The following article by Robert Pear was posted on the New York Times website November 26, 2017:
WASHINGTON — Alex M. Azar II, President Trump’s nominee to lead the Department of Health and Human Services, has expressed concern about the soaring cost of prescription drugs for many consumers. This week, Mr. Azar, a former pharmaceutical executive, is expected to face tough questions at a Senate confirmation hearing over why his own company raised prices.
Democratic senators say that, as a top manager at Eli Lilly and Company, he was responsible for steep increases on insulin and other drugs. How he would now tackle that problem as secretary, along with the future of the Affordable Care Act, promises to dominate the hearings.
Even Democrats who are unlikely to vote for Mr. Azar say that he will probably be confirmed, and that he would be more pragmatic and less ideological than the man he would succeed, Tom Price, who resigned in September under criticism for his use of private jets and military flights.
And Mr. Azar has struck a conciliatory tone as the public outcry over pharmaceutical prices has grown.
“Let’s start by saying, ‘We have a problem,’” he said at a pharmaceutical industry conference in May.
Mr. Azar, 50, would bring an unusual combination of experience in government and industry to the job of running a cabinet department that spends more than a trillion dollars a year providing health insurance to more than 130 million Americans.
His résumé is studded with conservative credentials. He was active in the Federalist Society and was a Supreme Court law clerk to Justice Antonin Scalia, whom he describes as “one of the 10 greatest figures in the history of Anglo-American law.” He spent two years working for Kenneth W. Starr, the independent counsel who investigated President Bill Clinton. He worked on the Bush-Cheney campaign in 2000 and provided legal support for vote recount efforts in Florida.
Mr. Azar, who describes himself as a policy wonk, joined the administration of President George W. Bush as general counsel of the Department of Health and Human Services in 2001 and became deputy secretary four years later.
He helped devise the legal rationale for a complicated compromise on the emotional issue of federal funding for embryonic stem cell research. And he helped carry out a 2003 law that added a prescription drug benefit to Medicare, one of the most significant changes in the history of the program.
Work on Medicare was a formative experience for Mr. Azar, and he cites the drug benefit — delivered entirely by private companies under contract with the government — as a model. The cost to Medicare beneficiaries and to taxpayers has been substantially less than originally projected.
Mr. Azar (rhymes with “pay czar”) joined Lilly in 2007 and worked there for nearly 10 years before he left the Indianapolis-based company in January of this year.
Lilly’s portfolio includes Cialis, for men with erectile dysfunction; Forteo, for osteoporosis; and Zyprexa, for schizophrenia and bipolar disorder. But its best sellers are insulin and other products for the treatment of diabetes.
Patients and members of Congress criticized increases in list prices for insulin while Mr. Azar was the president of Lilly USA, the company’s largest affiliate, which is responsible for more than 40 percent of its global revenue.
“The price of insulin has tripled in the last decade,” said Senator Amy Klobuchar, Democrat of Minnesota. “If you want to bring down drug prices, you don’t put a former pharmaceutical company executive in charge of health care policy for our country.”
Mr. Trump has said repeatedly that he wants to lower drug prices, but Democrats say his words have not been matched by action.
The Senate health committee will investigate Mr. Azar’s record at a hearing on Wednesday. The panel includes liberal critics of the drug industry like Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts.
“We need an H.H.S. secretary who is willing to take on the greed of the pharmaceutical industry and lower prescription drug prices, not one who has financially benefited from this greed,” Mr. Sanders said.
The Senate Finance Committee plans to hold a separate confirmation hearing soon.
In a letter to the health committee, the Type 1 Diabetes Defense Foundation, a nonprofit group, said that Mr. Azar had condoned Lilly’s “overpricing of insulin” and that some patients had suffered as a result. In filings with the Securities and Exchange Commission over the past seven months, Lilly said it had received demands for information about the pricing of its insulin products from offices of the attorneys general in California, Florida, Minnesota, New Mexico and Washington State.
Drug companies have long said high prices are not a concern because they provide big discounts and rebates on many products. But in the last year, as public outcry has grown, Mr. Azar has acknowledged a problem.
“This is not something to put our head in the sand about,” he told the industry conference in May. “Patients are having to pay too much for drugs.” In particular, he said, “patients are paying out of pocket too much money.”
“What happened?” he asked. “Was there in the last three years a radical change in the pricing of drugs — either how launch prices occur or how drug price increases happen? No. In the last five to seven years, the pricing model really has not changed one bit.”
“So why did things erupt?” he asked. “They erupted because we have seen a complete and fundamental restructuring of health insurance in the United States over the last three to five years. More of us now have high-deductible plans. More of us now have high cost-sharing.”
As a result, he said, “when the patient goes into the pharmacy, they’re getting the sticker, they’re getting the list price.”
At a symposium at the Manhattan Institute last November, Mr. Azar said, “We’re on the cusp of a golden age of pharmaceutical breakthroughs.” But he added, “Our outdated system for paying for prescription drugs is threatening to squelch patient access to this recent and revolutionary burst of innovation by shifting a crushing burden directly onto individuals.”
Even as drug companies increase list prices, they have been giving larger discounts and rebates to health insurance companies and the middlemen known as pharmacy benefit managers, who work for insurers and employers. But consumers who are uninsured or who have high-deductible health plans often must pay the full list price, or close to it.
“No patient was ever supposed to pay those list prices, but in recent years a growing number have been forced to do exactly that,” Mr. Azar said, adding, “That practice exposes patients to huge amounts of cost-sharing when they walk into the pharmacy.”
And that, he said, is bad for patients because they are much less likely to fill prescriptions if their out-of-pocket cost is more than $50 or $100.
He said the current, convoluted system of paying for drugs had perverse incentives.
“All players — wholesalers like McKesson and Cardinal, pharmacies like CVS and Walgreens, pharmacy benefit managers like Express Scripts and CVS Caremark, and drug companies — make more money when list prices increase,” Mr. Azar said, adding, “The unfortunate victims of these trends are patients.”
Mr. Azar echoes Mr. Trump’s criticism of the Affordable Care Act. He maintains that the expansion of Medicaid under the law has not been successful. He speaks favorably of proposals to give each state a lump sum of federal money in the form of a block grant to provide health care to low-income people.
And he said he wanted to “get H.H.S. out of the business of being the nation’s insurance commissioner.”
Asked on the Fox Business Network in May if the health law was dead, he said, “It’s certainly circling the drain.”
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