Watchdog asks ethics officials to probe Azar over industry ties and views on rebates

By: Ed Silverman, STAT, August 28, 2018

A watchdog group has asked ethics officials at the Department of Health and Human Services to investigate the relationship between Alex Azar, who heads the department, and Eli Lilly (LLY), his former employer, over a recently proposed rule that would benefit drug makers.

The request by the Campaign for Accountability, a nonprofit, comes in response to a proposal the Trump administration is considering to reduce or restrict rebates, which are essentially a type of discount that drug makers provide pharmacy benefit managers off the wholesale, or list, price for their medicines in order to receive favorable placement on formularies, which are lists of insured drugs.

Drug makers claim PBMs, which keep a percentage of rebates, demand higher amounts to bolster profits and in turn, drug makers must respond by raising list prices. PBMs counter that rebates blunt price hikes that drug makers regularly take in order to boost their own profits. But the pharmaceutical industry has been winning this debate, and the nonprofit wants to know if Azar is carrying water for drug makers.

“Azar appears to be using his position to implement a top policy goal for his former employer. The only question is whether (he) has been working in tandem with his old co-workers to push the company’s agenda,” said CFA executive director Daniel Stevens, in a statement. “HHS must investigate (his) conduct to determine whether he is working to change government regulations to benefit consumers or to benefit the company where he worked for a decade.”

In his letter to Daniel Levinson, the HHS Inspector General, and Elizabeth J. Fischmann, the top HHS ethics official, the nonprofit argued that Azar has championed an industry goal of limiting the ability of PBMs to negotiate rebates. And the alternative he has suggested are fixed-price agreements, which he has talked up in recent months, the nonprofit pointed out.

A spokeswoman for the Office of Inspector General wrote us to say that, “we have received and are reviewing the letter to determine the most appropriate action.”

[UPDATE: Separately, an HHS spokeswoman wrote that “Secretary Azar fully disclosed his former employment with Eli Lilly to the Senate, the U.S. Office of Government Ethics, and the HHS Ethics Office prior to his appointment at HHS. He has been completely transparent and agreed to recuse as required by the Ethics Pledge. Under the guidance of the HHS Ethics Office, he has instituted a robust screening arrangement to help ensure that, as required by the Ethics Pledge, he does not participate in any particular matters where his former employer is a party to the matter, or a party representative.”]

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