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President Trump laid out his long-awaited plan for tackling drug prices on Friday. Health and Human Services Secretary Alex Azar joins Judy Woodruff to fill in the details about the plan, including how it will affect prices under Medicare, why the administration is calling on pharmaceutical companies to list their prices and more.
And now to the president's point man on prescription drug costs and what Mr. Trump proposed last week to lower prices.
His plan aims to improve competition for drugs, in part by speeding generic drugs to market, give Medicare-approved insurance plans more power to negotiate with pharmaceutical companies over the prices of just some drugs, use trade deals to force other countries to pay for drugs they buy from the U.S., with the hope that it would lower — would lead to lower costs here, and potentially require drug-makers to disclose their list prices as part of advertising.
But the president backed away from what he once called for as a candidate: allowing Medicare to use its full power and leverage to negotiate prices directly with drug-makers.
Alex Azar is the secretary of health and human services, and he joins me now.
Mr. Secretary, thank you very much for being with us.
So, as we just said, you have outlined a number of things you're doing, but what — people are pointing to what the president said as a candidate and even as president.
He said, look, the biggest negotiating power is from the federal government itself. It buys more drugs than anybody else. Why not have an overall — overall, let Medicare negotiate with drug companies?
That is completely what the president's plan would do.
This has been a great misunderstanding or misrepresentation that's happened out there. What the president has called for is, in the two biggest parts of the Medicare program where we pay for drugs, Medicare Part D, which is that retail pharmacy program for senior citizens, to increase the power of the drug plans that we currently have negotiating for our seniors, give them the power to better negotiate, just like commercial plans do.
And then take this whole other segment, Part B, which is the drugs that you would get that your physician administers when you're in the physician's office, for the first time in history, negotiate and use the power of Medicare to negotiate discounts in Part B.
So, actually, this is bigger and broader than anything that has ever been proposed before in Medicare, using the full power of Medicare to negotiate against pharma companies.
But aren't you picking and choosing? You're talking about Part B and you're talking about Part D.
And, by the way, I'm sure many in our audience don't quite — unless they're into Medicare, may not understand the differences. Wouldn't it have been simpler, bigger and more effective to say all of Medicare can negotiate with these pharmaceutical companies, that that's where the real clout would be?
So, this actually pretty much includes every drug that we pay for in Medicare for seniors, the ones you buy at your pharmacy — that's that retail drug program — and the drugs that you would have infused, for instance, by the doctor in the office. That's that Part B.
This brings full-power negotiation, the power of the federal government, to all of those drugs. That's our goal, all of those drugs.
The only critique has been really what — frankly, it's been a bit of a tired, cheap talking point — has been this idea that I, as secretary, should do the negotiating directly, rather than companies that know how to do this.
Well, a couple of things. First, this is the same government that often brings you $400 toilet seats when it comes to procurement, so not the best at doing negotiations and procurement.
Second, Peter Orszag, who was the head of the Congressional Budget Office and then President Obama's head of the Office of Management and Budget, he, OMB and CBO, under that leadership concluded that direct negotiations wouldn't bring any material savings to the program.
But what we're doing will, because we're introducing more tools to negotiate, and we're bringing negotiation to this other big segment of those drugs you get that the doctor administers to you for the first time ever.
I pay list price right now. Isn't that amazing?
So, you're saying this is the equivalent of doing what the president talked about during the campaign?
It's better. It is fulfilling the president's commitment to negotiate and bid better, but even more.
Well, let me ask you about a couple of other elements. You have got a whole list of proposals here.
One of the things you're talking about is requiring pharmaceutical companies to list the prices of drugs in their advertising. There are already skeptics out there saying, 'Wait a minute, do you really think that this is going to work?'
What makes you think that will work?
Well, we fundamentally believe that, as a citizen, when you're watching a TV ad that is trying to entice you to go to your doctor's office and ask that doctor for a drug, that you are owed as part of a fair balance, information, to know how much the drug costs.
What are they trying to get for that drug? I think it's material to know if the drug that you're being pitched is a $100 drug or a $50,000 drug.
God help you if a senior citizen watches an ad and pays for a doctor's appointment to find out that it's a $50,000, unaffordable drug that he or she couldn't get. I just think that's fair information they ought to have.
