What Azar’s Nomination Could Mean for the Drug Pricing Debate

In announcing his nomination of Alex Azar for Secretary of the Department of Health and Human Services (HHS), President Trump said Azar would be a “star for better health care and lower drug prices.”

Azar, who served at HHS under President George W. Bush and, more recently, as head of Eli Lilly’s U.S. operations, has a deep experience with and understanding of the prescription drug supply chain. Azar’s drug expertise is particularly relevant and timely because prescription drug prices are increasing at an unsustainable rate, to the detriment of patients, employers, taxpayers, and our health care system. A recent study by Politico and Harvard underscores public support for addressing this ongoing challenge showing that an overwhelming majority of Americans believe that lowering drug prices is an “extremely” or “very” important priority for Congress.

Should Azar be confirmed to the post, he will have the opportunity to take meaningful action that would lead to savings for patients, health plans and taxpayers. By building on proven, private sector solutions already working for employers and government programs like Medicare Part D, and looking for new ways to increase competition for brand name and generic medicines, under Azar’s leadership, HHS could help ensure patients are able to access the prescription drugs they need to get and stay healthy.

There are three elements of the current drug pricing debate that will be critical for the incoming secretary to keep in mind in order to make strides in tackling high drug prices:

  1. Drug manufacturers set the price for prescription medicines. Since taking office in January, President Trump has said that drug companies are “getting away with murder.” Those comments came after manufacturers’ prices grew by 9.2 percent in 2016, following double-digit increases every year since 2012.
      
    We are fortunate to live in a time of unprecedented medical breakthroughs. Scientists are developing cures for diseases like Hepatitis C and treatments that improve and extend the lives of people living with cancer. The power of that innovation, however, is lost when patients are unable to afford access to those medicines.
  2. PBMs keep costs down for patients, employers, unions. In the face of rising drug prices, PBM partnerships have proven to be one of the most powerful and measureable ways to manage rising prescription drug costs and improve health outcomes for 266 million Americans. While manufacturers’ prices have grown at or near double digit rates, PBM-negotiated discounts and price concessions kept net price growth to 3.5 percent in 2016. More than 90 percent of these savings are passed on and used to lower out-of-pocket costs and premiums for employees and members.
     

    Those savings extend beyond the private sector, into government programs, such as Medicare Part D – a successful and popular program, which provides prescription drug benefit coverage to 42 million seniors. A recent study projects that PBM negotiations and tools will save Part D $896 billion over ten years. Absent those savings, the study estimates that premiums would be 66 percent higher. Because of PBMs, the Centers for Medicare and Medicaid Services (CMS) and beneficiaries combined will save $1,800 per enrollee, per year, over ten years.
  3. Increased competition drives better prices for patients. PBMs’ ability to effectively negotiate on behalf of their partners – and therefore lower costs for patients – relies on marketplace competition and the ability of generic alternatives to get to market. FDA Commissioner Scott Gottlieb, has discussed strategies for facilitating faster reviews of generics and biosimilars, identifying off-patent drugs with little or no competition, and ending anti-competitive practices that keep safe, effective alternatives off the market. These steps will be key to managing rising drug costs for patients

If confirmed, CAPD looks forward to working with Azar to build upon the proven, private sector solutions already working for the employers, unions, state employee and retiree plans and other diverse organizations who make up the coalition. We would look to Azar to help find and advance solutions that get to the heart of the problem of high drug prices – manufacturers raising prices at an unsustainable rate – and to seek out new ways to drive competition and help ensure access. America’s patients deserve no less.