President Donald Trump tweeted Monday that his nominee for HHS secretary, Alex Azar will “be a star for … lower drug prices!” But the record of the former top executive for Eli Lilly, which tripled the price of a top-selling insulin drug while he led its U.S. operation, suggests a different story.
Lilly is one of three drug companies targeted by a class-action lawsuit that accuses the company, then under Azar’s watch, of exploiting the drug pricing system to ensure higher profit for insulin and has been fined in Mexico for colluding on the pricing of the drug.
Azar, who spent almost a decade at Eli Lilly, rising to become president of the drug giant’s U.S. operations before leaving earlier this year, doesn’t deny drug costs are a consumer issue. But his record there and as a top official in George W. Bush’s administration suggests he’s unlikely to push pricing policies that would hit pharmaceutical companies’ pocketbooks.
In recent years, Azar has defended pricing practices, and argued against the approaches to reduce costs to consumers as Trump endorsed during his campaign, such as allowing the government to negotiate drug prices and importing medicines from oversees.
Instead, Azar has followed the pharma messaging playbook on drug pricing — deflecting attention to other parts of the health system, and even other countries, blaming them for the high drug costs paid by U.S. patients. He’s also justified drug prices as the cost of innovation.
Azar’s nomination signals the status quo, Eric Assaraf of Cowen Washington Research Group wrote in a note to clients Monday. “Although Trump specifically called out lowering drug prices in his announcement of Azar, we don’t believe his appointment will mark a change in course in that realm.”
Trump’s focus on drug pricing in announcing Azar’s nomination didn’t win over doubters, who no longer believe he is serious about going after the industry he once slammed as “getting away with murder.” But it will make it easier for critics to pounce on what will likely be the toughest barrier for Azar to overcome during his confirmation process in the Senate.
Sen. Bernie Sanders said Monday he will “vigorously oppose” the nomination of Azar.
“During Mr. Azar’s tenure at Eli Lilly, this multibillion-dollar corporation dodged taxes while charging Americans outrageously high prices for lifesaving prescription drugs,” Sanders said.
Sanders and Rep. Elijah Cummings commenced an investigation into Eli Lilly’s rising prices for insulin last year, spurring attorneys generals in Washington and New Mexico to look into the matter. The lawmakers questioned why the prices of the diabetes medicine whose main patent expired 75 years ago have seen huge jumps in recent years, with competitors often raising prices in tandem. One of Eli Lilly’s insulins, Humulin R U-500, rose 325 percent in price from 2010 to 2015.
Cummings tweeted that picking Azar is “like a fox guarding the hen house,” and a “slap in the face,” to Americans waiting for action on lower drug prices.
“I have often said that the pharmaceutical industry owns Washington,” Sen. Amy Klobuchar said on the Senate floor Monday. “Now with this action today they are actually running it.”
Azar contends the outrage over drug pricing “erupted because we have seen a complete fundamental restructuring of health insurance,” with a shift to high-deductible plans that puts the burden of drug costs on employees and individuals, he said at a conference in May.
While Azar makes a valid point, changing insurance policies without addressing drugmakers’ markups of existing drug prices, or high launch prices for new medicines, “is avoiding the elephant in the room.” said Ameet Sarpatwari, who studies drug prices at Harvard Medical School.
Even Azar acknowledged in his speech that if insurance companies reduced consumers’ out of pocket charges for medicines, those costs would show up elsewhere, likely in premium increases.
Azar has also attacked government regulators and payers for devaluing pharmaceutical innovation, suggesting that if the U.S. cuts pharma profits, it will see decreased investment in new drugs and fewer new cures.
“The narrow focus of costs of medicine to the exclusion of innovation would be self-defeating in the long run,” Azar said in a 2014 speech.
Sarpatwari worries such views will lead Azar to promote the idea that making it quicker and easier for drug makers to introduce new medicines will reduce pharmaceutical costs. Researchers have found that drug companies don’t price their products any cheaper when FDA lets them use the accelerated approval process or other tactics to speed drugs to market. Former FDA Commissioner Robert Califf recently said that despite claims by the Trump administration that faster drug approvals lead to lower cost drugs, there is no direction relationship between the cost of development and price of drugs.
Nonetheless, in June, Azar told Fox Business that getting more new drugs to market to increase competition among brands would help bring U.S. prices down. Yet there’s only one example the drug industry can point to in the U.S. where brand competition has led to lower prices — and many where competitors simply raise prices in tandem. For example, Democrats recently launched a probe into the rising price of multiple sclerosis drugs where drugs introduced decades ago have raised prices to match their newer competitors.
And while Azar expresses support for competition, one of the major factors keeping generic versions of insulin off the market have been drug company tactics known as evergreening — making incremental tweaks to their insulin versions or the devices that deliver it, to extend their monopolies for decades.
An article published in The Lancet in late 2015 found that most of the recent innovation in the insulin market has centered on improvements in delivery devices, blocking generics by agents that are indirectly related to the drug.
Azar has also opposed other ideas to encourage competitive drug pricing. He’s spoken out against studies known as comparative effectiveness research, used to determine which drugs are most cost-effective for treating patients with a disease. He argues that all options should be available since different patients may need different medicines. The problem however, is that if payers must make all drugs available, they have little leverage to negotiate lower drug prices with industry.
The result is that despite Trump’s tweets praising Azar as a champion for lower costs, few fighting for lower drug prices are pinning their hopes on action by Azar.
“This nominee has impeccable big pharma credentials but non-existent credentials when it comes to concerns on drug prices,” said Peter Welch, co-chair of the House Democrats Drug Pricing Task Force.