HHS Secretary Alex Azar said Tuesday that the Trump administration's proposal to tie prices for certain Medicare drugs to the prices wealthy countries pay overseas has already changed the dynamic around pharmaceutical prices "perhaps forever."
The secretary gave a full-throated defense of the administration's drug pricing blueprint released last May and singled out a controversial proposal to tie the price of physician-administered drugs under Medicare Part B to the average price that wealthy countries like Germany or Japan pay. HHS has claimed that Medicare Part B pays on average 180% higher prices than those countries, which can negotiate for lower drug prices so drug companies can gain access to their healthcare systems, which provide universal coverage primarily through public financing.
Azar said at an event Tuesday sponsored by the Council for Affordable Health Coverage that the proposal, which has not been finalized, will ensure that drug companies can no longer pay higher prices in the U.S. to compensate for paying lower prices overseas.
"Just introducing this model has already, perhaps forever, changed the dynamics around foreign free-riding," he said. "No drug company CEO will ever agree to a discount in Europe without having to consider the effect of (the) price of reimbursement they will get in the U.S."
The CMS expects to issue a draft rule for the model this spring and start the model in 2020.
Azar's defense of the administration's blueprint comes as he met with President Donald Trump last week over drug prices and after an analysis from Rx Savings Solutions that 60 companies would raise prices at the start of 2019.
Azar also delivered an olive branch to the newly Democratic-controlled U.S. House of Representatives to work together to lower drug prices, albeit without endorsing specific legislation.
"We are open to any ideas that preserve drug safety and keep the patient at the center," he said. "Nothing that meets that idea is off the table until drug prices come down."
Democrats have made drug prices a major policy priority since assuming control of the House earlier this month.
A group of House and Senate Democrats introduced three bills last week to tackle high prices. The bills include top Democratic reforms such as giving Medicare power to negotiate directly with drugmakers for lower prices and allowing Americans to buy cheaper drugs from Canada. Azar has previously been cool to both ideas, calling direct Medicare negotiations for instance a "gimmick."
Correction: The analysis of 60 companies' drug pricing was done by Rx Savings Solutions. An earlier version of this story misstated the company's name.