Trump Likes Drug Price Negotiations; His Nominee for Health Secretary Doesn’t


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 Alex M. Azar II, President Trump’s nominee for secretary of health and human services, said Tuesday that he was wary of proposals for the government to negotiate drug prices for Medicare beneficiaries, an idea endorsed by Mr. Trump in the 2016 campaign.

But Mr. Azar said that in some situations, he was willing to look at proposals to negotiate prices for a limited number of medicines.

He made the comments at a Senate confirmation hearing on Tuesday, where he tried to allay the concerns of some Democrats who asserted that he would be biased in favor of pharmaceutical companies because he had worked for a decade as a top executive at Eli Lilly, the company in Indiana that sells drugs for diabetes, erectile dysfunction and schizophrenia, among other conditions.

Mr. Azar’s remarks on drug price negotiations were carefully circumscribed and somewhat ambiguous — an approach that allowed him to get through the hearing largely unscathed.

If Medicare negotiates drug prices, he said, patients might have less access to some medicines because the government would probably establish a list of preferred products.

“For the government to negotiate there, we would have to have a single national formulary that restricted access to all seniors for medicines,” Mr. Azar told the Senate Finance Committee. “I don’t believe we want to go there in restricting patient access.”

At the same time, Mr. Azar said, “it’s worth looking at” proposals to allow price negotiations for drugs in Part B of Medicare. Under this part of the program, patients receive cancer drugs and other medications, often by infusion or injection, in doctor’s offices and hospital outpatient clinics.

Mr. Azar, who worked for six years in the administration of President George W. Bush, is expected to win confirmation, with support from Republicans and perhaps a few Democrats, who view him as a pragmatic problem solver rather than an ideologue. He would take charge of a cabinet department that spends more than a trillion dollars a year providing health insurance to more than 130 million Americans.

Senator Bill Nelson, Democrat of Florida, asked Mr. Azar whether he would support cuts in Medicare, Medicaid or Social Security to offset increases in the federal budget deficit that would be caused by the recently passed tax legislation.

“The president has stated his opposition to cuts to Medicare, Medicaid or Social Security,” Mr. Azar replied. “He said that in the campaign, and I believe he remains steadfast in his views on that. He’s made that commitment. I will live up to that if I’m confirmed.”

But like many Republicans, Mr. Azar said that cuts in the growth of federal benefit programs were not really cuts if federal spending on the programs continued to increase.

Democrats kept returning to the question of drug prices. Mr. Azar said that the expertise he acquired in the pharmaceutical industry would help him rein in drug costs as a federal official.

“Across the board,” he said, “drug prices are too high. Insulin prices are too high. All drug prices are too high in this country.”

Democrats were generally skeptical, based on Lilly’s record during Mr. Azar’s time at the company.

“The price of Lilly’s bone-growth drug Forteo, used to treat osteoporosis, more than doubled on Mr. Azar’s watch,” said Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee. In the same period, Mr. Wyden said, the company more than doubled prices for other drugs including Humalog, used to treat diabetes, and Strattera, for attention deficit hyperactivity disorder.

Mr. Wyden asked Mr. Azar if, as head of Lilly’s operations in the United States, he had ever approved a reduction in the price of a Lilly drug.

Mr. Azar avoided a direct answer and blamed “the system.”

“I don’t know that there is any drug price of a branded product that has ever gone down from any company on any drug in the United States because every incentive in this system is toward higher prices,” Mr. Azar said, adding: “No one company is going to fix that system. That’s why I want to be here working with you.”

Mr. Azar said he saw no need for the government to negotiate prices for drugs covered by Part D of Medicare, which pays for pills and other products that patients can give themselves and purchase from neighborhood drugstores and mail-order pharmacies.

Medicare’s Part D drug benefit is delivered entirely by private companies under contract with the government. These companies and their agents, known as pharmacy benefit managers, negotiate with drug manufacturers, and Mr. Azar said he did not believe the government could get lower prices by negotiating directly with drug companies.

A 2003 law prohibits the Department of Health and Human Services from interfering in negotiations between drug manufacturers and insurers that provide drug coverage under Part D of Medicare. “You would not get better pricing by removing” that prohibition, Mr. Azar said.

In the 2016 campaign and since taking office, Mr. Trump has said that Medicare could save large sums by negotiating directly with drug companies. But drug companies adamantly oppose that idea, and Mr. Trump has not taken steps to translate that into practice.

Asked specifically if Medicare should negotiate drug prices, Mr. Azar said: “In Part D, we do significant negotiation through pharmacy benefit managers that get the best rates of any commercial payers. We don’t do that in Part B, which is where we have physician-administered drugs. We basically pay sales price plus 6 percent or some other number.”

As an alternative, Mr. Azar said he supported proposals to link the pricing of prescription drugs to an assessment of how well they work for patients. Under such arrangements, known as value-based pricing, insurers would pay more for medicines that were highly effective and less for those that did not work well.

Mr. Azar also said he supported an agency created by the Affordable Care Act to test novel ways of delivering and paying for health care. And he said that some of the experiments could require doctors and hospitals to participate. Republicans in Congress have generally opposed mandatory participation.

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