HHS Secretary Alex Azar joined me this morning:
HH: I’m now happy to welcome back Health and Human Services Secretary Alex Azar. Good morning, Mr. Secretary, good to have you on the program.
AA: Good morning, Hugh, it’s great to be with you again.
HH: I hope my friends Ann Agnew and Kristina Pelakoudas continue to work well with you. I bring them up only because the New Yorker has a story today, before we go to the drug program, about how the so-called “deep state,” the permanent government, is upset that the political appointees are not writing things down and destroying documents and stuff. Is that going on at HHS? It seems to me to be nonsense.
AA: Well, I’ll tell you, Ann and Kristina certainly keep all of us on the straight and narrow. And you know, one of the, this is one of the great things. Here at HHS, we actually have a really unified team. We’ve got such a clear sense of mission, and everybody’s working to support where the President’s trying to drive health care. So I just don’t see the kind of conflicts you hear about at other departments. I’ve had zero issues throughout out department. We’re aligned on trying to make health care more affordable, more accessible. That’s part of the drug thing we’re going to talk about today, Hugh.
HH: All right, let’s go to the drug thing. The President made an announcement with you at his side about controlling the cost of prescription drugs. I want to give you a minute just to outline its key, and then go to some of the controversy around it. What do you think of the major points of the President’s announcement?
AA: You betcha. So the President has proposed changes. They’re more sweeping than any drug pricing initiative ever before from a Democratic president, from a Republican president, ideas that have never even been seen by liberals or conservatives. You know, we’re calling for drug companies to have to put their list prices in their TV ads, so that if they’re going to ask you to pay $50,000 for a therapy that only has a marginal benefit, they’ve got to be candid about that and disclose that to you so that you don’t go into your doctor demanding that therapy without even having an idea of how expensive it is. We’re immediately tackling gaming in the system that keeps cheaper generics and bio-similar drugs from our people. We’re introducing hard core competition on behalf of Medicare harnessing the power of Medicare to go after the drug companies to bring savings to our senior citizens, to our taxpayers, and also keep choice in the program, which is what a lot of our opponents would not do.
HH: Now Mr. Secretary, that brings me right to the biggest criticism: There is no, I’m quoting from one of the accounts of the Friday event, there is no plan to allow Medicare to directly barter with drug companies. How do you respond to that?
AA: I’d say they cannot, they are not listening, and they are not reading, because what we are doing is more sweeping than anybody’s ever proposed before. We are enhancing the powers of the retail prescription drug program, what’s called Part D. We are unshackling these middlemen, these Part D plans, that negotiate on our behalf. We are unshackling them to go after big Pharma and finally get deep discounts in parts of the program that had been walled off, drugs that had been held in what are called these six protected classes where they didn’t have power to negotiate. We are unleashing them against Pharma on those drugs. And we are calling for negotiation on our behalf in Part B, which is the part of the drug program where any physician-administered drugs, so drugs that are like infused by a doctor’s office or a hospital, right now, for decades under Democrats and Republicans, all we have done is pay sticker price plus a markup for those drugs. And President Trump has now called for that program to be moved over to Part D, where we negotiate deep discounts, so moving from zero rebates and discounts to on average 30% kind of rebates and discounts like we have in Part D. So I don’t know what they’re talking about. This is the President doing exactly what he said. He’s going to harness the power of Medicare to negotiate on behalf of seniors and taxpayers. And he’s going to have improved bidding for these programs. I don’t get it. I don’t know what they’re talking about.
HH: But you did see that, right? That was the whole headline, is oh, you might have done all these different things, but he’s not letting Medicare use the price of the market to negotiate. So are you saying that’s exactly wrong?
AA: That’s completely incorrect and false. What they’re talking about are cheap, political gimmicks like saying the Secretary should do the negotiating instead of these drug plans. Well, you know what? The same people who bring you $400 toilet seats in procurement are not the people to negotiate best with these big drug companies. You need these big, bad middlemen, these Part D drug plans, to hit these companies hard. I know. I was on the other side. They know what they’re doing. We have to unleash them and sick them on the drug companies. They know how to manage this, but they know how to manage it in a way that is appropriate to our patients and retains free market choice for our patients in their programs. The only, even the Democrats, even Peter Orszag, who was the Democratic head of the Congressional Budget Office, and then President Obama’s head of the Office of Management and Budget, has repeatedly made clear that having me as Secretary do the negotiation wouldn’t yield any savings to seniors or government programs unless you move to a system like Obamacare of rationing care, denying access to medicine, denying choice and moving to a European socialist style system of one size fits all.
