During a hearing before the Senate Health, Education, Labor and Pensions Committee that was mainly about the president’s blueprint to address drug prices, Sen. Maggie Hassan (D-N.H.) told Azar that Justice’s legal position is “like some kind of a sick joke.” The administration argues that the ACA’s individual mandate, requiring most people to carry health insurance, will become unconstitutional next year — and, with it, the law’s insurance protections for consumers.
“Will you encourage the Trump administration to change its position?” Hassan challenged Azar, a lawyer and former HHS general counsel.
He replied that “we do believe in finding solutions on the matter of preexisting conditions and the matter of affordability, regardless of the litigation.”
The committee’s Republicans were silent on the question during the hearing. Tuesday evening, Chairman Lamar Alexander (R-Tenn.) called Justice’s legal argument “as far-fetched as any I’ve ever heard.” Alexander said in a statement that when Congress repealed enforcement of the ACA’s insurance requirement as part of a massive tax bill late last year, “I didn’t hear a single senator say that they also thought they were repealing protections for people with preexisting conditions.”
Other GOP lawmakers have said they were bewildered by the Justice Department’s surprise stance. The move has become a lightning rod ahead of the November midterm elections.
Democrats also pressed Azar on a statement by President Trump last month that drug companies would, within two weeks, “announce voluntary, massive drops in prices.”
“That would be tomorrow,” noted Sen. Elizabeth Warren (D-Mass.), challenging Azar to name companies that have carried out Trump’s promise.
The secretary said several drug manufacturers have told federal officials that “they want to execute substantial price reductions” but are “encountering hurdles.” Pharmacy benefit managers (PBMs), he said, are threatening to drop those companies’ drugs from formularies — that is, lists of medicines covered by an insurer — because lower list prices would translate into smaller profits for the PBMs. “I find that unconscionable,” he said.
Azar’s remarks were consistent with the administration’s portrayal of “middle men,” not the pharmaceutical industry itself, as the root of the nation’s high drug prices. He reiterated that direct government negotiation of drug prices in the vast Medicare program — a longtime Democratic goal that Trump embraced during his campaign — would be ineffective.
Azar noted that the Food and Drug Administration on Tuesday issued final guidelines designed to make it easier for pharmaceutical companies and insurers to negotiate prices based on a drug’s value and effectiveness.
The rules, first drafted during the final days of the Obama administration, define permissible “medical communications” between the manufacturers and payers such as health plans and hospitals. They fit within a priority of Azar’s to shift health-care payments from methods based on the amount of treatment provided to ones based on services’ quality and effectiveness.
FDA Commissioner Scott Gottlieb said the guidance clarifies how drug companies may communicate information about patient outcomes that are important to purchasers, but are not expressly included in a product’s approved labeling.
For example, Gottlieb said in an interview, drug companies might have information on how a particular drug helps to reduce the length of hospital stays or whether patients need to be readmitted to a hospital. While such data are not part of the approved labels, they “may be of interest to health plans and easy to measure.”
His agency wants to encourage competitive contracting based on such measures and “not get in the way” of such negotiations, he added.
Drug companies develop information on the economic value of their medications. But they have indicated to the FDA that they feel inhibited in sharing certain economic data with payers because of legal concerns.
A spokesman for the Pharmaceutical Research and Manufacturers of America, the main trade group for the drug industry, praised the new guidelines. They address “one barrier that has restricted how much information biopharmaceutical companies can share with insurance companies about the potential value of a medicine,” the spokesman said.