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Getting serious

How HHS Secretary Azar is creating political space for long-term drug pricing changes

HHS Secretary Alex Azar isn’t waiting for the ink to dry on the department’s Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, or for his staff to digest tens of thousands of pages of comments on the plan.

Azar is putting a set of policies into place that chip away at drug costs in the short-term, and generating headlines that create political space for longer-term policies.

The goal is not merely to change the system at the margins, or to intimidate pharma CEOs into deferring and attenuating price increases.

Azar plans to enact policies aimed at “completely resetting the pricing system in the U.S.,” he told Fox News on July 19.

Pharma CEOs kowtowing to Trump won’t be sufficient, Azar said. “Voluntary actions are not what we are counting on. We are driving swift, firm regulatory action, legislative action that is going to create every incentive to bring drug prices down in this country.”

Trump administration decisions on drug pricing are being shaped in the face of responses to the blueprint from trade associations that follow the classic Washington approach: deny responsibility for the problem, blame other sectors, fight to avoid changing business practices, and demand policies that squeeze other industries (see “Pointing Fingers”).

Figure: Pointing fingers

In public comments submitted in response to the HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, trade associations engaged in a classic finger-pointing exercise. Each said that the problems are being caused by other industries, defended itself against proposals that would reduce its industry’s revenues, and called for HHS to implement policies that would hurt other industries.

Representing drug and biotech companies, PhRMA and BIO said insurance designs that impose high out-of-pocket costs, not drug prices, are the problem. They called for steps that would squeeze revenues from PBMs represented by the Pharmaceutical Care Management Association (PCMA) and insurance companies represented by America’s Health Insurance Plans (AHIP).

PCMA and AHIP said the practices PhRMA and BIO attacked are essential tools for constraining prices, and they urged HHS to compel drug companies to lower their prices.

The Association for Accessible Medicines (AAM), representing generic

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