HH: Secretary Azar, then, I’ve got to ask you to expand a little bit on the lens. Why does this happen? Why would an almost collective response of the mainstream media misrepresent what happened Friday?
AA: Do you think the mainstream media wants President Trump to be viewed as being successful and tough and bringing down drug prices for our citizens? Probably not, and so we’re going to have to fight through and around them so people understand just how comprehensive, how bold and how much this is in keeping with his promise to use the power of Medicare, but the right way, the effective way to negotiate discounts for our people and enhance the bidding in our programs.
HH: Now Secretary Azar, you are a very fine lawyer. You’re a Luttig clerk and a Scalia clerk, and so you will have read a long time ago Virginia Pharmacy Board V. Virginia Consumer Council, a case I teach every single year about the 1st Amendment right to know your prices when you go into a pharmacy, right? That’s a 1st Amendment right to know what your prices are. You have been pursuing what is called the value agenda, which I think comes down to the idea that if you expose pricing in everything, whether it’s a doctor’s office visit to a drug, you get greater efficiency. Is that the summary of what you’re about?
AA: That is a part of it. I’d say it’s a small part of it, because with, this plan is so comprehensive, but yes, Hugh, we believe in transparency. We want transparency of pricing. We have called for in this plan to require that when senior citizens, of course, we act through senior citizens. We act through our programs that we can influence most directly where we are paying the check and paying the bill. But we want our senior citizens to have the right when they’re in the doctor’s office, and the doctor’s writing a prescription, to know what they’re going to pay out of pocket under their particular drug plan when they go into the pharmacy. We also want that patient to know what the competing options are in terms of their out of pocket expense on other types of drugs so they can have an informed discussion with their doctor and say you know, I really can’t afford a $300 dollar co-pay. Would that $25 dollar co-pay drug be good enough for me? Would that work, possibly?
HH: You know, Mr. Secretary, I’m a not slow fellow, and when I go to the doctor, I get confused. And doctors are rushed, and they write their prescriptions in a way, they’re going to laugh at me, you can’t even read them, much less write them.
HH: How in the world are you going to make this stick? I mean, doctors are rushed. They’ve got per capita, I mean, they’ve got capitation issues. They’ve got to move along. How in the world are you going to get them into the pricing business?
AA: Well, they’re not, don’t need to be in the pricing business, but they’re already using an electronic prescribing system. And it simply needs to be billed within that system, and the technology is there where it can show, where it can and will show the patients, under the patient’s drug plan, that’s already in the EMR, in the electronic medical record that the doctor is using, or the hospital is using, and it can pull up what they would pay and what their alternative drugs are that are in that therapeutic area. I mean, Hugh, here’s the kind of thing we’re talking about that is, that the President is tackling, that not even any Democrat has gone after before, which is when you go into the doctor’s office, let’s say you have rheumatoid arthritis. That doctor may also have an infusion clinic, that’s the kind of, that’s infusions of the drugs. They put an IV in you. Well, those are paid for under Part B as in boy, okay? That doctor may have an infusion clinic. And they may say you know what? For this treatment, I’m going to put you on this infusion drug. And you know, let’s say your co-payment for that under Medicare is usually 20% of the cost of the drug. So you’re going to pay, let’s call it, let’s call it $200 dollars on a $1,000 dollar treatment. Well, he doesn’t have to tell you that if instead he wrote you a prescription for a self-injected medicine that you went to your neighborhood pharmacy and got under your formulary, you might only pay $25 dollars. And maybe it’s even a more effective therapy. So that’s why we’re trying to get these drugs that are currently not competed in Part B into Part D, that retain pharmacy program…
HH: It’s a big deal.
AA: Where we negotiate it.
HH: That’s a big deal. That’s a very big deal. How long do you expect that to take until it gets traction and shows up in the marketplace and seniors begin to get that information?
AA: So some of this, we’re going to do directly. We’re going to be announcing today the rejuvenation of what we call a competitive acquisition program. And that’s where we directly negotiate in Part B for discounts for those expensive infusion drugs. But also, we’ve called on Congress, and we need Congress to get moving here, to give us the authority to move these drugs from Part B, where there’s no negotiation, just sticker price, and move them into Part D. I mean, Hugh, you know, as you know, I used to lead the U.S. arm of a big drug company, so…
HH: Lilly, yeah. Yeah.
