getting the drug because the cost is too high according to a t v ad how is this going to help them when you're requiring them to put a cost in if they're not going to walk to the point here your honor st of all it  is in some circumstances the cost that they will pack and but not all we knowledge but the point here for this rule is to give consumers an understanding in general whether they are likely to pay more or less for a drug right now they have no anchor point at all to figure out how much a drug is going to cost and really neither do doctors and the point here is to show consumers and doctors how much a particular drug cost so that the consumer and the doctor can have an informed discussion about whether they're ready for price alternatives or potentially therapeutic alternatives that can be achieved at a lower cost and the very problem here is that is that no one does know what the price of these drugs are and so it leads to over efficiency it's a it's an economic principle i think it would apply to many different concepts and if people know the price of these drugs they're able to pry shop which improves efficiency is there any kind of misses says price transparency that is not the price actually pay but it sure does give you a good indication of whether you're likely to pay more or less in general for a particular product  statute he often veered off in plain text in his remarks but the plain text is instructive what it says is that this area has the authority to issue rules that are necessary for his it efficient administration of the functions with which he is charged under medicare and medicaid so one has to look at what functions is he charged with is contracting one of those functions contracting with prescription drug companies you honor congress has provided with those contracts have to say the nd i'm just asking you whether contracting negotiating prices is not that's not part of the administration negotiating prices with the drug companies is not part of his the calculus formula for calculating that's all within their ministry over your honor i would think that the fact that congress has set forth what the function is in that context in other words whatever flexibility  that the that the secretary has with regard to the rebates better being agreed upon which is a statutory point congress has given not only a goal of lower drug prices but a means to achieve goal with the secretary can do is say i know the congress in general is interested in lower prices so i'm going to take my authority to administer the functions with with which with which i charge and include at the bottom there at the same font type exact same positioning as this one a statement that says for information on medicare medicaid pricing go to excellence write  discussion a j eighteen of what the enforcement mechanisms are for this particular woman with they're going to be and the secretary discusses their comments were introduced saying that you should think about making it a condition of coverage coverage what i'm saying is all there it is all requiring you to do is disclose not a price universal but disclosure to disclose tell people if your medicare medicaid you covered by medicare medicaid here's where you can go to figure out what your prices executing a rebate agreement is a condition of coverage under medicare and medicaid and so requiring us to sign on to work really to provide that message to consumers within the rebate agreement would with this what the congress has done is it set up what the conditions of coverage of are and it's made very express over is very few with regard to drug companies the ones that exist have to do with a green tomato paste certain rebates to medica getting back to it you wonder what congress has done is we need one of the secretary to interact in any way with regard to drug pricing to lower drug pricing if it actually passed laws that said you're go to you can require rebate agreements in the senate with those rebate should be it passed laws talking about how to determine pricing for medicare part b for medicare part d it didn't include any of that but it did hard agreement on as a condition of coverage that would require certain pricing for people who are in that gap period of their medicare part d coverage for a if there is no agreement for medicare part a the drugs are simply sold in the reverse so that's there's by procedure in other words you do the hospitals get reimbursed for treating particular conditions and the drug prices just fall into whatever the whatever medicare pays the hospital getting back to the language for a moment your honor mention gonzales vs organ and i think it's relevant here because gonzales versus oregon don't with very similar statutory language the language in that case gave the attorney general the authority  to enact was necessary for the efficient execution of his functions and the very same argument was made as the government is making here that that should be interpreted very broadly allow the attorney general to do essentially anything that related to what his duties were this report look at that language very specifically and said that it would go against the plain language of the statute on to treat a delegation of authority to an on execute functions with which he is charged to delegate the further authority to create new functions with which he's not charged under the statute i'm in fact a court act giving the secretary the authority to review marketing materials for medicare advantage plans in both cases congress did that quite explicitly people power explicitly but also subject to quite explicit limitations and what we learned from that is when congress is given the authority to regulate speech in these instances for the secretary to do that it takes care and it does it very expressly and subject to limitations in that sense this case is similar as your own  there were given understood it's not about it's not narrow at all or water well the government has indicated that it will leave only has to do with things that are paid for under medicare and medicaid it also of course have to do with people who are treated under medicare and answer is satisfying your own or her couple of reasons st but with regard to beneficiaries we do require the government does require of