As pharmas revert to regular price hikes, Azar threatens action with 'fighting words'
- Pharmas largely reverted to boosting list prices in January even after a year of criticism from the Trump administration and some companies pledging to hold off. The White House is now weighing in with Health and Human Services Secretary Alex Azar threatening further regulatory and legislative action if list prices do not come down.
- President Donald Trump claimed drugmakers are unfairly not fulfilling pricing commitments in a Saturday tweet. Following a White House meeting on drug pricing Tuesday, Azar put the industry and pharmaceutical benefit managers, or PBMs, on blast with a tweet thread Wednesday capped off with a cable news hit.
- "The president and I will not stop until list prices of drugs come down," Azar said on Fox Business Network. "This behavior has to stop. Drug prices must come down and we will roll out more regulatory and legislative proposals, and we will work with Democrats and Republicans to get drug prices down."
Azar, a former Eli Lilly exec, started his Wednesday tweets with a carrot before bearing the stick, praising the behavior of Merck & Co., Gilead Sciences and Amgen by name for lowering prices on certain drugs.
Then came the criticism, warning that "all options are on the table," including additional regulatory and legislative actions working with Democrats and Republicans.
For those listening in the pharmaceutical industry: The list price increases must stop. Prices must start coming down.— Secretary Alex Azar (@SecAzar) January 9, 2019
Azar's outreach to Democrats could be quickly tested, as a group of liberal congressional members, including Sen. Bernie Sanders, I-Vt., and Rep. Elijah Cummings, D-Md., will roll out a legislative package of three new bills to "drastically reduce" U.S. prescription drug prices Thursday.
With a new House of Representatives led by Democrats, drug pricing is called a rare area for potential bipartisan cooperation.
The HHS head also derided rebates in a cable news appearance as an "absolutely silly system" where companies raise prices and "funnel kickbacks in the form of rebates" to PBMs to maintain preferred status on formularies.
Fox Business host Stuart Varney remarked that those sounded like fighting words from the HHS leader.
"They are indeed," Azar replied.
For the time being, that's what they are: words. As the January price hikes show, drugmakers seem unlikely to scrap their fundamental business model, which relies on regular price increases to drive revenue growth, despite shaming from the White House.
However, Azar took actions last year that drew the industry's ire, including rolling out proposals to require list prices in television prescription drug ads as well as changing Medicare Part B reimbursement to link the system's payments to a composite of international prices.
Any industry-changing legislation won't be without critics though, both from the industry's powerful lobbying arm, PhRMA, as well as from the GOP free market stalwarts, exemplified by a Wall Street Journal editorial published Tuesday arguing many of these ideas from Sanders and Trump are innovation-hurting price controls.