AA: So I know this stuff, okay? And here’s the difference between Part B and Part D, B again is those physician-administered drugs in a hospital or the doctor’s office, D is the drugs that you get when you go to your neighborhood pharmacy, and you administer to yourself. When you’re getting drugs in Part B, whenever you’re launching a drug, if you’re a drug company, an infusion drug is immediately covered by Medicare, no questions asked for the most part. If your drug is a Part D drug, it’s not covered by insurance companies until you, the drug company, can make it worth their while to cover by giving discounts and accommodating the patient’s needs. In Part B, you pick any price you want, and you pay full price, and we, the government, pay full price. In Part D, we get average 30% discounts and rebates. In Part B, there’s no formulary management. It’s a free for all. There’s no direction. You pick whatever drug you want. The doctor picks whatever drug you want. You get that drug. There is no step. There is no failing first on more affordable therapies. You just pay, the doctor picks the drug you want. Part D, it’s tightly managed, it’s controlled, it’s medically appropriate. And so what do you think happens if you’re running a drug company in drug development? You actually look at that and say geez, I might want to develop my drug so it’s physician-administered as opposed to self-administered at the pharmacy, because that Part B program sounds pretty good. That’s a pretty no hassle program that keeps me in the driver’s seat, and nobody’s negotiating against me. That’s what President Trump is changing here. And you know, he needs to get the credit for this fact that he’s bringing the power of Medicare against these drugs where there’s no negotiation. It’s a free for all right now.
HH: That is remarkable. I’m glad you explained that. I want to use our last ten minutes on a couple of other subjects, Mr. Secretary. The first one is Berkshire Hathaway founder Warren Buffett, Amazon’s Jeff Bezos and J.P. Morgan/Chase’s Jamie Diamond have announced a project in the planning stages to “tackle the ballooning cost of health care act, which is a hungry tapeworm on the American economy,” according to Buffett. Do you welcome that partnership?
AA: I welcome any efforts in the private sector that work to tackle drug costs and help bring us to a more value-based efficient system. You know, there’s another, that’s, they haven’t laid out what they’re going to do. If this is more them as employers of tens of thousands of people or if this is them using the power of Amazon for alternative distribution tactics, I don’t know. Of course, anytime Amazon is involved, I’m curious. Amazon has long been the actor here that Pharma companies, distributors, pharmacy benefit managers and insurers have lived in fear of and pharmacies. How might they enter this space and act? I don’t know what they’re talking about. I don’t think they have even laid down anything, yet.
HH: That’s a useful fear, isn’t it, Mr. Secretary? It’s a useful fear.
AA: Oh, it is. Absolutely. It’s good to have, listen, this is an industry that needs shaking up. And any external pressure from other actors, whether it’s me from the government side and President Trump, or if it’s other commercial players that have a lot of employees and a lot of power, they need to be shaken up and they need it taken to them. There’s another big effort called the health transformation alliance that pulls together, I think it’s the 40 biggest company employers, and they’ve been working to negotiate down drug costs also, now pooling in the commercial space their power the way President Trump is pooling together the power of Medicare here.
HH: Okay, now have they asked to meet with you, these big three titans of American industry? Have they said Mr. Secretary, let’s sit down and reason together?
AA: To my knowledge, they have not, but I would gladly do so. I’ll meet with anyone who’s got solutions and ideas on how we can bring value to our system and decrease costs anywhere in our system. Listen, one thing, one thing that I am known for is being very open-minded, very solution-oriented. If anything will be an effective solution, be safe for patients and respect choice and access for people in this country, I’m all ears. I want to hear about it.
HH: Now Secretary Azar, I want to go in the wayback machine. Before you were the secretary, before you were at Lilly, you were a terrific lawyer. I mentioned in the introduction you clerked for my friend, Judge Luttig. You worked for Justice Scalia. You also worked for Ken Starr in the independent counsel’s office, and that goes way back. Today’s Wall Street Journal has a piece by Steve Calabrese, Northwestern professor of law, that perhaps Special Counsel Mueller is unaware of the decision in Morrison V. Olson, and has exceeded their authority. What do you think about the authority of the special counsel vis-à-vis the independent counsel act, which is gone, and whether or not your eyebrows are going up over some of their actions concerning the limit of their authority under the special counsel regulations?
AA: So Hugh, as you mentioned, I clerked for Judge Luttig, and I clerked for Justice Scalia, which means I think I have a little bit of intellectual savvy, which means I am not even going to go anywhere near those questions.
