Hospitals

Azar points to Amgen, Merck and Gilead as evidence of progress in curbing drug prices

By Tina Reed Jan 15, 2019 8:32am
Drug Prices Healthcare Costs Insurance Benefits Alex Azar

Despite a slew of recent drug price hikes, the Trump administration claims it's seeing signs of progress in its efforts to curb the price of prescriptions.

Since May, when the president first announced his drug pricing blueprint, drug companies took 57% fewer price increases on brand-name drugs compared with the same period in 2017, Health and Human Services Secretary Alex Azar said on Tuesday. 

“Some companies, such as Amgen, Merck, and Gilead, have cut the list price on certain drugs, and early data suggests that the 2019 price increases have been smaller and fewer in number than we saw in 2018," Azar told the Council for Affordable Health Coverage at an event in D.C. on Tuesday. “But drug companies have a lot further to go."

RELATED: Trump, frustrated over latest hikes, calls White House meeting on prices: report

But smaller and fewer price increases or flat net prices aren’t enough, he warned.

“Some manufacturers are still in denial about whether bringing down list prices is even an important goal," Azar said. "They claim that these skyrocketing prices don’t matter. But these prices do matter to patients, in a number of important ways.”

He laid out a laundry list of actions already taken by the administration under the blueprint, which aims to boost competition and negotiation in drug markets and provide incentives for lower list prices and lower out-of-pocket costs. In particular, Azar devoted much of his time defending a plan that would benchmark U.S. drug prices against an international price index, an idea that has proved controversial. 

The IPIP program will be phased in over five years with 20% of the price to be determined by an international target, and 80% by the current Medicare pricing system, Azar said. The following year, 40% of the price would be determined by the international target and 60% by the current system, and so forth, giving drug companies time to adjust, he said. 

"Pharma has gotten some stakeholders to claim that this plan would cause drug companies to not offer their drugs for sale in Medicare," Azar said. "Are we seriously to believe that a drug company will walk away from earning a 26% premium from the world’s largest payer to earn less from European countries?"

RELATED: Trump administration unveils plan to lower Medicare Part B prices by basing costs on other countries' pricing

Just introducing the model has made a difference, he said. "From now on, no drug company will ever agree to a discount in Europe without considering how it might affect the price they get in the United States."

Ultimately, he said the administration is not done introducing strategies to try to disrupt and low net drug costs as well as list prices and out-of-pocket costs for patients.

"If we need to go beyond its four corners to bring down list prices and out-of-pocket costs, we will," he said.

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