by Blair Burnett, Policy Analyst, ACCC
Alex Azar, current nominee for Secretary of the U.S. Department of Health and Human Services (HHS), went before the Senate Finance Committee for the second time on December 9 on his road to confirmation. Despite Azar’s expected confirmation later this month, this hearing, once again, brought the spotlight and scrutiny to Azar assuming this role. If confirmed, Azar would be the first individual to assume leadership of HHS who has served as an executive within the pharmaceutical industry. Azar was previously president of Eli Lilly USA.
Similar to his prior public testimony, in his December 9 comments before the Senate Finance Committee, Azar stated there were four areas he plans to tackle during his tenure as HHS Secretary: drug prices; affordability, attainability, and availability of healthcare choices; the future of value-based care in Medicare; and prevention and enforcement efforts related to the nation’s opioid epidemic.
Questioned briefly on value-based contracting in Medicare and in the private sector, Mr. Azar cited support for value-based contracting in Medicare as well as innovations in models currently coming out of the private sector.
“Value-based care or outcome-based contracting can be vitally important. There are some approaches in Medicare that get away from that. . . . Paying for value and outcomes based upon these types of medicines is an exciting way to look at drug pricing in the future,” Azar stated.
Mr. Azar also noted that he is open to considering pricing negotiations in Medicare Part B by incorporating lessons from the Medicare Part D program. He expressed opposition to government direct negotiation in Medicare Part D, stating current private sector pharmacy benefit companies obtain the nation’s lowest net prices and asserting government price negotiations would need to include a formulary restricting patient access. He also indicated the existing system encourages high list prices, which have a disproportionately negative impact on consumer out-of-pocket costs.
Citing drug prices as “too high,” Azar vowed to tackle this very public concern. Senator Ron Wyden (D-OR), Ranking Member of the Senate Finance Committee, asked Azar directly if during his five years as President of Eli Lilly USA, he lowered the price of one drug. Azar did not provide a direct answer, instead approaching the issue through the lens of increasing competition or reducing the list price of drugs, which would be difficult from the Department of Health and Human Services since HHS does not currently regulate how pharmaceutical companies set their prices.
When asked about Medicaid, Mr. Azar stated Medicaid block grants would give states incentives to manage their Medicaid programs more effectively and efficiently. He added that the key to developing alternative financing approaches for Medicaid is to determine appropriate funding levels and formulas.
Throughout the hearing, Mr. Azar expressed interest, if confirmed, in working with Members of the Committee on a host of other issues, including: expanding telehealth in Medicare; enhancing generic drug competition; supporting home and community-based care as alternatives to institutional-based long-term care; offering states more flexibility in Medicaid; and expanding consumer-focused health insurance options. Mr. Azar also indicated he would support mandatory Center for Medicare & Medicaid Innovation (CMMI) pilots if needed to get adequate data. Chairman Orrin Hatch (R-UT) intends the Committee to move the nomination quickly; however, he did not provide a timetable for action.
Azar, 50, would succeed the Trump Administration’s first HHS Secretary, Tom Price, a former congressman from Georgia who, under pressure from the public and the administration resigned in September 2017. Price, a physician, championed more flexibility and less regulatory burden for providers in his few months in office; it is unclear if this will continue under Mr. Azar, who has asserted that, unlike former Secretary Price, he plans to keep open lines of communication between the Senate Finance Committee and HHS through regular meetings. During his brief term as HHS Secretary, Price broke decades of bipartisan tradition in not meeting regularly with the Senate Finance Committee and other members of Congress.
The Senate Finance Committee is expected to vote later this month to decide whether to recommend Mr. Azar’s confirmation as HHS Secretary to the full Senate.