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News & Press: Advocacy

Health Secretary Warns Pharma: Administration Will Push Ahead with Drug Pricing Reforms

Monday, October 29, 2018   (0 Comments)
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Health and Human Services Secretary Alex Azar said Friday he would push ahead with drug pricing reforms despite pushback from the pharmaceutical industry.

“Finally seeing this system reformed, in fact, is one of the pharmaceutical industry’s ultimate nightmares," said Azar, a former Eli Lily executive, at a Brookings Institution event in Washington. "I can tell you that because it used to be my job to have pharmaceutical nightmares.”

“But now we have a president who is definitely not afraid of upsetting drug companies and isn’t afraid of taking on ostensibly invincible special interests,” he added.

Azar was defending the administration’s latest, and most aggressive action yet, to target escalating drug prices in the U.S. 

A proposal announced Thursday by President Trump and Azar would base payments for some drugs off of lower prices in other countries. The policy would only apply to Medicare Part B, which covers drugs administered in doctors’ offices.

The administration is "not turning back" from its efforts to lower drug prices, Azar said. "We will put American patients first by reforming how Part B pays for drugs, and this reference pricing model will happen."

PhRMA — the deep-pocked trade group representing pharmaceutical companies in the U.S. — came out swinging after the announcement, arguing it would “jeopardize access to medicines.” 

Azar responded Friday to that criticism, saying “something has to change” and that the administration's model would increase patient access.

“This is widely understood across the health care spectrum, and it’s been a long time coming,” he said. “The only thing standing in the way is the one special interest that has benefited from this program far out of proportion to any other actor for the last 15 years: the pharmaceutical industry.”

A study released by the administration Thursday says Medicare pays 80 percent more than other advanced industrial countries for some of the most expensive medicines administered at doctors' offices.

Azar argued that over the next five years, that percentage would drop to 26 percent, and the U.S. would save $17 billion, under the administration's plan.

Azar said it’s unlikely pharmaceutical companies would stop selling drugs to the U.S., especially since under the proposal it would still pay more for those drugs than other countries. 

“To believe that this is going to meaningfully impact patient access, you have to believe that drug companies somehow will find it appealing to sell a drug in Germany, Japan and other countries at lower prices — but not to the United States at higher prices,” he said. “Not only are drug companies never going to walk away from the world’s largest payer for prescription drugs, they’re certainly not going to walk away while they’re still getting paid a quarter more than they are elsewhere.” 

The administration will accept public comments before implementing its proposal, which doesn't require congressional approval. It's certain to face strong headwinds from the pharmaceutical industry, which is on track to spend more on lobbying this year than it has in recent history.

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