And so, today, I have called on America's pharma industry to begin voluntarily disclosing list prices in their ads. We're going to work the regulatory process, but they can start that now.
But do you — how many of them do you think are going to take that — take you up on that and do it?
Well, we're going to get there one way or the other, so I hope they will get there now.
Another part of this proposal, increasing — you say increasing competition, lowering out-of-pocket costs.
What does that mean?
So, right now, so many people pay so much out of pocket for their medicines, especially as we now have these higher-deductible health care plans and as insurance companies have pushed more of the cost burden on to us.
When we walk into the pharmacy, we're asked to pay such a higher percentage. So, we have got proposals for our Medicare plan to reduce how much our senior citizens will pay out of pocket.
And we have actually asked for Congress to put a cap on the amount of out-of-pocket a senior would ever have to pay during a year.
We have asked for low-income senior citizens to pay nothing for generic drugs out of pocket. And we have already changed how we reimburse our drugs for those physician-administered infusion drugs. We have changed the reimbursement that pulls down the out-of-pocket for seniors by $320 million a year already.
This all requires congressional approval, though, right?
Very little of it does.
Some of those changes to benefit design I just mentioned would require congressional approval. But the vast, vast majority of what we're doing, I have the power to implement.
The secretary of HHS has a shocking amount of power by the stroke of a pen. And we intend to exercise it.
Alright, another element of this, proposing to use trade deals to force foreign governments to pay more for the drugs they buy from U.S. pharmaceutical companies.
Some people are saying, 'OK, that sounds like a great idea, but how do we know those — that these pharmaceutical companies are actually going to use that extra money to lower prices here in the United States?'
And I think that's a fair question.
It's not necessarily to lower it. It's to ensure they're paying their fair share.
In the U.S., we need to pay less. And there are a host of initiatives we have had — that we have to bring better negotiation and reduce list prices in the U.S. We have got to pay less. Our point is, they should be paying more of their fair share.
And I have already met with Ambassador Lighthizer, the U.S. trade representative. And he's working on strategies on how we could take this to our trading partners, who ought to be paying more, and use the full weight of the U.S. government's trading power to try to get them to pay more.
But the main thing we have got to do in the U.S. is bring our prices down.
Two more quick things.
One comes from critics. They point out you, Alex Azar, come to this position in government having been the head of the U.S. operations for Eli Lilly, one of the big pharmaceutical companies.
They're saying, 'Alright, if they didn't do enough to lower prices then, how can we trust that you're going to do it now?
Yes, I could say judge me by our actions and the plans that we have and that we are putting out there the most comprehensive plan to address drug pricing and bring them down of any president, Democratic or Republican, ideas in here that conservatives and liberals have never thought of.
How? Because we have experts at the table who know how this system works, know the levers that actually impact. I have been on the inside of it. I have worked in that system.
And one of the things that I love about being in the government, I can change the system. The rational actors, the pharma companies, every incentive in the system is towards higher prices. The system has to change.
The president has given me the — he has given me the mandate to work to change that system.
One final question, in brief, health care coverage overall.
This administration, of course, has been moving to dismantle Obamacare, the Affordable Care Act. We learned this week that number of — the rate of working-age Americans without health insurance has risen to 15.5 percent since 2016, and that things are worse in those states, those, I think, 19 states that decided not to expand Medicaid.
My question is, does this suggest that what the Trump administration is doing is leading to less health coverage? In other words, you're ending up doing the opposite of what you wanted to do with health care coverage in this country?
In fact, the Affordable Care Act plans are unaffordable and they're lacking in choice for individuals. And it's shoving these 28 million forgotten men and women out of that individual market. It's pricing them out of that market.
What we're trying to do is bring them low-cost plans that they can afford, and then work with Congress to actually replace the system with a better one.
And I want to use all of my administrative authority to try to make affordable insurance available for people. But within the contours of the individual market that the Obamacare created there, it's pricing people out.
We had 6.7 million Americans pay $3.1 billion in the Affordable Care Act taxes to not buy insurance they couldn't afford.
Big subject. We would love to have you back on to talk about this in greater detail.
Secretary of Health and Human Services Alex Azar, thank you very much.
Thank you, Judy.
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