HH: So glad to be back in time to talk again with Secretary of Health and Human Services Alex Azar who joins me inside the Beltway. I’m in the ReliefFactor.com studios. Secretary Azar, welcome back. I want to talk to you about drug pricing, and good morning to you. But I had to visit the pharmacy this week for the Z-Pack and all the other stuff that goes when you get bronchitis. Tell me, and I was a little sticker shocked, and I’ve got good insurance. What were you and the President talking about yesterday about lowering drug prices.
AA: Well, Hugh, great to be with you again. Yesterday morning here at HHS, we actually revealed data showing that in one of the most important parts of our drug program, Medicare pays 180% of what Europeans and Japanese pay for the same medicine under deals that Pharma gives them. And the President came over to HHS and he said that’s going to stop. That foreign free riding’s going to stop. We are going to be done with us paying sticker price in that part of the Medicare program, and we’re going to get the benefit of these foreign prices here in America. And it’ll save $17 billion dollars over five years for the program, and $3.5 billion over five years for patients like you when you get your drugs.
HH: Now Secretary Azar, I want people to know you’re a very fine lawyer. You’re what we call a litigator, having clerked for the Right Honorable Michael Luttig. Am I correct about that?
AA: Indeed. I was his first law clerk.
HH: Okay, so I want him to be our next Attorney General. But as a litigator, you will have concern for what the statute permits you to do, and whether the regulations which will go through the notice and comment process are going to be labeled an overreach. And you know that Big Pharma spends $171 million bucks a year on lobbying. So you’re going to get a bazillion comments during the notice and comment phase. When do you think, and without prejudging the outcome, HHS will be able to issue a regulation from the Center for Medicare and Medicaid Innovation to implement this proposal?
AA: Our plan is to have this up and running by the end of 2019, so the end of next year or the beginning of 2020. We’re going to take input, but I want to be really clear, Hugh. We’re going to be doing this. We’re going to get input to do it the right way, but we’re going to end this foreign free riding. That’s not debatable. It’s going to happen, but we’ll do it the right way, and we’re doing an open, transparent process to ensure we’re seeing around corners and doing everything right, because we want to make sure this works for hospitals. We want to make sure it works for our providers, for our doctors, and want to make sure absolutely it works for patients. And we’ll do whatever it takes to make it work for all of them so they save money, they have access, and we stop this foreign free riding and how Pharma is taking advantage of us.
HH: Now Secretary Azar, I agree with all that, but I go back to the fact I think by the time your reg is out and into the courts, Chevron doctrine will have been greatly limited. So I expect this Supreme Court to look very, very closely at the statute under which you are proceeding. Have you already done that as a litigator and persuaded yourself you’ve got the authority to do what essentially looks like a referencing to me, a midpoint averaging, like the Real Clear Politics average of drug prices and implement that was the will buy price for Medicare?
AA: That’s correct. You know, I actually have through what’s called the Center for Medicare and Medicaid Innovation extremely broad authority to test alternative methods of making payments in Medicare to improve patient quality, access, and affordability and efficiency of the program. That’s why this is a demonstration project that will take place in 50% of America. It has very clear metrics to be studied through it. I have not the least bit of concern about our legal authority to do this, to do this project.
HH: That’s very good to know. Which, now what about the Americans who are in the other 50% of the country? They’re not going to be happy.
AA: Well, you know, I’m using, as you just said, I’m using the full authority that I’ve got. I do have to test a proposition. I can’t just do it across the board for everyone. Now if Congress likes this idea, they can do it tomorrow across America. And I’m happy to work with them if they’re interested in that. But for the rest of Americans who are not the 50 areas, the 50% of the country that will be doing this, they’re still going to see a benefit, because as we, the way the system works, as we pull down the reimbursements in this 50% of America, the silly way that we currently fix prices in this program will also pull down the reimbursements as a result in the other 50% of the country. Not as much, but they will still get some of that benefit.
HH: And so to conclude, Secretary Azar of Health and Human Services, you’ve got a new proposal. It’s going to notice and comment in rulemaking, and you expect to have it in operation by 2019. What do you expect health care premiums to look like in the year ahead?
AA: So we actually have had great results. Medicare Advantage and Part D, these are two of the most important programs for our seniors. The premiums for them under President Trump’s leadership have gone down. And you know, I’ve, we get some guff for this, but you know, we don’t like Obamacare. We think it’s fundamentally flawed. We think it’s broken. We think the premiums are too high and it needs to be repealed and replaced. But President Trump’s doing a better job running that program than the guy whose name is on it. Premiums actually for the silver benchmark plan on which everything is based are going down over 1% in the coming year for the first time in the history of that program. And choices of plans are up for the first time since 2015. It’s still a broken program. It’s still not meeting the needs of our citizens. But we’re at least making it work as well as it can until Congress fixes it and replaces it.
HH: You’re doing a great job. Say hello to my friends Ann Agnew and Christian Pilakoutis, of course, Matt Bowman. You’ve got a great team over there, Secretary. You’ve got a great team over there.
AA: I do. I do, although Christina got, Christina’s, her last name’s changed now.
HH: I know.
AA: And so she’s no longer got that good Greek last name.
HH: I can’t remember the new one. I’m going with Pilakoutas.
AA: Yeah, I’m not going to out here on, I’m not going to out her on national radio.
HH: Good, good, good. Be well, Secretary.
End of interview.