[Ip-health] Wall Street Journal vs. Public Citizen on Azar & insulin price spikes

Peter Maybarduk pmaybarduk at citizen.org
Sun Nov 19 17:48:56 PST 2017

Our exchange with The Wall Street Journal editorial board this week regarding Alex Azar's nomination to lead the U.S. Department of Health & Human Services. I am the "talking head from Public Citizen." 
A point cut from the exchange, unfortunately, is that University of Toronto researchers isolated insulin a century ago and gifted it to humanity. -Peter

LTE: Azar's Pharma Record Includes Higher Prices
During Alex Azar's tenure as Lilly USA president and vice president, Eli Lilly, Novo Nordisk and Sanofi, the "big three," tripled the price of insulin in near lockstep.
Nov. 19, 2017 1:36 p.m. ET

Regarding your editorial "Oh, No, a Pharma Exec," Nov. 14 about Alex Azar's nomination to lead the Department of Health & Human Services: One in five Americans now foregoes needed prescriptions due to their cost. During Mr. Azar's tenure as Lilly USA president and in other senior jobs, Eli Lilly, Novo Nordisk and Sanofi, the "big three," tripled the price of the major insulin products in near lockstep.

They used high list prices to attract the business of pharmacy-benefit managers, middlemen who keep an undisclosed percentage of the undisclosed discounts they negotiate with manufacturers. In other words, the big three chose to compete by increasing payouts to middlemen rather than by reducing prices to consumers. Together they drove up health-care costs for everyone. People living with diabetes are paying much more out of pocket as a result, if they can afford to pay. Many ration their insulin use against their own health needs.

The big three designed aggressive patent barriers and now control 96% of the global supply. We are not paying for innovation or, in your words, "the reality of market economics." We are paying oligopolists to destroy markets. 

The U.S. government's top health official must be prepared to impose discipline on manufacturers, reduce government subsidies and tolerance for anticompetitive behavior. Alex Azar's record suggests he is more likely to defend drug corporation value, even if the cost to Americans is far too high.

Peter Maybarduk, Public Citizen

Oh, No, a Pharma Exec
As a businessman, Alex Azar raised drug prices. String him up.
The Editorial Board
Nov. 13, 2017 6:12 p.m. ET

One reason men and women in business are reluctant to go to Washington is the reception accorded Alex Azar Monday after President Trump said he will nominate the former Eli Lilly & Co. executive to lead the Health and Human Services Department. Mr. Azar was immediately criticized for, well, knowing too much about health care.

"It's a pharma fox to run the HHS henhouse," a talking head from Public Citizen told the Washington Post, which headlined the same piece "Trump's pick to lower drug prices is a former pharma executive who raised them." It seems that when Mr. Azar was president, Lilly "doubled the U.S. list price of its top-selling insulin drug."

Well, sure, pharma executives are paid by shareholders to make money selling drugs. Profits drive drug innovation, so there wouldn't be better treatments without profits, which sometimes requires raising prices. Pardon the reality of market economics.

No doubt Mr. Azar's record will be parsed by Senate Democrats, but it's always possible that knowing the industry makes Mr. Azar the right man to regulate it. He can't do any worse than the Obama Administration, which cut a political deal with Big Pharma on drug pricing to win its support for ObamaCare. Mr. Azar has been a critic of ObamaCare, which may be the real explanation for the instant opposition.

Washington Post Wonkblog: Trump's pick to lower drug prices is a former pharma executive who raised them
By Carolyn Y. Johnson, November 13 

President Trump's pick for health secretary previously served as a high-ranking executive at a pharmaceutical company that repeatedly raised the prices of its drugs, doubling the U.S. list price of its top-selling insulin over the five years he served as a company president. Trump endorsed Alex Azar, a previous deputy secretary of Health and Human Services under President George W. Bush and pharmaceuticals executive at diabetes pharmaceuticals giant Eli Lilly, as "a star for better health care and lower drug prices" on Twitter. 

Supporters said that Azar's understanding of the complicated dynamics behind pharmaceuticals pricing would give him an advantage in figuring out how to make drugs more affordable. 

Critics, however, noted that Azar's tenure at Lilly coincided with massive list price increases on insulin and made him particularly ill-suited to lower drug prices. While Azar led Eli Lilly's largest affiliate, Lilly USA, the U.S. list price of Humalog insulin more than doubled, from $123 per vial in Jan. 2012 to $255 per vial when he left the company in early 2017, according to data from Truven Health Analytics. Lilly, along with other insulin makers, was hit by a class-action lawsuit alleging overpricing of insulin earlier this year. 

"Alex had a successful career at Lilly, and we wish him the best in his future work," Lilly spokesman Greg Kueterman said in an email. Azar joined Lilly in 2007 as a senior vice president of global corporate affairs and communications. He rose to become president of the company's largest affiliate, Lilly USA, in 2012. Kueterman said his responsibilities included direction over the sales and marketing operations of the entire U.S. commercial business, including diabetes. 

"This is the terrible record on price that we saw; now we're talking about putting him in charge of the people's health agency - what reason do we have to expect any difference?" said Peter Maybarduk, director of the Access to Medicines Program at Public Citizen, a watchdog group. "It's a pharma fox to run the HHS henhouse." 

The list price increases on Humalog and other insulins are often painted by advocates as a simple illustration of pharmaceutical greed. But Lilly executives have repeatedly said the net prices, the amount the company reaps after it provides rebates to companies called pharmacy benefit managers that negotiate on behalf of insurers, has been essentially flat. Kueterman said the final net price for Humalog has declined since 2009. 

The rising list prices have resulted in ever bigger rebates - meaning the benefit from price increases goes not just to drug companies, but to middlemen including pharmacy benefit managers, retail pharmacies, health insurers and wholesalers. Patients with high deductible plans are especially hard hit by those list price increases. 

"Mr. Azar's experience in the public and private sector makes him uniquely positioned to accomplish the President's goal of lowering drug prices - a goal that Mr. Azar shares," White House deputy press secretary Hogan Gidley said in an email. "He's been a consistent outspoken longtime advocate for lower drug prices, publicly calling for reduced restrictions on the production of generic drugs so Americans can have access to affordable medications." 

The complexity of pharmaceutical pricing - where list prices are typically a starting point for the negotiation of secret rebates - has thwarted legislation to lower drug prices, although Congress has held a number of high-profile hearings on the issue. 

"This is someone who understands the complex system we've built - and the warped channel incentives baked into the system. I don't think it's possible to reform the system unless you truly understand this very complicated system we've created," said Adam Fein, president of Pembroke Consulting. "I think there are very few people who understand well enough, from both the business side and the policy side ... solutions that would actually make things more affordable for patients."

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