Azar Tells 340B Meeting "Change Is Coming" After Trump Tweets About Drug Prices

About an hour before HHS Secretary Alex Azar was due to give a keynote speech about drug prices at the 340B Coalition Summer Conference, his appearance was foreshadowed by a tweet from President Donald Trump.

Singling out one pharmaceutical firm in particular, the president tweeted:

Azar was there to talk about drug prices before a skeptical audience. Revamping the 340B drug discount program, which has seen significant discord over the years, is one of the many ways that the Trump administration is seeking to reshape healthcare financing.

Azar referenced Trump’s tweet, saying, “The president has noticed and I have noticed.”

“The special interests should be prepared for change in our system because change is coming,” he said towards the end of his remarks.

Since the administration released its plan to reduce drug prices in May, some pharmaceutical firms, have raised prices. Besides Pfizer, the list includes Teva, Fresenius Kabi, Avanir, Sandoz, Novartis, Northstar, Acella, and others.

According to a research report from Wells Fargo Securities, Teva had 14 of the 63 price increases in June, including drugs for attention-deficit/hyperactivity disorder, cancer pain, oral contraceptives, and a recently launched Huntington’s disease drug, Austedo.

Pfizer was apparently highlighted by the president for raising prices on 41 drugs, including Viagra.

Earlier in his speech, as he has done before in other remarks, Azar criticized drug list prices, saying “something must be done.”

“Most significantly, we are examining whether we need to disrupt the entire system of rebates, which drives list prices ever higher while patients keep paying more,” he said. “Eliminating rebates within the Medicare program, pushing the system toward fixed-price discounts, is well within our administrative powers.”

Referring to the 340B program, the administration believes that changes created by the Affordable Care Act has created a system whereby there is no way to tell if the discounts given to hospitals and providers are still benefitting the patients they were meant to, due to a lack of transparency.

“Everyone here who serves the needy understands the importance of adapting our work to changing circumstances,” said Azar, but the nation’s “system of healthcare regulation and financing has not always kept up with these changes.”

Regarding 340B specifically, Azar said 2 kinds of reforms are needed. One involves more transparency about how discounts are being used, and 1 involves reforms “to reduce the gap between discounted prices and the reimbursement provided, particularly by government programs.

In some cases, he claimed, patients pay more in cost sharing than the hospital or provider pays for the drug covered under 340B.

Last year, CMS finalized a reform under the hospital Outpatient Prospective Payment System, adjusting payment for drugs purchased through the 340B program to average sales price (ASP) minus 22.5%, instead of ASP plus 6%.

Rural sole community hospitals, certain cancer hospitals, and children’s hospitals, however, are exempt from this reform.

The new HHS plan states that 340B hospitals can retain savings from the drug discounts only if they provide a threshold level of charity care.

“The new payment level is still above the average price actually paid by 340B entities, but it is closer to reality,” Azar said.

After Azar left the stage, Maureen Testoni, the interim president and chief executive officer for 340B Health, paused a moment before speaking. “Well, OK,” she said, to audience laughter, before crediting the secretary for coming and “being very frank.” She cited the work of the 1300 hospitals and health systems participating in the federal 340B drug pricing program, adding, “we need to make sure our elected officials understand all of that.”