HHS secretary calls on employers to drive down health costs

WASHINGTON — Health and Human Services Secretary Alex Azar called on employers to do their part in driving down healthcare costs and helping employees better navigate the health system.

Though those are initiatives for the agency this year, Azar told HR and benefits leaders Thursday at the National Business Group on Health’s annual conference, “you can do your part, too.”

“In the last couple of decades, employers have taken the lead on adopting consumer-directed health plans with higher deductibles that should incentivize patients to choose care options with more competitive prices.”

It’s a positive step, he said, but only if employees have the tools to shop around.

“We believe there may be a role for employers to connect patients with providers or some other trusted intermediaries who can act as guides through the healthcare system,” he said, adding that the HHS is focused on empowering patients with transparent, accessible information on how to best utilize health services.

“[Employers are] a more important force than the American government can be,” he said. “You drive so much of the healthcare system.”

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Alex Azar, secretary of Health and Human Services (HHS), speaks during a meeting in the Cabinet Room of the White House in Washington, D.C., U.S., on on Wednesday, Jan. 2, 2019. U.S. President Donald Trump insisted the U.S. needs some kind of physical barrier along the frontier with Mexico, just a few hours before a meeting with congressional leaders aimed at breaking a stalemate over border wall funding that’s kept parts of the federal government shut down for 12 days. Photographer: Al Drago/Bloomberg

Azar said another positive step toward driving down healthcare costs is the agency’s proposed rule that would eliminate hidden drug rebates. It’s an initiative many employer groups have rallied behind.

“For too long, our prescription drug pricing system has operated in the shadows, serving entrenched interests: drug companies who set these prices so high, and the pharmacy benefit managers who receive tens of billions of dollars in rebates without patients, or the employers who pay a big chunk of the bill, [without] ever knowing where the money goes,” he said.

Private health insurance expenditures, mostly borne by employers, rose to almost $1.2 trillion in 2017 from $898 billion in 2011, he noted. And by 2029, growing at about 5% a year, these expenses are set to hit $1.9 trillion.

He said the proposed rule is about more than just eliminating rebates; it also is about making drug negotiations as transparent as possible to promote competition among the drug options available.

He shared a recent example of a drug company that introduced a generic version of a common asthma inhaler.

“When the generic hit the market, pharmacies across America got a notification from at least one large middleman that said essentially the following: We won’t cover the generic. If someone comes in with our insurance, you cannot process the generic with their insurance card. We’ll only cover the brand drug,” Azar said.

He said some estimates note a quarter of patients will pay more at the pharmacy counter by using their insurance to purchase that brand drug than they would if they just paid cash for the new generic.

“Replacing the rebate system with upfront discounts means an end to those kinds of shenanigans,” he said, “and the beginning of a prescription drug marketplace with real competition and transparency.”

Azar cited NBGH’s recent annual survey in which more than three in four large employers said they do not believe rebates are effectively driving down drug costs. “We agree,” he said.

“I know rebates are an issue and a challenge, but we also recognize the supply chain overall has challenges, and addressing rebates is just a part of the problem,” added NBGH president and CEO Brian Marcotte.

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