Drug Prices Coming Down Due to Federal Pressure, HHS Says

Alicia Ault

August 21, 2018

The Trump Administration is claiming that drug prices are coming down in response to its announcement in May that it would be taking various actions to reduce the cost of pharmaceuticals for Americans.

In a "100 days" report issued yesterday, the US Department of Health and Human Services (HHS) said there have been 60% fewer brand-name drug price increases from May to August 2018 compared with the same period in 2017, along with 54% more generic and brand-name drug price decreases. Officials on a call with reporters to unveil the report offered no examples of drugs that had been discounted and gave no further details when asked.

HHS officials also said that 15 drug companies have reduced list prices, rolled back planned price increases, or committed to price freezes for the rest of 2018.

"The pharma industry has responded with real changes that will benefit patients — not out of any altruism on their part, but rather because they're skating to where they see the puck is going," said HHS Secretary Alex Azar on the call.

Azar said companies were responding to the administration's actions, such as giving Medicare Advantage health plans — which cover 19 million Medicare beneficiaries — the ability to institute step therapy for Part B drugs, and notifying Part D drug plans that they cannot prohibit pharmacists from telling patients that a less costly version of their medication might be available.

The US Food and Drug Administration (FDA) approved a record number of generic drugs in July (126) and has launched a plan to speed biosimilar medications to market, noted the HHS secretary.

Azar also said that the administration is taking steps toward letting patients import drugs if only one brand or generic is available in the United States. The FDA working group on drug reimportation has already begun meeting, said Azar.

Taking on PBMs

Pharmacy benefit managers (PBMs) also entered the conversation.

In the past, Azar has said that PBMs are largely responsible for rising drug prices. US senators Elizabeth Warren (D-MA) and Tina Smith (D-MN) recently said that Azar may be protecting the drug industry by blaming PBMs — as he had done in testimony to the Senate Health, Education, Labor and Pensions (HELP) Committee in June.

The senators said that PBMs, in response to detailed questions from them, explicitly denied Azar's allegations that they had created hurdles to lower drug prices and said they would support manufacturer efforts to reduce prices. "If you have coordinated with the pharmaceutical industry to concoct a scenario in which the drug company failure to reduce prices is blamed on industry middlemen...it would raise very serious questions about your commitment to enhancing and protecting the health and wellbeing of all Americans as the Secretary of Health and Human Services," wrote the senators.

When asked about the senators' charges, Azar, said, "I make it a practice not to blame any individual part of the drug channel here, but to blame all parts of the drug channel here."

But he then went on to say that PBMs are a big problem. "There are massive structural, financial incentives, as well as contractual provisions, that basically lock those incentives in place towards ever-increasing list prices," said Azar, adding, "those structures and those incentives are factual and undeniable."

The administration has a proposed rule, still being reviewed, that would reportedly take away PBMs' ability to require rebates from drug companies.

But some in Congress have expressed concern about that potential action. House Energy and Commerce Committee Chairman Greg Walden (R-OR) and Senate Finance Committee Chairman Orrin Hatch (R-UT) recently said they wanted a very thorough analysis of the proposal and noted that they had not seen any details.

"Depending on the nature of the policies contemplated, possible changes could ripple across the health care sector, altering a major sector of the US economy that Americans depend upon for their health and well-being," wrote the congressmen.  

Azar said that he viewed the Walden and Hatch letter "as completely consistent with our approach," which included being transparent and thoughtful. He said the administration had taken some unwarranted heat for telegraphing its intentions. "I think it's right to lay your strategy out publicly," said Azar.  

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