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Analysis

Though Eye-Catching, Azar's Proposals 'Staying Safely Within The Guardrails'

By John Commins  
   November 16, 2018

The Health and Human Services Secretary has launched a string of ambitious and aggressive initiatives, but he's also careful not to get too far in front of President Donald Trump.

It's been another interesting week of pronouncements from Health and Human Services Secretary Alex Azar.

In the past month, Azar has called for mandatory transparency in drug pricing, floated the idea of linking Medicare Part B drug prices to an international index, and strongly suggested that mandatory alternative payment models for radiation oncology and other subspecialties are on their way.

On Wednesday, Azar said the federal government will lead efforts to develop care models that factor in social determinants of health.

"Social determinants would be important to HHS even if all we did was healthcare services, but at HHS, we cover health and human services, all under one roof," Azar said in his prepared remarks. "In our very name and structure, we are set up to think about all the needs of vulnerable Americans, not just their healthcare needs."

At first glance, Azar's advocacy for an expanded or aggressive role for HHS in healthcare delivery sound odd coming from a conservative Republican, private sector champion, and former president of Eli Lilly USA.

However, Paul Keckley, managing editor of The Keckley Report, says Azar "is staying safely within the guardrails."

"I haven't seen anything that shocked me," Keckley says. "His view on the alternative payments and applying global pricing index to drugs are the two most edgy things that he's done so far."

"These are definitely more aggressive strategies than what his predecessor Tom Price would have put on the table, sure. But I don't see anything that would be viewed as really a stretch, such as we're going to get wholeheartedly behind drug importation," Keckley says. "He's holding those cards, seeing if the industry is going to comply, and politically that's probably the sensible thing to do right now."

Keckley says Azar is an experienced pragmatist who knows he can't get out too far ahead of the president.

"He won't do anything to make the private sector think he's not driven by a private system view of the world," he says. "He's knows he's carrying baggage from Eli Lilly, and he's got to do something with drugs prices and he knows that one wins votes, so he's going to push the envelope on that as much as he can."

Azar's proposals on drug pricing are not a surprise to the pharmaceutical industry, Keckley says, and he sees the industry working with HHS because it knows that drug pricing will be a big issue in the 2020 elections, and that the Trump administration needs a plan.

"If you think of it from the drug companies' vantage point, if you're going to be subject to increase price pressure and if that's going to be an issue in 2020, then they want to have some control over how it's implemented," he says. "All this transparency stuff is interesting, but it doesn't break the backs of the PhRMA companies, and I'm sure those 33 companies had input."

As for Azar's speech this week on HHS's enhanced role with social determinants, Keckley says he's just "piggybacking on an industry discussion."

"Where he's talking about allowing housing be reimbursed and Medicare Advantage being able to code for nutrition, I don't think he's taking a lot of risk moving that direction," Keckley says. "He's signaling that this is the right direction. He's telling us that HHS is not going to lead in this process, but we are going to create some kind of regulatory swim lanes for you to play in."

In 2019, Keckley says Azar will likely focus on drug pricing, but he may be forced to examine hospital consolidation and its effect on the cost of care delivery.

"The numbers of consolidations have shrunk a little, but they're bigger deals now," he says. "They're being sold to communities as eliminating duplication of services and reducing redundancies to save money, and yet that hasn't been the result."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Azar comments on social determinants are 'piggybacking on an industry discussion.'

The HHS secretary is a pragmatist who knows he has to act on reducing drug costs.

Hospital consolidation and its effects on rising care costs may have to be addressed in 2019.


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