Trump health nominee backs some U.S. bargaining on drug prices

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(Bloomberg) – President Donald Trump’s pick to lead the U.S. Department of Health and Human Services said that he’s open to negotiating some drug prices for Medicare, while backing a largely dormant proposal to repeal and replace parts of Obamacare.

Nominee Alex Azar, a former executive at drugmaker Eli Lilly & Co., told the Senate Finance Committee at a hearing Tuesday he would consider implementing some kind of negotiation in Medicare Part B, part of the government health program for the elderly which covers drugs that must be administered by doctors. Those are often among the most expensive medications.

But Azar dismissed calls from Democrats on the panel to give the government the power to bargain for lower prices in Medicare’s larger prescription-drug benefit, known as Part D. He said private companies already take on that task and “they’re the best rates out there.”

“Where we can do so that preserves innovation and access, I want to look at those areas, and in Part B I believe we can do so,” Azar said.

As he did at a November hearing, Azar told senators he wants to end “gaming” that allows drugmakers to extend monopolies and keep prices high, an idea backed by both Republicans and Democrats. He also said he wants to encourage drug companies to bring down list prices before negotiating discounts and rebates with private payers, though he didn’t offer details.

State Solution

Senate Republicans have been divided over continuing their largely failed effort to repeal the Affordable Care Act. As part of the tax overhaul passed into law last month, lawmakers overturned the requirement that everyone have health coverage, but most of the health law remains intact.

Azar largely backed a proposal from Republican Senators Bill Cassidy of Louisiana and Lindsey Graham of South Carolina that would redirect billions in Obamacare funding to states to use as they see fit. The senators also want to change Medicaid’s funding to a fixed, per-enrollee amount, instead of a set percentage of states’ costs, a move that would mostly roll back the Affordable Care Act’s expansion of the program.

Giving states a fixed amount would help “align incentives better” and hold states accountable, Azar said.

Senator Maria Cantwell, a Washington Democrat, challenged him on Medicaid, claiming the proposal would lead to funding cuts in the program.

“Slowing the rate of a growing program is certainly not a cut in my mind nor the president’s mind,” Azar said.

Obamacare Changes

Senate Majority Leader Mitch McConnell, a Republican from Kentucky, said at a year-end news conference that while he’d like to see “more substantial changes” to Obamacare, he wants to work on bills that have a chance to pass. The GOP failed several times last year to gain enough votes from its own members to repeal and replace the Affordable Care Act.

Cassidy and Graham have said they’ll continue trying to build support for their proposal to give states more flexibility in how they spend Obamacare funding.

Some Republicans have advocated changing parts of the law to bring down premiums, but Democrats, who are necessary to pass any such bill, are now considering whether they’ll make additional demands as part of any such bill.

Azar would be Trump’s second HHS secretary after his predecessor, Tom Price, resigned in September amid a scandal over his use of private jets at taxpayer expense. Democrats have accused the administration of attempting to sabotage Obamacare after it stripped funding for advertising open enrollment and cut off money for workers who helped consumers choose coverage. Trump also stopped making payments to insurers meant to help defray health-care costs for low-income Americans.

Despite that, enrollment in Obamacare plans for this year went better than experts who feared significantly fewer sign-ups anticipated.

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