HHS Nominee Azar Questioned on Drug Pricing, Medicaid

Alicia Ault

January 09, 2018

WASHINGTON, DC — The United States Senate Committee on Finance for the most part warmly received US Department of Health and Human Services (HHS) Secretary-nominee Alex Azar during a 2-hour-plus confirmation hearing today, although Democrats questioned whether he will actively work to protect Medicaid and reduce drug prices.

The hearing sets up a yet-to-be-scheduled confirmation vote by the panel, and an eventual vote by the full Senate. HHS has been without a confirmed secretary since the resignation of Tom Price, MD, in September 2017.

Azar, a former executive for the pharmaceutical company Eli Lilly, was nominated to lead HHS by President Donald Trump in November. He is no stranger to Capitol Hill — most recently having gone before the United States Senate Committee on Health, Education, Labor and Pensions shortly after his nomination — or to HHS. He was the department's general counsel from 2001 to 2005 and its deputy secretary from 2005 to 2007 during the George W. Bush administration.

Alex Azar testifies before the Senate Finance Committee today on Capitol Hill. (Carolyn Kaster/AP)

The two HHS Secretaries he served under — Tommy Thompson and Michael Leavitt — heartily endorsed Azar at the finance committee hearing. "I don't know that there is a person who has ever been nominated as secretary of health who's positioned to hit the ground running like Alex Azar," said Leavitt.

Committee Chairman Orrin Hatch (R-UT) called Azar "one of the most qualified I've ever seen in my whole term in the United States Senate," and thanked him for his willingness to come to Washington "to help turn this mess around and get it working better." The senator presumably was referring to the Affordable Care Act (ACA), which was a topic of questioning from both Republicans and Democrats.

"The task is humbling," said Azar, citing the numerous programs and responsibilities overseen by HHS. He outlined what he said would be his top priorities: "First, drug prices are too high," said Azar. "I believe I bring skills and experiences to the table that could help us tackle these issues, while still encouraging discovery so Americans have access to high quality care."

Azar said he'd also work to make healthcare more affordable and accessible; encourage a shift away from "paying for procedures and sickness to paying for health and outcomes"; and, to help end the opioid epidemic.

Support of Medicaid Block Grants Draws Fire

The nominee said it was not his job to dismantle the existing healthcare law. "My job is to take whatever I've got — so the Affordable Care Act is there — and make whatever it is work as best as it possibly can," Azar told the finance committee.

But, he added, "What we have now is not working for people," stating his belief that premiums were rising in part because some 28 million people were still not covered by insurance. He also said that high deductibles and skimpy provider networks in the individual market meant that people really had a "false insurance card."

Azar said access and affordability could be improved by giving states more flexibility to run their Medicaid programs. He did not outright endorse block grants of Medicaid — which has been proposed as an ACA fix by Senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA). But, said Azar, states could be more empowered if they received Medicaid money in a lump sum rather than as a matching portion from the federal government.

Under the current system, states "don't always exercise the level of creativity or fiscal fraud, waste and abuse stewardship over it as if they owned 100 percent of that money," he said.

Democrats did not like that answer. Senator Maria Cantwell (D-WA) said Azar would have to confirm his commitment to continuing the match system to get her vote. A block grant "is no innovation," said Cantwell. "It is simply a budget mechanism to cut Medicaid."

Senator Sherrod Brown (D-OH) said he was concerned that Azar would oversee implementation of a new work requirement for "able-bodied adults" to receive Medicaid benefits, and that such a policy could end coverage for some 200,000 Ohio residents receiving treatment for a substance use disorder. Azar said he had not contemplated such a policy. "You're imputing to me a desire that I have not stated," Azar told Brown.

Senator Ron Wyden (D-OR) said that as HHS Secretary, Azar would be asked to implement block grants — which Wyden called Medicaid cuts — called for in Trump's fiscal 2018 budget proposal. Azar disagreed. "Slowing the rate of growth of a growing program is simply not a cut in my mind or the president's mind," said Azar.

Criticized for Lilly Price Hikes

Democrats also went after Azar for drug price increases that occurred while he was president of Eli Lilly's US affiliate. Azar worked for Lilly from 2007 to 2016, and, as president, was also chief of a committee that gave him final say on many drug pricing decisions.

Wyden displayed a chart showing that the wholesale package price of the Lilly osteoporosis drug Forteo (teriparatide injection) had risen from $1,032 to $2,728 in 5 years during Azar's tenure — a 164% increase that also helped boost Forteo's US revenues by 58% over the same period, said the senator. He also noted large price increases for Lilly's attention deficit disorder drug Strattera (atomoxetine) that were approved by Azar.

The nominee would not directly discuss those products or the price increases. But, he reiterated that "drug prices are too high."

Azar said he favored government negotiation for drugs purchased under Part B of the Medicare program, and for the overdose antidote naloxone — if the federal government were the sole purchaser and distributor. But in other circumstances, giving the feds power to negotiate with drug makers would not result in lower list prices — the root of the problem, said Azar, who blamed higher prices paid by consumers on "the system."

He said the Medicare Part D program is a prime example. "The largest prescription benefit programs get the best net pricing of any commercial payers in the US," said Azar, adding, "I did that world. I know that world."

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