HHS Secretary, Alex Azar, appeared before the Senate HELP committee on Tuesday, June 12, 2018 to provide testimony regarding the details of the Trump Administration’s drug pricing blueprint. The hearing was more of a launching point to further the discussion on the topic of lowering drug costs. No definitive action plans were outlined, but a myriad of potential target areas were discussed.
Secretary Azar’s opening statement cited 4 primary problem areas in the pharmaceutical industry:
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High list prices
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Seniors overpaying due to lack of negotiations
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Rising out of pocket costs
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Foreign governments exploiting American innovation
His testimony went on to detail the Administration’s blueprint for lower drug costs and that it intends to deploy 4 strategies:
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Incentivize lowering drug list prices
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As list prices rise, all parties gain, except the patient
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List prices included in TV ads
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A system without rebates, only fixed price contracts
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Negotiate Medicare drug pricing
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Create a competitive pharmaceutical marketplace
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Lower out of pocket costs
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Pharmacists working with patients to find lower cost options
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Transparent drug costs and options from the patients’ perspective
Secretary Azar provided a few specific areas where Congress could assist in implementing the administration’s 4-prong strategy.
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Remove 100% rebate cap – removing the cap would disincentivize list price increases
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Address 180-day exclusivity – companies ‘game’ the system to keep other generics off the market
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Ban gag clauses – allow pharmacist to inform patient of lower cost options
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Address Site neutral payments – not based on where drug is received
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Address PBM transparency – patients should have knowledge when a manufacturer is offering a lower list price
Chairman Lamar Alexander (R-TN) questioned whether the rebate process, negotiated by the Pharmacy Benefit Manager (PBM) from the manufacturer based on the list price, should be eliminated. 80% of patients receive prescriptions from pharmacies who utilize PBMs so would eliminating rebates extend drug savings to patients? Secretary Azar responded that the elimination of rebates would remove the incentive for list price increases.
Senator Susan Collins (R-ME) elaborated on the need to eliminate gag clauses, which prevent pharmacists from discussing cheaper cost options with patients. She is pushing for legislation to eliminate the gag clauses for all insurance plans.
Senator Tim Kaine (D-VA) suggested a pilot project to negotiate a “best price” or “favored nation” contract on a selected set of high cost cancer drugs. Foreign countries are able to buy drugs at a lower cost than here in the U.S. and that is one of the Trump Administration’s four pain points. Secretary Azar had some reservations on how/if a “best price” or “favored nation” model would work because drug manufacturers can control the drugs sold in foreign markets in order to control the baseline prices.
The 340B program was not discussed during the hearing, however, Senator Michael Enzi (R-WY) intended to submit his 340B questions in writing due to time constraints. The 340B program was at the heart of the discussion in the HELP committee’s June 19, 2018 hearing where Captain Krista M. Pedley, Director of the Office of Pharmacy Affairs testified. We will have a post on that hearing soon.
If you would like to view the full Senate HELP committee’s Trump Administration’s drug pricing blueprint hearing, you can follow this link. Also, a copy of Secretary Azar’s written testimony can be viewed HERE.
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