HHS Secretary Azar hints that international reference pricing will be key focus in U.S. as two other blueprint policies flop

by Natalie Morrison
LONDON, 12 July (APM) - U.S. Health and Human Services (HHS) Secretary Alex Azar has hinted that international reference pricing will be a new key focus for the Trump administration's blueprint to lower drug prices, in a week when two of the main policies for the plan were quashed.
His comments were made during a televised interview with Fox Business' Varney & Co on Thursday, the day after President Donald Trump's administration scrapped plans to take down drug rebates (APMHE 58084).
Earlier in the week, a U.S. federal judge blocked the government from forcing drugmakers to reveal list prices for drugs on television advertisements (APMHE 63350) - a lawsuit brought by Amgen, Merck & Co and Eli Lilly with the Association of National Advertisers.
Both policies had been frontrunners in Trump's blueprint to lower drug prices (APMHE 58084).
Another policy which has been proposed by Trump and other officials is the idea of an international reference price - basing the prices paid by Medicare (Part D) on those paid elsewhere in the world (APMHE 60322). Introducing the concept, Trump accused other countries of "freeloading" off the U.S., where he said patients are bearing the cost of innovation by paying the highest prices in the world.
Experts have told APM that commercial insurance plans in the U.S. also base their pricing levels on those negotiated by Medicare and Medicaid, and so the would-be policy could have wide implications (APMHE 62638).
In the Thursday interview with Fox, Azar said: "We’re going to come up with a system to allow importation of drugs that's safe and effective. The president's made it clear we're gonna [sic] end foreign free-riding. It is time that the American senior and American patient stops overpaying for drugs, to prop up and subsidise the socialist healthcare systems of Europe.
"We are footing the bill for them. We are supporting their socialist systems."
The comments come the week after Trump told reporters he is preparing an executive order declaring a "favoured nations clause" for drug prices, where the U.S. will pay no more than the country with the lowest prescription prices, according to a CNBC report on 5 July.
"As you know, for years and years, other nations pay less for drugs than we do," Trump said. "Why should other nations — like Canada — why should other nations pay less than us?"
Medicare is rapidly running out of money, Azar added on Thursday, when questioned over the HHS' $100 billion spend a month, 86% of which goes to Medicare and Medicaid.
Like the two other policies which were repressed this week, international reference pricing has courted controversy, however.
The policy has also been widely unpopular with pharma and biotech, which say the U.S. system would be weakened and that it is impossible to compare the largest private system in the U.S. with public payer-based markets (APMHE 62638).
Critics of the proposals include including Novartis (APMHE 61666), Merck & Co (APMHE 62844), and even international reimbursement experts, including chief of the UK's healthcare guidance body NICE, Andrew Dillon (APMHE 62181).
According to Seeking Alpha on Thursday, big biopharma companies have seen shares fall this week as the market braces for Trump's international reference price plans.
It listed Takeda, Bausche Health, Roche, AbbVie, Allergan, AstraZeneca, Bristol-Myers Squibb, GlaxoSmithKline, Johnson & Johnson, Eli Lilly, Merck & Co, Novo Nordisk, Novartis. Pfizer and Teva as companies who had seen drops.

Rebate scrappage not dead in the water

Plans to scrap drug rebates - discounts given by pharma companies to pharmacy benefit managers (PBMs) and insurers to win reimbursement - were killed this week after an analysis from the Congressional Budget Office (CBO) suggested it could have cost the government an extra $177 billion over the next 10 years.
Experts argued the policy would pump up premiums for elderly citizens covered under the Medicare Part D plan, the section of Medicare concerned in the rebates plan.
Getting rid of drug rebates had been a controversial topic, though the policy had received wide support from the pharma sector, in which companies blame rebates for high list prices, a symptom - they say - of dealing with increasingly high-pressured discounting requirements from PBMs (APMHE 61785, APMHE 61764, APMHE 62120).
In a statement on Thursday, U.S. trade body the Pharmaceutical Research and Manufacturers of America (PhRMA) reproached the government for scrapping the plan.
It said: "The administration's decision to not move forward on the proposed rule to reform the rebate system in Medicare Part D is a blow to seniors who could have paid less for their medicines at the pharmacy counter.
"Of all the policies proposed in Washington right now, this was the only proposal that would provide immediate savings at the pharmacy counter, instead of only saving the government or insurance companies money. It is disappointing that despite support from policymakers on both sides of the aisle and from a wide array of consumer, patient, pharmacist and provider groups that they have decided to backtrack.
"Our industry remains committed to fighting for patients by advancing policies that will actually lower what they pay out of pocket for their medicines."
It seems that, despite the government binning the policy, Azar agrees that rebates should still be removed, however.
In a call on Thursday afternoon with reporters, picked up by The Washington Post, Azar insisted "rebates' days are numbered".
"At the end of the day, while we support the concept of getting rid of rebates ... we’re not going to put seniors at risk of their premiums going up," however, he added.
Some publications have floated more calculated political reasoning for killing the policy, however. White House Domestic Policy Council Director Joe Grogan had argued the rule would raise Medicare premiums just before the 2020 presidential election, The Washington Post quotes a White House official and a lobbyist briefed on the matter as saying.
It quoted a senior administration official as saying the cost was "exorbitant" and was perceived as being a "bail-out" for big pharma.
Meanwhile, Japan Times on Friday quoted Baird analyst Eric Coldwell as suggesting the move could signal Trump refocusing his reform on drug pricing on the pharmaceutical companies themselves.
"There are still many headwinds for the supply chain, but … pharma and biotech seem to have drawn the ire of the administration more recently," Coldwell said, citing the example of the three pharma companies successfully blocking the rule on television advertising.
"Shelving the rebate reform initiative, which pharma strongly supported, feels like payback," Japan Times went on to quote him as saying.

Drug price drop

Despite Trump's ongoing policy-making in the field polarising the opinions of many parties, IJR on Thursday noted that the administration has seen at least some success in its goal of lowering drug prices.
For the first time in 47 years, prescription drug prices dropped by around 1.2% in the U.S. in March this year, it noted.



Interviews with KOLs/senior executives amongst the Regulators, Payers, Health, Medical & Pharmaceutical organisations

Events coverage with a unique focus on Market Access & sustainability of healthcare systems

6 European bureaus : Berlin, Brussels, London, Madrid, Milan & Paris

Ask for a Free trial and get access to the latest stories

Our coverage includes:
  • Health Care
  • Market Access
  • HTA – policies & practices
  • European medicine regulations
  • Drug safety issues
  • Pricing & Reimbursement
  • International medicines agencies

If you are a Payer, Pharmaceutical or Consulting professional our premium data will keep you informed on the regulatory, pricing, market access and cost-effectiveness issues that impact all stakeholders.


an initial 10 day temporary access of APM Health Europe.