Azar Talks Up Administration Plan to Lower Drug Prices Before Senate Committee

HHS Secretary Alex Azar appeared before the Senate Committee on Health, Education, Labor, and Pensions to talk about President Trump’s plan to lower drug prices, with legislators peppering him with questions about when prices would start to fall for US patients, which possible actions do or don’t need Congressional authority, transparency issues, and other points.

Some senators also asked about the Department of Justice (DOJ) decision last week to not defend the Affordable Care Act (ACA) in a Texas lawsuit, criticizing the possible loss of coverage for people with pre-existing conditions.

During his opening statement, Azar also announced new guidance from the FDA about value-based contracts, saying it would help achieve some of the goals contained in the “American Patients First” blueprint to lower drug prices.

Azar said there were 4 major problems the blueprint sought to address: high list prices for pharmaceuticals, overpaying for drugs, rising out-of-pocket costs, and what the administration calls a “free ride” by foreign governments for drugs that are researched and developed in the United States.

Among other things, the drug pricing proposal calls for drug companies to disclose their prices in television ads, end delays for generic drugs, and convince other countries that their lower drug prices are supported by US-based research and development. It also calls for moving Medicare Part B drugs into Part D, with the idea that Part D sponsors would have more negotiating room with pharmaceutical companies.

Azar also derided so-called "gag clauses" in Part D contracts, which prevent pharmacists from telling patients when they could save money by paying for their prescriptions with cash instead of insurance.

Chairman Lamar Alexander, R-Tennessee, asked which actions HHS can take on its own and which need the approval of Congress.

“We have the authority to require list prices,” Azar replied. As for Congress, it could act to remove the 100% cap from the ACA’s maximum rebate amount provision, which limits manufacturer rebates on brand and generic drugs in Medicaid to 100% of the average manufacturer price.

Congress could also act to end what Azar and FDA Commissioner Scott Gottlieb, MD, have called “gaming” of the 180-day exclusivity period for drug patents, discouraging competition.

“We need to create the right incentives for lowering list prices,” he said, and he agreed that more competition is needed, especially in biosimilars.

Azar also faulted pharmacy benefit managers (PBMs), as he has before, and said that the system needs to move to one where rebates do not exist and “detach from artificial list prices.”

In many ways, the senators’ questions reflected their partisan opinions on the issue of drug pricing and overall healthcare issues, although one area that had bipartisan support was that the entire system needed more transparency, an issue raised by Senator Michael F. Bennet, D-Colorado.

“There is a complete lack of transparency—not just in drugs but all of healthcare,” Bennet said.

Azar also blamed PBMs for the administration's inability to get drug companies to "voluntarily" reduce drug prices, in response to an exchange with Senator Elizabeth Warren, D-Massachusetts.

Democrats brought up last week’s surprise decision by the DOJ to refuse to defend the ACA in a Texas lawsuit. If the judge in the case agrees with Texas that the ACA is unconstitutional, Americans are at risk of losing their health coverage or paying higher premiums if they have pre-existing conditions.

“This, Mr Secretary, is some kind of sick joke,” said Senator Maggie Hassan, D-New Hampshire.

Azar replied that the position of the DOJ is a constitutional and legal opinion, not a policy opinion.

Separately, the FDA released guidance about communicating information about value-based decisions as they pertain to sharing economic information about drugs and devices with payers and other organizations.

In response to a question from Senator Michael B. Enzi, R-Wyoming, Azar told the senators that HHS wants to work with CMS to make value-based contracting easier to achieve.

Senators also urged Azar to implement a recommendation from the president’s commission on opioid use disorder and negotiate lower prices with companies that make naloxone, which is used to counteract the effects of an opioid overdose.