Azar Testifies on the Need to Reduce Drugs' List Prices, Provider Group Raises Concerns

HHS Secretary Alex Azar today testified before the Senate’s Committee on Health, Education, Labor, and Pensions (HELP) on the Trump administration’s blueprint to lower drug prices.

Among the administration’s top priorities, said Azar, was creating incentives for drug makers to lower list prices for drugs. “Everybody wins when list prices rise,” he said, “except for the patient.”

Azar said that the administration’s proposal to require disclosure of list prices in direct-to-consumer advertising would be one way to achieve this goal, and he explained that HHS believes that it currently has the authority to require this change to advertising through regulation, although he would welcome congressional action to reinforce its authority in this area.

He added that another approach would include moving away from a system that permits manufacturers’ rebates and toward fixed-price contracts or value-based contracts. Azar highlighted the fact that, concurrently with his testimony, the FDA issued new guidance for industry that clarifies how drug companies can share information with payers about drugs’ effectiveness and other measures of value that can help payers to make their formulary and reimbursement decisions.

Other key concerns for the administration, said Azar, are allowing for negotiation under Medicare Part B by merging Part B with Part D, creating more competition within the pharmaceutical marketplace by publishing names of companies that restrict access to samples of drugs for generic testing and issuing new guidance on Risk Evaluation and Mitigation Strategy requirements, and bringing down out-of-pocket costs by disallowing the use of so-called “gag clauses” that prohibit pharmacists from counseling patients on the lowest-price options for their prescribed drugs.

When asked by Senator Lamar Alexander, R-Tennessee, chair of the HELP Committee, which areas of the administration’s plan would require legislative action to achieve, Azar asked Congress to act to end 180-day periods of exclusivity for innovator products that could delay generic market entry, ban “gag clauses,” support site-neutral payments for drugs provided to patients, and clarify that pharmacy benefit managers must not be permitted to penalize drug manufacturers for lowering list prices.

Ahead of the hearing, the American College of Rheumatology (ACR), which has been critical of the plan to move Part B coverage into Part D, issued a set of principles geared toward policy makers.

Among ACR’s key principles outlined in the document are providing access to rheumatology treatments that can control disease activity and prevent morbidity and mortality, reducing and streamlining utilization management tools that delay access to medicine, ensuring access to Medicare Part B therapies in monitored stings, promoting the use of treatment guidelines when they are available, and improving the FDA’s ability to review and manufacturers’ abilities to develop cost-saving biosimilars.

“The ACR supports drug pricing policies that make safe, effective and innovative treatments accessible to our patients at the lowest possible cost. While several proposals in the American Patients First drug pricing blueprint would bring our health care system closer to that goal, others would make it even more difficult for our patients to access the breakthrough treatments and therapies needed to prevent permanent joint damage, organ damage, and early death,” said David Daikh, MD, PhD, president of the ACR, in a statement. “In the coming weeks, the ACR will submit detailed comments to HHS sharing our feedback and concerns,” he added.