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HHS Secretary Clarifies Trump Administration's Plan To Reduce Prescription Drug Prices


Trump administration officials have been out in force talking about their plans to reduce prescription drug prices. The goal is to help people struggling to pay for the medications they need and also to cut costs for the federal government, which spends hundreds of billions of dollars on pharmaceuticals every year. NPR health policy correspondent Alison Kodjak has been following these officials all over town this week. And in a brief break - what? - in your schedule, Alison, you've come to update us. Welcome.

ALISON KODJAK, BYLINE: Thanks for having me.

KELLY: First start just by reminding us what this proposal is. The president came out and made an announcement about drug prices last Friday in the Rose Garden. What exactly did he say?

KODJAK: Yeah, so it was a speech that sort of landed with a bit of a thud because there was a lot of buildup. And it was broad - loads of ideas - but didn't go very deep. There's a lot of things they said that they were going to study. So this week, they decided they needed to put some meat on those bones. So three of the top health officials in the federal government fanned out across Washington. They made speeches. There were reporter briefings. I went to four of these events. And I couldn't even get to them all because there were so many.

KELLY: Oh, wow, OK. So they were all on message. What's the message?

KODJAK: Well, what struck me most was there was a really aggressive tone. They sounded really serious about what they want to do. So HHS Secretary Alex Azar, who used to run the drug company Eli Lilly - he really sounded fed up with what drug companies are doing with prices. And so he talked about this industry line that they all need really big profits if they want to pay for research and come up with new medications. And then he called them tired talking points. He said that in two speeches.

And he also made clear that he believed the biggest problem is pretty simple. Drug companies' prices are just too high. It's not a system thing. And he thinks he has the power to do a lot to change that without the help of Congress. So yesterday he was talking about changing how Medicare pays for some very expensive drugs. And this is what he said. This is what he sounded like.


ALEX AZAR: Let me be really clear about this. It's going to happen, so it would be most productive if the pharmaceutical industry came to us with plans for these changes.

KELLY: All right, so the administration is determined they're going to do something. Do we know what their plan is? Did they lay any more specifics on the proposal?

KODJAK: Yeah, so they clarified some plans. The biggest change, if they can pull it off, would completely alter the drug market - how drugs are paid for. Right now the whole market is based on these high list prices, and then companies or the government gets percentage-based rebates back afterward. So the way it's structured, everybody makes a little more money if the list prices start out high.

So Azar says he's going to change that by doing two things. First he's going to require that those contracts be based on fixed discounted prices, not percentage rebates. And second, he wants to ban these middlemen who negotiate these rebates from being able to get money from the drug companies at the same time as they get it from the company that hired them to get those discounts for them. Those are the insurance companies and maybe your employer who hire this company to say, hey, get us good deals. But they're also paid on both sides, and he wants to ban that practice.

Some other changes - how drugs are approved. The FDA commissioner, Scott Gottlieb - he wants to make sure drug companies don't have market monopolies extended for years and years.

KELLY: All right - some more details coming in, and you can come back and update us as they continue to emerge. That is NPR health policy correspondent Alison Kodjak. Alison, thank you.

KODJAK: Thank you. Transcript provided by NPR, Copyright NPR.

Alison Fitzgerald Kodjak is a health policy correspondent on NPR's Science Desk.
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