your statute lots of things about claims and wants of things in order to find out that they have the same thing that isn't regulating their behavior  but in very specific ways and i think there's a negative pregnant there you're where congress has wanted to come in because for the most part as you pointed out this program is not a program kind of like the f c c has where you're regulating an entire industry under under the social security act the power here is to administer particular government insurance programs not to be a climate regulator primary climbdown of drug companies in the marketplace which of course a very different power  so i do think that the they claim that they didn't go beyond administration of the insurance programs to regulation partly conduct brings up you know a phrase that the court used in utility  that clearly the serious never claimed utility to regulate the conduct of drug companies in the marketplace and that's precisely what this does is these ads go out not only to medicare and medicaid beneficiaries but to the general public on one of those cases but it was a much more specific reactive statutory authority is dealing only with the administration of the program of the time the efficient administration of his functions under the that it requires a specific statutory authority in order you can't just regulate the public interest you've got to be a point to something in the statute that you were implemented and with regards of for i with the courts it is it's similar to a necessary proper clause and it moves gives you the power to shoot regulations that are reasonably ancillary to specific provisions the same obviously goes here but even in spades because in this case the delegation is nearer his functions under air you've got to give him a point to function as to morrow morning and several actually i really appreciate the ability to address that because there's been a lot of confusion in the law for several decades about it if you look carefully at the work and  question whether congress has delegated to the agency that type the authority to issue the type of regulations that were issued and only then after addressing that question and deciding that that to give anywhere near the the it was for thesis the government would give which is regardless of what the general making provisions say you've got this overarching authority to issue regulations that are reasonably related to the purpose that gives you underlining and were the two issues you know in that case to disclose particular information because it was essentially a housekeeping or how we run our own organisation type of rule you know agencies are presumed to be able to issue rules more specifically that there was a statute that required states to take into account the resources that if d c recipients happen so the court went from thirteen to general language to find something for more specific that was in fact being administered  parts of the act and also there wasn't a sufficient record to support so so i think the best way to think of the case overall is is it most sort of a an articulation of how chevron's step two might apply when you're looking that your owners have no i'm healthy how pricing is determined i'm happy to have answer your questions if you'd like because we certainly have the information is different in many instances from what the government c true that code co insurance is twenty percent but it's also true that eighty percent of recipients have something metal insurance which results in them having no who insurance payment at all were just a small co pay when you get medicare part d but pay versus co insurance ninety nine percent of those who are covered by medicare advantage plans pay only co pays for four dollars preferred drugs seventy seven percent of those who are covered by  standalone prescription drug plans only have co pays for preferred drugs if you take all of this into account and you understand that even for individuals what they pay is going to vary during the course of a year based on deductibles based on whether that particular drug is preferred no one preferred it several governments comment that telling people lacked gives them an anchor is actually for more dangerous than helpful because the government said it's an anchor it acts as a gravitational force on everything that follows in the ad so they're given this number whack that not only doesn't tell them what they're going to pay but even from a relative basis might be highly was misleading a drug might have a higher  your i'm just i'll try to be very brief about this and the government's pitch is that this gives you important relative information and it doesn't quite often because a drug can have a higher whack but if it's preferred it can have a much lower and for particular disclaimer st of all suggest that if you don't have insurance that will be your price and as we pointed out in our brief that often won't be the case nd least telling people that have insurance your price may be different doesn't tell you your  almost certainly be far lower so rather than actually clarifying things there disclaimer the feeling that your price will be in around the amount and it's not going to be so different effectively the trustee of medicare and medicaid secretary is responsible for officially administering the medicare trust funds and the best interests of the recipients and the best interests of the medicare beneficiary or to pay a market price a lower price for their growers rather than a higher price that's my st point my nd point your honor is about the food drug and cosmetic act i think it's important to recognize that with respect under a totally different law and the final or final point i'd like to make your honor is on limiting principle my colleague on the other side brought up the example of exercise mandating exercise and then in a particular diet  you know nothing in our theory goes anywhere close to those hypotheticals cns as we haven't talked about does not pay for exercise it does not regulate exercises not regulate diet but the one dollar thing that we know c m s does regulate is prescription drugs and c m s pays for those drugs and this rule is tightly connected to the very products that c m s actually pays for and i think it is a is a circums