On Tuesday, June 12, 2018, United States Health and Human Services (HHS) Secretary Alex Azar appeared before the United States Senate Committee on Health, Education Labor & Pensions (HELP) to discuss, “The Cost of Prescription Drugs: Examining the President’s Blueprint ‘American Patients First’ to Lower Drug Prices.”
During his testimony, Secretary Azar discussed his understanding of the hot-button issue of rising prescription drug prices, and spoke to the Senators noting, “thank you for the opportunity to appear before you to discuss an important issue: why prescription drug prices are too high, and what we are doing about it.”
Azar of course noted the Trump Administration’s history with respect to drug pricing, beginning on Day One when President Trump directed HHS and other agencies to make drug pricing a top priority. Azar also mentioned that President Trump’s 2019 budget “laid out a range of proposals for lowering drug prices, including through reforms to Medicare and Medicaid.”
Most recently, Secretary Azar referenced the May 2018 blueprint released by President Trump “to put American patients first by lowering drug prices and reducing out-of-pocket costs.” He continued, noting, ‘This blueprint is a plan of action for how to bring prices down while keeping our country the world’s leader in biopharmaceutical innovation, and lays out dozens of possible ways HHS and Congress can address this vital issue. Some of these proposals came out of Congress, and we look forward to working with you as we take action.”
Azar laid out the four strategies the Trump Administration is concentrating on to tackle rising list prices and rising out-of-pocket costs, in addition to foreign governments riding off of American investment in innovation. The strategies include: creating the right incentives for list prices; allowing better negotiation for drugs within Medicare; creating a more competitive pharmaceutical marketplace, including via Congressional reforms; and bringing down out-of-pocket costs for American patients.
Azar highlighted the Trump Administration’s plan to require drug companies to include list prices in TV commercials; called for getting rid of drug rebates; and suggested a system “where PBMs and drug companies just negotiate fixed-price contracts.”
Azar closed by looking to the future, noting “What I have laid out are just some elements of an aggressive, long-term plan to solve the problem we all care deeply about.”
During the hearing, members of the committee were largely split along party lines in their reaction to the blueprint and confidence in the administration’s ability to implement the reform. Republicans largely focused on aspects of the blueprint the Administration may need Congressional help in enacting and were interested in how to eliminate rebates and make drug list prices available at point of prescription. Democrats, on the other hand, criticized the lack of action by the Administration to hold drug manufacturers accountable for increasing prices and also pushed for additional government drug price negotiation authority.
Commentary and Quotes, Plus Call to Action
Health policy expert and director at ADVI Health, Lindsay Bealor Greenleaf, commented on Secretary Azar’s testimony, stating,
“It was great to hear Secretary Azar emphasize the need to reform the role played by PBMs, but his plan for moving Medicare Part B drug coverage into Part D is concerning. Drugs reimbursed under Part B are those that are administered by physician, as opposed to drugs reimbursed under Part D where a patient purchases the drug at the pharmacy counter. Physician-administered products have highly complex storage, handling and administration issues that justify treating these products differently from drugs that are obtained through the retail pharmacy setting.”
Additionally, Senators Elizabeth Warren and Tina Smith wrote a letter to Secretary Azar the day before he provided testimony, outlining several questions and concerns with the Trump Administration’s drug pricing plan. The Senators charge that the Administration’s plan to reduce drug prices “does not go far enough to help Americans with high drug costs” and they believe, “changes proposed by the Administration could significantly increase costs for many Medicare enrollees.”
There is a high likelihood that this recent testimony is going to re-ignite calls from those on both sides of the aisle to reduce drug costs. Some important things to remember and not lose sight of during this discussion, however, including:
- Part B drugs never have price increases. This is because physicians get reimbursed for Part B drugs based on the average sales price (ASP) plus 4.3%. If a company were to raise the price of the drug, the physician would eat the additional cost of the drug, which would lead the physician to find another drug that accomplishes the same goal, rather than lose money.
- If the Part B drugs were to move to Part D, they would see regular price increases similar to other drugs, some of which increase their price quarterly. If there is no additional income from Part B drugs and they are moved to Part D, independent physicians such as oncologists will either get bought up by large health systems or refer their patients to hospitals for treatment. The reimbursement for physician administering drugs is 2 times higher if given by a health system owned provider or administered in the hospital.
- The idea of moving Part B drugs into Part A may delay treatment for time-sensitive oncology patients. Insurers would have to issue prior authorization to use most biologic or other chemo therapy agents. Often this preauthorization can take days, or even weeks or months. This additional step could cost the patient valuable time in fighting the disease.
The Trump Administration is looking for input on this issue, with the Request for Information comment period closing on July 16, 2018.