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Azar's reference drug pricing model makes inroads with GOP


The Trump administration’s aggressive proposal to tie U.S. drug spending through Medicare to the much lower prices paid by other countries piqued interest and launched discussions this week among Senate Republicans.

GOP members of the Senate Finance Committee met with HHS Secretary Alex Azar on Tuesday and some were cautiously open to the plan, as they focused on the theme that Americans shouldn’t be paying for the research and development that benefit other countries using the same drugs. In the meeting, Azar asked for legislation to support what is now an administrative demonstration proposal but didn’t specify a timeframe, according to Sen. Rob Portman (R-Ohio).

“I hate outsourcing what our pricing will be, but it also puts pressure on those drug companies to not make us pay for all the R&D while the rest of the world gets off,” said Sen. James Lankford (R-Okla.), who was in the Azar meeting.


Lankford hasn’t thrown his support behind the proposal in its current form, but he said Thursday he is weighing it and looking deeper at its details. The HHS model has yet to be finalized.

The Oklahoma senator concluded from the meeting that his colleagues also were open to keep discussing the policy — significant for GOP members of a powerful Senate committee governing healthcare policy. Republicans typically bristle at concepts that sniff of price fixing.

“I didn’t hear anyone saying adamantly, ‘No way,'” Lankford said. “It was a free-market group obviously, so every time you talk about price management it is a different type of question. But everyone was listening and asking questions and no one was committal at the end.”

Portman said Azar “was able to address the concerns about both R&D innovation and the concern of jobs leaving our shores.”

Like Lankford and others, Portman remained noncommittal, but he said he believes there’s a path to compromise.

When President Donald Trump announced the model last fall, Azar suggested HHS would launch the demonstration in late 2019 or early 2020, and it would be phased in over about five years in half of the U.S.

Lankford pointed out that under the model the U.S. would still likely pay about 25% above the median prices in the other countries.

Still, it’s far from certain that Senate Republicans will take up legislation to bolster the plan. A variation on the idea has gained swift traction among progressive Democrats in the House and Senate, but the policy made some conservative analysts wary. Manufacturers are fighting it hard.

Senate Finance Chair Chuck Grassley (R-Iowa), who last week expressed reservations about “messing with the private sector” through government negotiation, told reporters on Wednesday he couldn’t quantify the support or opposition among his GOP committee members — saying simply that some Republicans were open to it and others opposed. He also framed the meeting with Finance Committee Republicans as an effort for Azar to address an entire group rather than a “hand-picked” few.

“It was in no way confrontational, it was just a discussion,” he said.

Meanwhile in the House, legislation that roughly tracks with Azar’s international pricing model, authorizing the secretary to launch a similar model nationwide, is picking up co-sponsors.

It was first brought up in November by vocal pharma critics Sen. Bernie Sanders (I-Vt.) and Rep. Ro Khanna (D-Calif.). Leading the 18 co-sponsors is Rep. Peter Welch (D-Vt.), and colleagues expect he will take the initiative with drug pricing legislation in the House Energy & Commerce Committee this year.

Some other co-sponsors are members of the House Democrats’ most liberal wing, including freshmen Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Rashida Tlaib (D-Mich.), and the co-chairs of the Congressional Progressive Caucus, Reps. Pramila Jayapal (D-Wash.) and Mark Pocan (D-Wis.).

It’s far from clear whether Senate Republicans and progressives could end up locking arms on a compromise.

Sanders on Wednesday was skeptical the GOP will take significant action. The senator, who brought Medicare drug pricing negotiation to the forefront as a 2016 presidential candidate, said Azar hasn’t met with him and hasn’t reached out to discuss drug prices — although he said he would be happy to have a meeting.

“Do I have a great deal of confidence that the Trump administration has the courage to stand up to a very powerful pharmaceutical industry?” Sanders said. “No, I don’t. I hope I’m mistaken.”

The Senate Finance Committee Democrats will meet with Azar later this month, according to an aide. Azar also met this week with House Oversight Chair Elijah Cummings, a Maryland Democrat who has already scheduled a hearing to look at drug costs for the end of this month. A spokesperson for HHS said the secretary plans to work with Democrats on the issue.

“Secretary Azar and the Trump administration are committed to working across the aisle and have made it clear that all options that preserve drug safety and keep patients at the center are on the table,” the spokesperson said.

One House Democrat who has signed onto the Sanders-Khanna reference pricing bill said he thinks Republicans will have to come to the table for aggressive action.

“Probably at the moment the only thing less popular than the government shutdown and the squabbling in Washington is the pharmaceutical industry and their price gouging,” said Rep. Peter DeFazio (D-Ore.). “So I think it will be hard to stand in the way of something reasonable that would lower the price for Americans.”

But that could depend on how Democrats play to their base ahead of the 2020 election cycle. House Democrats are pushing for Medicare’s complete negotiating authority with drug manufacturers, and this is emerging as their key messaging point for legislation this Congress.

As he laid out his agenda as health panel chair on the House Ways & Means Committee on Thursday, Rep. Lloyd Doggett (D-Texas) put Medicare negotiation at the top of his priorities for lowering prices.

“I hope that President Trump will follow the advice of Candidate Trump to find common ground with us, reject the advice of the Big Pharma executives he appointed to control his agenda, and deliver a real victory for the American people,” Doggett said in a statement.

The Senate Finance Committee has yet to announce a hearing on drug pricing but on Friday morning Sen. John Cornyn (R-Texas) tweeted that the panel is poised to begin scrutiny of the price problem with an emphasis on pharmacy benefit managers.

“The Senate Finance Committee will lead an investigation into high prescription drug prices and questionable ‘rebates’ to pharmacy benefit managers that don’t directly benefit consumers,” he tweeted.