This week, a Trump cabinet nominee got up in front of the Senate and made this claim: when drug companies charge more money for a product — as Mylan, for example, did when they quadrupled the price of EpiPen — the company does not make more money.
Let that one marinate for a second.
The (almost impressively) ludicrous claim was just the tip of the iceberg during the confirmation hearing for Alex Azar, a former president at giant pharma corporation Eli Lilly, Trump’s nominee for Secretary of Health and Human Services.
The hearing had hours’ worth of ridiculous claims, so let’s narrow it down: here are the top five jaw-droppers from Azar’s confirmation hearing this week:
1. Drug prices are way too high – but it’s not Big Pharma’s fault.
Azar acknowledged that drug prices are too high – in fact, he was eager to make the point. But he twisted and turned to avoid pinning any responsibility on Big Pharma.
The problem, he said, was “the system” and “incentives” – code for blaming insurers, pharmacy benefit managers, and the New York Yankees. Ok, not the Yankees. But he was eager to tarnish any and all of the actors in the healthcare system except the one that matters most: the drug companies that leverage their monopoly power to charge exorbitant prices – which they raise year after year after year. The result: One in six Americans ration their meds because of price issues.
2. Drug companies don’t benefit from high drug prices.
This one was breathtaking.
Asked about insulin prices that tripled while he was at Eli Lilly, Azar talked about the amazing complexity of the pharmaceutical system. Prices jumped sure, but it didn’t benefit Lilly, he said: “This is what is so bizarre about the way the system is organized. Those price increases happen, and my former employer has said this publicly, the net realized price by the company stayed flat.”
The truth, of course, is that when you read Lilly’s annual reports, you find that U.S. revenues from their major insulin products doubled from 2007 to 2016, and that this was due both to increased sales and “higher realized prices.”
What does “higher realized prices” mean? It reflects the not-so-startling reality that when Lilly raised insulin prices, the company made more money on each sale.
3. He never — not once — authorized a lower price while at Eli Lilly.
This confession took some extracting by Senator Ron Wyden, D-Oregon. Here was the back-and-forth:
Wyden: “Did you ever lower the price, ever, of a Lilly drug sold in the United States?”
Azar: “Drug prices are too high, Senator Wyden. I’ve said that. I said that when I was at Lilly. Every incentive — ”
Wyden: “That is not the question. Did you ever lower the price?”
Azar: “I don’t know that there is any drug price of a branded product that has ever gone down from any company on any drug in the United States because every incentive in this system is toward higher prices.” …
Wyden: “Let the record show that when that specific question for Mr. Azar was asked and the bipartisan Senate Finance Committee was present – did he ever lower the price of a Lilly drug sold in the United States? – Mr. Azar said ‘no.’”
So to recap: Azar wants us to believe he thinks drug prices are too high. He wants us to believe he can transition from prioritizing cash to prioritizing the public. But the man never took a step to cut the price of a drug? Not once? Now that is sick.
4. Medicare should not negotiate prices.
You’ll recall that Medicare – although it is responsible for about 7 percent of pharmaceutical purchases in the entire world – is forbidden by law from negotiating drug prices. That’s because of one single provision that Big Pharma had inserted into the law creating the Medicare drug benefit.
Getting rid of that provision and allowing Medicare negotiation would save $16 billion every year, and that’s only the conservative estimate.
True to form, Azar tried to dodge a question about Medicare negotiation by saying negotiation already takes place.
But, once pinned down, he said he opposed Medicare negotiation because it wouldn’t lower drug prices unless it restricted patient access. Well, the Veterans’ Administration does it, no problem. And the access problem he’s purportedly worried about could be solved, easily, by the government buying generic versions of drugs if brand-name corporations refuse to agree to a reasonable price in negotiations.
But of course, that wouldn’t be great for the massive profits of a corporation like Eli Lilly. Azar’s priorities are pretty clear.
5. Notwithstanding the talk about lowering drug prices, maybe they should be higher!
Azar is a big believer, he said, in “value-based” pricing.
The idea is that the government and insurers should pay based on the “value” of a drug, and should pay only for the drugs that work, not those that don’t.
If you know much about Big Pharma, you know what they really mean: for drugs that provide real health benefits, pay us all your arms and legs, and then some.
Here’s the latest example. A company called Spark Therapeutics just won approval for a new treatment for a rare form of blindness. The company’s CEO said that, taking into account “quality of life and direct medical cost over a patient’s lifetime, that there is support for the value of the therapy in excess of $1 million per patient.” Well, sure, it’s reasonable to value sight at $1 million, or maybe a lot more. But that doesn’t mean we as a society should pay $1 million for a blindness treatment, or the $850,000 per person that Spark wants to charge.
But Spark’s approach is, apparently, one that our would-be Secretary of Health and Human Services thinks is reasonable.
It also just so happens to be one that will blow up the healthcare system.
This was a confirmation hearing, alright. Azar confirmed that he has no business running the nation’s top health agency.