Did HHS chief Alex Azar work with ex-employer Lilly on drug rebate plans? A watchdog wants to know

Alex Azar
Alex Azar was appointed HHS secretary last year after former secretary Tom Price stepped down due to a travel scandal. (Wwsgconnect)

The Trump administration in general—and HHS Secretary Alex Azar in particular—say a proposed crackdown on drug rebates is all about cutting costs for patients. But a nonprofit group wonders if the proposal has more to do with Azar's ties to the pharma industry, and it's asking the agency's watchdogs to investigate.

In a letter (PDF) to HHS Inspector General Daniel Levinson and the agency’s ethics official Elizabeth Fischmann, the Campaign for Accountability (CfA) says Azar and his former employer Eli Lilly both support reforming or eliminating pharmacy benefit manager rebates—and it's challenging the HHS to determine whether Azar wants to revamp rebates "to benefit his former employer" or to benefit patients as he's claimed.

Last month, HHS submitted a proposed rule to the Office of Management and Budget that suggests the administration is considering changing or eliminating drug rebates. Details aren't available, and the OMB must review the proposal—which would change the "safe harbor" provisions that protect drug rebates from prosecution as kickbacks—before the HHS can act.

The Pharmaceutical Care Management Association, the trade group that represents PBMs, said at the time that removing those protections wouldn't lower prices, and that HHS might not be able to make the change without Congress.   

CfA wants to know whether Azar worked with Lilly representatives on the proposed rule. If so, that may be an ethics violation, the group said. As CfA notes, senators Elizabeth Warren and Tina Smith have also questioned (PDF) Azar’s motives. 

Speaking with FiercePharma, CfA Executive Director Daniel Stevens said it’s “important for agency officials to implement rules in the interest of the public," not in favor of any industry or company. “We want to make sure that HHS is putting forth this rule because they believe it will benefit the public,” he added. 

According to its website, CfA is a nonpartisan "watchdog" that seeks to "expose misconduct and malfeasance in public life."

When Trump tapped Azar for the HHS post last year, critics blasted the former Lilly exec for his industry ties. Sen. Bernie Sanders, for instance, said the “last thing” the U.S. needs is to “put a pharmaceutical executive in charge of the Department of Health and Human Services.” 

The pharma industry fell on the other side of the argument. In January, two weeks before Azar was confirmed as HHS chief, Lilly CEO David Ricks said 2018 would be the “time for action” on drug prices. In the Trump administration, there are "people who are in power who understand that tricky balance, that fragile balance between reward for innovation and access," he said at the J.P. Morgan Healthcare Conference. "We better take advantage of that."

Pharma and PBMs have been locked in a debate for years over drug prices and rebates. PBMs argue their tough negotiations drive savings, while drugmakers say the growth of rebates has forced them to raise prices. Meanwhile, patients are caught in the middle, because their share of the cost is based on list prices, not discounted prices offered to payers.

RELATED: Lilly CEO: With pharma friends in high places, it's 'time for action' to ease drug costs 

In May, the Trump administration released its drug pricing “blueprint” that calls for more negotiation, more transparency, incentives to lower list prices and lower out-of-pocket costs for patients. Since then, the Centers for Medicare & Medicaid Services has said it would allow Medicare Advantage plans to implement step therapy for new patients and negotiate drug prices, and the FDA has taken a variety of steps to crack down on regulatory abuses that forestall generic competition.