HHS secretary: Recent drug price increases ‘creating a tipping point’

Health and Human Services (HHS) Secretary Alex Azar on Monday rebuked drug companies for recent price increases. 

“Change is coming to prescription drug pricing, whether it’s painful or not for pharmaceutical companies,” Azar said in a speech Monday at a health policy conference. 

Azar’s comments follow Pfizer’s decision to raise the list prices of more than 100 prescription drugs.

The increases, effective July 1, came despite the administration’s recent tough talk on combating rising drug costs. 

“The drug companies that recently increased prices will be remembered for creating a tipping point in U.S. drug pricing policy,” Azar said. 

Azar again said the administration is looking at reforming Medicaid by ending rebates — secretive discounts provided by drug manufacturers to pharmacy benefit managers (PBMs) in exchange for better contract terms. Rebates can also be used to have the manufacturers’ products included on lists of drugs covered by insurance companies, called formularies. 

“The time for using rebates to buy formulary access, we have suggested, may soon be coming to an end,” Azar said. 

Azar said since rebates are gauged by a drug’s list price, PBMs aren’t motivated to keep prices down. 

“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. 

Recent drug-price increases also caught the eye of President Trump, who tweeted Monday that Pfizer should be “ashamed.” 

“Pfizer & others should be ashamed that they have raised drug prices for no reason,” Trump said in a tweet.

“They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere.”

Pfizer said in a statement that the price increases only relate to a small percentage of their entire portfolio. 

“The list price remains unchanged for the majority of our medicines. Our portfolio includes more than 400 medicines and vaccines; we are modifying prices for approximately 10% of these, including some instances where we’re decreasing the price,” the company said.