7:41 AM
Dec 06, 2018
 |  BC Extra  |  Politics & Policy

Newly named Azar adviser O'Brien defends pricing index

Editor's Note: This article was updated on Dec 06, 2018 at 3:09 PM PST

John O'Brien is taking over as the point person on the Trump administration's drug pricing strategy as its plans to tie Medicare Part B drug prices to an international reference pricing scheme have come under fire.

HHS Secretary Alex Azar named O'Brien senior adviser to the secretary for drug pricing reform Thursday, where he will be responsible for coordinating the implementation of the Trump administration's drug pricing blueprint.

The role as been vacant since Dan Best passed away in November.

Previously adviser to the secretary for health reform and drug pricing, and deputy assistant secretary for health policy at the Office of the Assistant Secretary for Planning and Evaluation, O'Brien has been one of Azar's point men on drug pricing.

"O’Brien has already been an integral leader in HHS’s efforts to bring down the high price of prescription drugs,” Azar said in a statement Thursday.

In the months following the May release of the blueprint, O'Brien had joined Best in urging biopharma CEOs to get behind the plan by making positive proposals for implementing it in ways that won’t impede their ability to bring innovative medicines to market and warning them to voluntarily cut drug prices before the administration imposes more painful policies (see "PhRMA and Trump: War or Peace?").

In a blog post Thursday, O'Brien defended HHS's proposal to create an international pricing index that would be linked to Medicare reimbursement for Part B drugs. BIO, PhRMA and some physician groups view the move as detrimental, saying it imposes price controls and could put patients at risk (see “Trump’s Divide and Conquer Part B Plan”).

O'Brien argued that on the contrary, an index could actually "be the first effective tool against foreign price controls" because it introduces negotiation and competition to Part B drugs, and thus would result in lower drug prices for seniors.

"Drug companies that don’t agree to prices demanded by foreign governments don’t have to do business there or can negotiate a price more in line with what Americans pay," he wrote. "It provides drug companies with a valid reason to walk away from the negotiating table when other countries demand low prices subsidized by America’s seniors."

Under the proposal, physicians would be reimbursed a negotiated flat rate instead of receiving an add-on payment tied to the average sales price (ASP) (see "Backing into Value with Part B").

O'Brien said the current ASP methodology does not represent the free market. "For at least 30 percent of Part B spending, Medicare prices are at least half of the market, meaning there is effectively no competition," he wrote.

In a commentary published last week in The Hill, BIO President and CEO Jim Greenwood likened an international pricing index to a "wrecking ball to our global leadership in drug innovation."

O'Brien argued instead that the plan will foster innovation. "The best way to support future pharmaceutical innovation is to build a sustainable market-based system for pricing prescription drugs," he said, adding that "the possible savings American patients would receive over five years represents less than 1 percent of pharmaceutical R&D spending during that time."

Staff Writer Elizabeth S. Eaton contributed to this story.

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