AA: I am the health care guy, and I’m going to, listen, I’ve got $1.2 trillion dollar budget and the care of hundreds of millions of Americans and the monumental challenge of bringing down drug pricing and drug costs in this country. So my cup runneth over with what’s in my jurisdiction, Hugh.
HH: Okay, I’m going to come back to the health exchanges in a second. One more question, though. Have there been any conversations with you by anyone should a vacancy occur at the Department of Justice of you becoming the Attorney General under the Vacancies Act?
AA: Oh, good Lord, no. None whatsoever.
HH: All right. All right. Let me…
AA: No, I, Hugh, I am in the only job I would ever want. This is the most, in my mind, this is just the most important department in the life and wellbeing of every American. It’s just so important, the work we do. And the opportunity to change one seventh of the American economy, this is, this is, I mean, it’s the fulfillment of any, of every professional, you know, goal I could have ever had to be, the privilege to serve President Trump in this role.
HH: Well, if the President asked, you never know. Let me go, though, to the exchanges and vaccinations, my last two things.
HH: The exchanges, obviously adverse selection, I used to run the Employee Health Benefits program for the federal government at OPM. We know what adverse selection does to programs.
HH: Do the exchanges last much longer, Mr. Secretary, because adverse selection is going to kick in and crush these things?
AA: Well, yeah, the adverse selection is, I think, Hugh, it’s already there. And just for your listeners, what basically has happened, it was one of the fatal conceits of Obamacare was this notion that you would force the young and healthy to overpay insurance so that you could subsidize and have people who are older and less healthy underpay in these exchange markets. And that’s where they put this individual mandate tax saying to the young and healthy, hey, if you don’t buy insurance, we’re going to tax you to force you into buying insurance you don’t want. Well, guess what happened? People expressed their freedom of movement, and they paid the tax. 6.7 million Americans paid $3.1 billion dollars in taxes to avoid buying an insurance they couldn’t afford and did not want. You know, it just shows these socialist approaches cannot control the human spirit and individual rational economic behavior. So what happened is we ended up with these exchanges where 82% of the people that are in these Obamacare plans are people that we’re buying insurance for, okay? That tax wasn’t, that’s why people say oh, we got rid of the tax, it’s going to create even more risk problems. I don’t see it. We’re buying these people insurance right now that are in there. The folks who didn’t want this insurance, the tax wasn’t keeping them in that plan. They were paying $3.1 billion a year to get out of it. So I think we’ve got effectively a subsidized group here in the exchanges. Now that’s why President Trump is so laser focused for the 28 million forgotten men and women who were forced out of that individual market or left out of that market who aren’t getting these Obamacare big government subsidies that can’t afford insurance and have been left behind. That’s why he’s so focused on bringing them affordable options like association health plans, like short term limited duration plans. And I’m working with the President right now on a plan to give even greater flexibility to states to open up even more options for people so that those 28 million forgotten men and women, so that relief can come to them.
HH: All right, my last question, I’ll give you the last two minutes, and I promised your staff a hard out at :55. You take as much time as you want, though. I served 17 years on a commission in Orange County, California that took care of poor kids. And one of the problems was non-vaccination of newly arrived populations, meaning whether they came in legally or illegally, they had not received the vaccinations that an ordinary American citizen born in this country receives. What is HHS doing to prevent the recurrence and the rise again of Polio, Rubella, Whooping Cough, all of these diseases we had once eradicated through public health but now are returning with new populations?
AA: Yeah, Hugh, thank you for raising that, and thank you for your past work in this field, because you’re right. Childhood vaccination and appropriation vaccination for the rest of us is so important for broad public health. We believe very strongly in it. And we’ve got programs like at the CDC called the Vaccine for Children’s program that ensures that vaccines are brought in an affordable way both to public health facilities and others around the country. So we have, this is a central part of our mission at the CDC to ensure that kids are getting vaccinated, and that we continue our efforts to eradicate all of those diseases that you just mentioned, as well as many others. So I can only encourage parents to please follow the directions of their doctor. Please, if you can’t afford your vaccines, go to community health centers. Go to public health clinics. They’ve got the vaccines. We provide them. We make them affordable and available to people. And you really need to do this for the protection of your kids as well as the protection of society.
HH: And we won’t be deporting anyone who shows up to get vaccinations, right?
AA: I, listen, again, I’m not the immigration guy, but we’re in the business of making sure these kids get vaccinated.
HH: Secretary Azar, thank you so much for joining me. I got you out right at :55 as promised. Thank you, Mr. Secretary.
AA: Thank you, Hugh.
End of interview.