Drugmakers brace for a pricing fight as Xavier Becerra is confirmed as the next HHS secretary
By a razor-thin margin of 50-49, all Senate Democrats and Maine Republican Susan Collins on Thursday confirmed former California Attorney General Xavier Becerra as the head of the Department of Health and Human Services (HHS) — setting the stage for what may be major pricing battles with the biopharma industry.
The partisan divide over Becerra’s nomination came as Democrats lined up behind Becerra’s tough stance against drugmakers and for Obamacare, among other issues, while Republicans lambasted his lack of medical and scientific experience, as well as his tough stance against the pharmaceutical industry.
“I think we can all agree the price we’re paying for some of these prescription drugs is far higher than it should be. All you have to do is travel to another country to find we’re paying way more,” Becerra said in his Senate committee hearing in February to review his nomination.
Aaron Kesselheim, a professor of medicine at Harvard Medical School and a faculty member in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital, said he’s not concerned that Becerra is not a doctor; “being a medical doctor trains you to have insight into patient care, but it does not give you special insight into being an effective HHS Secretary, as we learned from the disastrous Tom Price administration.”
In terms of drug pricing, Kesselheim said he thought Becerra could “right away take some steps to address Part B drug pricing, since right now Medicare engages in no oversight of Part B prices; it just pays the ASP [average sales price] plus a small percent. This could include ideas such as enforcing accurate reporting of ASPs, reducing spending on biologic drugs with biosimilars by bringing them all under the same reimbursement code, shifting certain drugs from Part B to Part D (with associated limits on OOP [out of pocket] costs), and instituting the MedPAC recommendation to create a CMMI [Centers for Medicare & Medicaid Services (CMS) Innovation Center] demonstration project to negotiate prices of Part B drugs. Ultimately, he may need to develop the mechanics of a system to negotiate fair drug prices based on their clinical benefits if such a negotiation process is approved by Congress, since it will most naturally be housed within CMS.”
As Attorney General of California, Becerra led the state to become the first in the nation to ban pay-for-delay agreements, which can delay the entry of generic drugs to market, and he defeated a challenge to the law from the Association for Accessible Medicines (AAM), the generic pharmaceutical industry group.
“I took on a number of these drugmakers by going behind the curtain on how they reached their pricing and we were able to prove there was collusion going on,” he added in the February hearing. He also has sought to right the wrongs of the opioid epidemic.
The Federal Trade Commission’s recent announcement that it would crack down on pharmaceutical companies’ mergers also plays right into Becerra’s work on antitrust issues.
And his advocacy for using march-in rights to unilaterally lower drug prices in cases where the government has invested in their development (such as with Gilead’s Covid-19 drug remdesivir) has also riled the industry.
“Obviously the use of march-in rights would be a huge deal,” Ben Ippolito, resident scholar at the American Enterprise Institute, told Endpoints News. “I don’t know if that has a high enough benefit-to-cost ratio to take on or not, particularly given all the other priorities they’ve already got … and if Congress ends up working on drug pricing legislation anyways.”
He noted that any push to use march-in might push the biopharma industry away from developing treatments that march-in rights could apply to, “which seems like it undermines the point of funding the research.”
On the flip side, several nonprofits specifically focused on drug prices praised his confirmation and are preparing for him to take action.
Lauren Aronson, executive director of the Campaign for Sustainable Rx Pricing, commended Congress for Becerra’s confirmation and for his “pledging to work across party lines to lower drug prices and hold Big Pharma accountable.” David Mitchell, a cancer patient and founder of Patients for Affordable Drugs Now, also called Becerra’s confirmation “a win for patients across the country who are struggling with high drug prices.”
Pharma industry groups, meanwhile, pledged to work with Becerra.
Stephen Ubl, president and CEO of industry group PhRMA, said in a statement that the industry looks forward to working with HHS “to help address our nation’s leading priorities: getting COVID-19 under control and improving health care affordability and access for all Americans.”
AAM offered their congratulations and said they look forward to working with him “to advance policies that enhance the competitiveness of safe, effective, affordable generics and biosimilars.”