Trump Nominates Former Pharmaceutical Executive as HHS Secretary

President Trump on Monday announced Alex Azar, a former pharmaceutical executive, as his choice to succeed Dr. Tom Price as secretary of Health & Human Services (HHS) (1). HHS is an 80,000-employee federal agency that oversees the Centers for Medicare and Medicaid Services, the Food and Drug Administration, the National Institutes of Health, and the Centers for Disease Control and Prevention. Price resigned in September following reports of his extensive use of government and charter air travel.

Azar, a lawyer, formerly headed Eli Lilly & Co.'s U.S. division. Before that, he served as HHS general counsel and deputy secretary during the George W. Bush administration. During that stint, he received praise for his management competence. Azar "will be a star for better healthcare and lower drug prices!" Trump tweeted.

Andy Slavitt, CMS administrator under the Obama administration, also a lawyer and former United Healthcare executive, offered cautious praise for Azar. "I have reason to hope he would make a good HHS secretary," Slavitt said in a written statement. "He ... has real-world experience enough to be pragmatic, and will hopefully avoid repeating the mistakes of his predecessor in over-politicizing Americans' access to healthcare."

If confirmed, Azar would inherit an agency currently torn by political and policy divisions in the wake of Price's departure (2). He will have to make key decisions to avoid further disruption in the individual health insurance market; how much leeway to give states to make big changes in their Medicaid expansion program; and face pressure to address rising prescription drug costs. One management issue Azar would quickly face is how to deal with Price's ambitious Reimagine HHS initiative to streamline the department's operations and with the White House’s proposal to slash the HHS' budget for 2018 by 18%.

Azar has been a sharp critic of the Affordable Care Act, saying in May that the ACA is "fundamentally broken" and "circling the drain." In June, he envisioned the Trump administration shifting the ACA in a more conservative direction even without repeal and replacement of the law. He also has opposed reducing prescription drug prices or allowing purchasing drugs from other countries where prices are lower.

If confirmed, Azar will represent a return to the recent tradition of selecting Secretaries of HHS with no medical background. Before, Price, only Dr. Otis Bowen (1985-9) and Dr. Louis Sullivan (1989-93) were physicians of the 11 non-interim Secretaries.

Richard A. Robbins, MD

Editor, SWJPCC

References

1. Meyer H. Can Trump's pick to lead HHS navigate the churning political waters of healthcare? Modern Healthcare. November 13, 2017. Available at: http://www.modernhealthcare.com/article/20171113/NEWS/171119968?utm_source=modernhealthcare&utm_medium=email&utm_content=20171113-NEWS-171119968&utm_campaign=am (accessed 11/14/17).
2. Pradhan R, Diamond D. Price investigation continues to roil HHS. Politico. November 13, 2017. Available at: https://www.politico.com/story/2017/11/13/tom-price-private-jets-probe-hhs-244793 (accessed 11/14/17).

Cite as: Robbins RA. Trump nominates former pharmaceutical executive as HHS secretary. Southwest J Pulm Crit Care. 2017;15(5):221-2. doi: https://doi.org/10.13175/swjpcc140-17 PDF

Lawsuits Allege Price Fixing by Generic Drug Makers

Two years after high generic drug prices became a public controversy, Reuters is reporting that 20 states filed a lawsuit Thursday against Mylan, Teva Pharmaceuticals and four other generic drug makers (1). The suit alleges the companies conspired to fix prices or allocated markets to prop up prices. The civil lawsuit, led by antitrust investigators in Connecticut, comes one day after the U.S. Department of Justice filed criminal charges against two former executives of the generic drug maker, Heritage. The states attorneys general asked the court to order the companies to disgorge ill-gotten gains, which were not defined, pay attorneys' fees and stop collusion. Of the states in the Southwest only Nevada is participating in the lawsuit.

The cases are part of a broader generic drug pricing probe that remains under way at the state and federal level, as well as in the U.S. Congress. In 2014, media reports of sharply rising drug prices led to Congressional hearings. "We believe that this is the tip of the iceberg," Connecticut Attorney General George Jepsen told Reuters in an interview. "Price fixing in the generic industry is widespread and pervasive, and it involves many other drugs and a number of other companies."

