"All drug prices are too high in this country," Alex Azar acknowledged Tuesday as he sat in the hot seat at a Senate Finance Committee hearing convened to consider his nomination as the next secretary of the U.S. Department of Health and Human Services (HHS).
Targeting list prices, and not just net prices, will be one of his top priorities should he be confirmed, Azar said. To do that, he proposed following the model used in the Medicare Part D prescription drug program to allow negotiations of Part B drug prices in place of the current "sticker price plus 6 percent" payment scheme.
He also supported government negotiations for the pricing of drugs to reverse opioid overdoses. If the government is the purchaser of a treatment, there's "absolutely nothing wrong with the government negotiating the price," Azar said, noting that the government negotiated the price of an anthrax drug in 2001 when five people were killed and 17 injured in anthrax attacks on the media and Senate leaders.
But negotiations are not a sole source solution. "There's no silver bullet" to shoot down drug prices, Azar said. In addition, he supports removing the barriers to value- and outcomes-based pricing, increasing pricing transparency, better monitoring of the Medicaid rebate system, going after companies that game the patent and regulatory systems to extend monopolies and working with FDA Commissioner Scott Gottlieb to ramp up competition.
Azar said his other priorities include making "health care more affordable, more available and more tailored to what individuals want and need," using the power of Medicare to shift the focus in the U.S. health care system "from paying for procedures and sickness to paying for health and outcomes," and tackling the opioid epidemic through "compassionate treatment," along with aggressive prevention, education, regulatory and enforcement efforts to stop the overprescribing and overuse of the drugs.
Azar's resume problem
Throughout the hearing, Azar's resume was his biggest strength and the biggest stumbling block to his confirmation. In introducing the nominee at the hearing, former HHS Secretaries Tommy Thompson and Michael Leavitt spoke glowingly of Azar's prior service at the department as general counsel and deputy secretary, citing his work in responding to 9/11, the anthrax scare, Hurricane Katrina and a potential influenza pandemic while implementing the new Medicare Part D program.
Sen. Rob Portman (R-Ohio) noted that Azar was confirmed for each of those HHS positions by a unanimous Senate.
Unanimous support isn't likely this time around. While some of the Democrats on the Finance Committee seemed resigned to Azar's confirmation and said they were willing to work with him on common goals, several opposed his confirmation because of what followed his previous work at HHS – a stint at Indianapolis-based Eli Lilly and Co.
"The same Donald Trump who said almost exactly one year ago that price-hiking drug companies were 'getting away with murder' has nominated a drug company executive with a documented history of raising prescription drug prices to captain the administration's health care team," said Sen. Ron Wyden (D-Ore.), the ranking member of the committee and Azar's most tenacious opponent at the hearing.
Wyden trotted out charts that showed Lilly raised the price of its osteoporosis drug Forteo (teriparatide) from $1,032 to $2,728 in the five years Azar served as president of Lilly USA and chaired the company's U.S. pricing, reimbursement and access steering committee. In that same time span, the price of Lilly's attention-deficit drug Strattera (atomoxetine) went from $203 to $429. Those were not isolated incidents, Wyden said.
"The committee will likely hear that this is just the way things work – it's the system that's to be blamed," Wyden said. "My view is, there's a lot of validity in that. The system is broken. Mr. Azar was a part of that system."
Anticipating the opposition, Sen. Orrin Hatch (R-Utah), chairman of the committee, opened the hearing by acknowledging that some of the committee members have already made up their minds to oppose Azar's confirmation. "This is essentially par for the course for the high-profile nominees that have come before us under this administration. And, as in previous cases, none of the attacks leveled at Mr. Azar are focused on his record, his experience or his qualifications," Hatch said. "Instead, we're hearing talk about supposedly revolving doors and nonexistent conflicts of interest."
Hatch scolded those who claim Azar's work in the biopharmaceutical industry should disqualify him to serve as HHS secretary. "I would hope that my colleagues would want to avoid creating standards or setting new precedents where work in the private sector is somehow a knock against a nominee," Hatch said. "That certainly wasn't a standard they applied to nominees from the previous administration, and it shouldn't apply to this one."
In a somewhat tense exchange, Wyden all but accused Azar of lying during his testimony. He submitted documents for the record to show that Azar had provided "incorrect answers" on two issues – Trump's commitment to maintaining the Medicaid program and the Lilly advertising budget, which Azar had testified was far less than the company's $5 billion R&D budget.
To refute Azar's testimony on Medicaid, Wyden proffered the president's first budget, which the senator said proposed block grants and other changes that would have cut hundreds of billions of dollars from Medicaid.
Azar didn't let the accusation stand unchallenged. "This has to do with Washington speak," he said. "A slowing the rate of growth of a growing program is simply not a cut in my mind, or the president's mind."
As to the Lilly advertising budget, Wyden introduced Pew Trust data that showed Lilly spent $5.7 billion in 2013 on sales and marketing and $5 billion on R&D.
Azar tried to explain that his testimony was in response to a question from Sen. Claire McCaskill (D-Mo.) specifically about Lilly's direct-to-consumer advertising budget. He reiterated that the advertising budget would be in no conceivable way close to the R&D budget.
Ignoring the fact that spending on advertising is just one piece of the larger sales and marketing budget, Wyden responded, "We'll let people evaluate the data. You said the two were far apart, and that's not what the document suggests."
Brushing aside that exchange, Hatch ended the hearing on a positive note. "There's no question in my mind – and there shouldn't be in anybody's mind – of your competence and your abilities to be able to handle this very, very important job. . . . You're one of the best public servants that I've seen in the whole time I've been here," Hatch told Azar.
He added that he hoped the Senate would confirm Azar as quickly as possible.