Azar blames PBMs for no drop in prescription prices


When he released his blueprint of policy options aimed at lowering the cost of prescription medications, President Donald Trump predicted drug companies soon would lower their prices in response. At press time, none had.

“The president said that, in reaction to the release of the drug pricing blueprint, drug companies would be ‘announcing voluntary massive drops in prices within 2 weeks,’ ” Sen. Elizabeth Warren (D-Mass.) said during a hearing of the Senate Health, Education, Labor, and Pensions Committee to review the administration’s plan to lower drug costs.

Sen. Warren said she, along with Sen. Tina Smith (D-Minn.), sent letters to the top 10 drug manufacturers to get a pricing update and see what products were going to be the recipient of price cuts in response to the blueprint.

Health & Human Services Secretary Alex M. Azar II Wikimedia Commons/WWsgConnect/CC-SA 4.0

Alex M. Azar II

“All 10 of them have now responded,” she continued. “Zero out of 10 said that they had lowered any prices. Zero out of 10 gave any indication that they planned to do so. And, in fact, 1 out of 10 said prices are going to up later this year.”

She then asked Alex Azar, Health & Human Services secretary and the hearing’s only witness, which manufacturers the president was referring to when he said drug companies would be reducing prices.

“There are actually several drug companies that are looking at substantial and material decreases of drug prices in competitive classes and actually competing with each other and looking to do that,” Mr. Azar testified. “They are working right now with the pharmacy benefit managers (PBMs) and distributors.”

He went on to blame the PBMs for the inability to lower prices.

“What they are trying to do is work to ensure they are not discriminated against,” he said. “Oddly, the fear is that they would be discriminated against for decreasing their price.”

He noted during the hearing that PBMs get paid based on the rebates they negotiate and could retaliate against manufacturers by placing products on a higher tier or dropping them from formularies in total if manufacturers were to impact the PBM bottom line by dropping prices. He added that one of the options in the blueprint was to ban any financial transactions between the manufacturer and the PBM to ensure there is no conflict of interest and that the PBM is working on behalf of the insurers only to negotiate the best prices for drugs.

Panel Democrats used the hearing to hammer the administration for not following up on President Trump’s campaign promise to allow the government to negotiate Medicare Part D drug pricing. Part of that discussion focused on using government leverage to get “best price” contracts using prices for drugs in other countries, an exercise that Mr. Azar said would theoretically result in manufacturers yanking their drugs out of foreign markets and jacking the prices even more in the United States.

When pressed to try it on a pilot basis with one or two drugs, he pushed back, suggesting that even a pilot trial of it could result in “irreparable harm.”

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