Both former Heritage CEO Jeffrey Glazer and former Heritage Vice President of Commercial Operations Jason Malek are expected to plead guilty. According to Reuters, it is typical for the Justice Department to file one lawsuit about an ongoing issue and use evidence from those defendants to build subsequent cases against others. Several companies have publicly disclosed receiving subpoenas from the Justice Department related to generic drug pricing including Mylan, Allergan, Lannett, Impax, Par, Sun and Mayne.

The drugs involved in the Justice Department lawsuit include two older drugs, doxycycline hyclate and glyburide. Doxycycline rose from $20 for 500 tablets to $1,849 between October 2013 and May 2014.

Richard A. Robbins, MD

Editor, SWJPCC

Reference

1. Bartz D, Lynch SN. U.S. states sue Mylan, Teva, others for fixing drug prices. Reuters. December 16, 2016. Available at: http://www.reuters.com/article/us-usa-drugpricing-idUSKBN14420C (accessed 12/17/16).

Cite as: Robbins RA. Lawsuits allege price fixing by generic drug makers. Southwest J Pulm Crit Care. 2016;13(6):313. doi: https://doi.org/10.13175/swjpcc142-16 PDF 

CMS Releases Data on Drug Spending

Yesterday (11/14/16) the Centers for Medicare and Medicaid Services (CMS) released data on spending for drugs under Medicare and Medicaid (1,2). Medicare paid $137.4 billion on drugs covered by its prescription drug benefit in 2015. About $8.7 billion of that spending occurred on drugs that had "large" price hikes, defined as a more than 25 percent increase between 2014 and 2015. In 2015, Medicaid paid $57.3 billion about $5.1 billion of which was spent on drugs that had large price increases.

The Medicare spending database highlights 11 drugs that doubled in price. The Medicaid database identified 20 drugs that more than doubled in price with 9 of these being old, generic drugs. Medicare drugs were led by Glumetza, a Type 2 diabetes drug which saw its price soar 380 percent and hydroxychloroquine sulfate, a generic malaria drug, which went up 370 percent. Medicaid drugs were led by Ativan, an anti-anxiety medication approved in 1977, which increased by 1,264 percent in price between 2014 and 2015. Daraprim, a decades-old antiparasitic drug that helped spark political attention to the issue of high drug prices after former pharmaceutical executive Martin Shkreli hiked the price, leapt up in average cost by 874 percent.

However, drugs commonly used in respiratory diseases also increased in price. These were led by mitomycin, an anticancer drug sometimes used in lung cancer, an antidepressant also used as a smoking cessation aid (Table 1).

Table 1. Medicare Spending on Respiratory Drugs. (Open table in separate window)

The data on price on small prices rises can be deceiving when calculating total costs. For example, Advair Diskus, a bronchodilator, ranked in the top-five of Medicare expenditures, with $2.3 billion in spending in 2015. However, he utilization of the drug has actually declined a little over the last five years. Meanwhile, the total spending has not gone down, but increased. Fueled by relatively modest price increases, from $3.81 per unit in 2011 to $5.28 in 2015, the spending on the drug increased by more than half a billion dollars over that period.

Of particular concern is a rise in price of some generics, a class of drugs that are intended to decrease drug prices and spending. Drugs that were responsible for large amounts of overall spending tended to see smaller increases that gradually increased the government outlay. In one outlier, the price of the hepatitis C treatment, Harvoni, decreased slightly in 2015, even as it led overall spending.

The prices do not include the impact of rebates, which are prohibited by law from being released (3). Those discounts can be significant, and not knowing what they are means the numbers almost certainly overstate how much the government actually paid for these drugs. CMS disclosed that, on average, rebates for brand name drugs were 17.5 percent for medicines covered by Medicare's "part D" prescription drug benefit in 2014.

Richard A. Robbins, MD

Editor, SWJPCC

References

1. CMS. 2015 Medicare drug spending dashboard. Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/2015Medicare.html (accessed 11/15/16.
2. CMS. 2015 Medicaid drug spending dashboard. Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/2015Medicaid.html (accessed 11/15/16).
3. Johnson CY. Drugs for hepatitis C and diabetes drove Medicare spending in 2015. Washington Post. November 14, 2016. Available at: https://www.washingtonpost.com/news/wonk/wp/2016/11/14/the-drugs-driving-up-medicare-spending/ (accessed 11/15/16).

Cite as: Robbins RA. CMS releases data on drug spending. Southwest J Pulm Crit Care. 2016;13(5):242-3. doi: https://doi.org/10.13175/swjpcc118-16 PDF