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“Change is coming to prescription drug pricing” warns HHS secretary

“Change is coming to prescription drug pricing,” is the message from Health and Human Services (HHS) secretary Alex Azar, who made the comments at the annual meeting of 340B Health, a trade group for 340B hospitals. 

At the meeting, he suggested the existing 340B system is in need of certain reforms, notably regarding transparency and distribution and use of benefits. Furthermore, the HHS official took aim at pharmaceutical firms, warning that changes to drug pricing were imminent, “whether it's painful or not for pharmaceutical companies”.

He said the failure of manufacturers to heed the current administration’s calls for lower drug prices could create a “tipping point in US drug pricing policy”. Earlier this month, President Trump took to Twitter to criticise pharmaceutical giant Pfizer for introducing its second round of price increases this year. Azar cited this as evidence of the growing dissatisfaction with drug pricing, stating: “The President's noticed, I've noticed, and, more importantly, the American people have noticed”. 

Pfizer initially responded to criticisms of the price hikes to some of its most prescribed medication, including Lyrica (pregabalin), Lipitor (atorvastatin), Viagra (sildenafil), and Chantix (varenicline), by stating list prices would remain unchanged on the majority of its portfolio. 

A company spokesperson observed that prices were only changed on around ten percent of its drugs (approximately 40 medications), including five which were reduced in price. However, earlier this week Pfizer announced a postponement of the current round of price increases, returning the cost of drugs to the levels seen before July 1st, 2018. 

Additionally, Azar identified certain issues with the 340B system and calling for reforms. Created in 1992, the 340B Drug Discount Program is a US federal government program requiring pharmaceutical manufacturers to provide certain outpatient drugs to eligible healthcare organizations (such as hospitals and clinics) at a significantly reduced price. 

However, Azar suggested the current system requires more statutory oversight to ensure the appropriate distribution and use of the benefits offered by the program, explaining it is currently too easy for benefits to be “diverted to unintended purposes, unrelated to supporting care for low-income patients”. 

The HHS official called for two kinds of reforms to improve the 340B pricing program, citing a need for greater transparency regarding how the discounts are used and “reforms to reduce the gap between discounted prices and the reimbursement provided, particularly by government programs”. 

Azar claimed a patient on Medicare could pay cost-sharing on the full price of an eligible drug administered by their healthcare provider (for example at their doctor’s office), while the provider purchases the drug at a hefty discount, which is not passed on to the patient and which may be so significant the patient’s cost sharing could prove higher than the price the doctor paid.