President Trump’s nominee to head the Department of Health and Human Services, Alex Azar, said during his confirmation hearing on Wednesday that the agency should consider allowing the Medicare Part B program to negotiate drug prices, as the Medicare Part D program currently does.
Drugs covered under Medicare Part B are administered by healthcare providers.
Azar, previously a senior executive at Eli Lilly, proposed granting Part B the authority to negotiate at a price lower than the current rate of a drug’s average sales price plus 6%, he said when questioned by Senator Al Franken (D-MN).
Azar said he intended to “take the learnings from Part D to Part B. Part D has negotiations with the biggest PBMs, and secures the best net prices of any players in the commercial system.” During the hearing, Azar told the Senate Health Committee that “drug prices are too high.”
In his opening remarks, Azar said he would work to fight drugmakers that abuse the patent-exclusivity system. Later, the issue of patents resurfaced during an exchange with Senator Rand Paul (R-KY). Targeting drugmakers that secure evergreen patents by periodically updating different parts of the same device, Azar said, is an “avenue we ought to be pursuing. There should be a time certain when competitions begins.”
The hearing also steered into the controversy over Allergan’s recent patent deal with the Saint Regis Mohawk Tribe. Senator Maggie Hassan (D-NH) asked Azar if “drugmakers should be able to rent out sovereign tribal immunity to shield patents from their review.” Azar said he shared Hassan’s concen over patents extended in such a manner.
Azar was grilled by Senate Democrats over his ties to the drug industry and his willingness to carry out President Trump’s agenda. Senator Tim Kaine (D-VA) asked whether individual actors in the healthcare system, like drugmakers, should be held culpable for rising costs. Azar responded by noting that “the system that we’ve got, it may fit for stakeholders behind the scenes, but for patients it’s not working.” He added that “everyone shares blame throughout.”
Senator Elizabeth Warren (D-MA) took aim at Azar over his previous role at Eli Lilly, specifically the $1.4 billion settlement the company paid to resolve allegations of off-label promotion for its schizophrenia drug, Zyprexa. Sen. Warren asked Azar whether he believes drugmaker CEOs should be held personally accountable when companies break the law in such a manner. Azar did not answer directly, but said the settlement prompted a culture shift at Lilly. “The attitude I saw at the company, from top to bottom, was, ‘How do we make sure this never happens again?’”
Azar also proposed clarifying the government’s guidance on what constitutes a preventative service. Clearer guidance in that area, he argued, would help Americans with high-deductible insurance plans, as some preventive services may be not subject to the same restrictions.
“The government hasn’t put out guidelines about what is a preventive service… that has to be part of what we draw toward,” Azar said.
Before the Senate votes on his confirmation, Azar will face a hearing before the Senate Finance Committee.