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Pink Sheet – HHS Senior Advisor O’Brien Emerges As Azar’s Lead On Drug Pricing In 2019

Pink Sheet – HHS Senior Advisor O’Brien Emerges As Azar’s Lead On Drug Pricing In 2019

Executive Summary

O’Brien assumes role from his late colleague and friend Dan Best as HHS closes out administrative items in the blueprint.


The Trump Administration appears to be ramping up towards some kind of action on drug pricing early in the New Year.


Over the last two weeks, HHS Secretary Alex Azar has been posting regular pictures of meetings with a variety of stakeholders on the issue of drug prices.


The receing meetings have included: the Association for Accessible Medicines, the American Hospital Association, Alliance of Community Health Plans, Better Medicare Alliance, America’s Health Insurance Plans, SNP Alliance, Health Plan Alliance, Association for Community Affiliated Plans, the American Cancer Society, AARP, Families USA, Arthritis Foundation, the American College of Rheumatology, PCMA, American Pharmacists Association, National Community Pharmacists Association, NACDS, the Council for Affordable Health Coverage, Patients For Affordable Drugs, the American Childhood Cancer Organization.


And Newt Gingrich.


Those public showcases have previously presaged administration announcements either on the Blueprint or introducing step therapy to Medicare managed care plans in Part D, for example.


John O’BrienHHS Senior Advisor for Drug Pricing Reform John O’Brien can be seen in all those photos flanking Azar.


O’Brien isn’t new to attending these types of stakeholder meetings, but his role is. O’Brien was recently named to the position by Azar, taking over the title for his late colleague and friend Dan Best who passed away in November.


O’Brien and Best had developed an effective drug pricing road show built on complementary strengths: O’Brien would tackle the high-level policy and Best would handle the fundamentals of negotiation, which he honed as an executive at
CVS Health Corp. in charge of the Medicare Part D business.


For the moment, O’Brien is now going it alone as the point person for drug pricing in advising Secretary Azar while he continues to be listed as Deputy Assistant Secretary (Health Policy) for Planning and Evaluation.


Another individual could be paired with O’Brien or take the position at ASPE in future but an HHS spokesperson said there is no announcement “yet” on that front.


O’Brien, who worked in the Obama Administration at CMS under Acting Administrator Don Berwick and Administrator Marilyn Tavenner, brings a measured approach and willingness to listen to parties at opposite ends of key issues in his current role in the Trump Administration.


He clearly sees potential for Democrats and Republicans to work on legislative solutions to address prices and out of pocket costs.


“There are opportunities to work together,” O’Brien said last month at the Prevision Policy/Friends of Cancer Research Biopharma Congress. “We’ve been to the Hill a number of times since May 11 and have engaged in really productive conversations with leaders from both sides of the aisle all of whom really want to understand what it is we’re trying to do and why we’re choosing the ways we’re trying to get there.”


O’Brien is effective at communicating just how serious and thoughtful the administration has been in addressing the price issue. He has talked about how Azar’s initial meeting with Best was scheduled for 30 minutes but it lasted three hours as Best delved into the weeds of the drug supply system.


He divides the administration’s approach into three areas:

  • Things that can be done with the stroke of a pen,
  • Things that require an act of Congress, and
  • Things that can be done “with the stroke of a pen that we want to make sure we get right.”

That helps explain why the administration has been careful to issue requests for information (RFIs) and advanced notices of proposes rule making (ANPRMs) instead of simply issuing proposed rules, such as was done with the Part B Drug Payment Model under the Obama Administration.


“Answering questions via an RFI is an important element of the administrative process,” O’Brien said at the Biopharma Congress. “We have 3,600 comments on the blueprint, countless meetings with stakeholders who said ‘don’t do this, do that.’ When we ultimately do finalize a policy, it will be a policy that will work and will thoughtfully consider the effect on stakeholders on a pretty important marketplace.”


On the approach to reducing the protections on the six classes in Medicare Part D where essentially all drugs must be covered, O’Brien said he has informally consulted former Principal Deputy Administrator Jon Blum, who unsuccessfully attempted to lift some of the protected classes in 2014. “Jon’s a good friend and I have talked to him about many of the lessons he has learned in his job.”


Instead of eliminating the protections altogether, CMS proposed giving plans two ways to exclude products in the six classes: if there are above-inflation price increases on a product or an attempt to evergreen a product line by substituting a line extension or new formulation for a withdrawn brand. (Also see “Carrots Or Sticks: Which Way Might Medicare’s Protected Classes Reforms Go?” – Pink Sheet, 1 Dec, 2018.)


On the international price index model in Medicare Part B, issued via ANPRM, O’Brien defended the approach that used a five-year phase-in and an international “target price.” In the first year of the demo, the payment would be 80% of the ASP plus 20% of the target price. That proportion would change over the five-year demo until payment was 100% of the target price.


“One policy that is contemplated in the ANPRM is that if you are currently selling below the international target price, which is still 26% more than the international average, then you would be paid ASP under the model,” O’Brien said at the Biopharma Congress. “This is a way we can save money in the US system without harming innovation so we’re very interested in hearing what people have to say.”


“I think everyone is being very truthful when they describe their view of how the system works,” O’Brien said.

The IPI model is certain to face strong opposition on Capitol Hill in 2019. However, O’Brien said meeting with such a wide-range of stakeholders has been valuable in developing policy and outside support for different strategies HHS has issued.


“Everybody wants to help. It’s true, we’re not relying on the voluntary actions of the US pharmaceutical industry and they have very thoughtfully in many instances tried to come up with ways to lower their list price to their net price or somewhere north of their net price so they can begin negotiating off of that,” O’Brien said.


In certain cases, such as Hep C and the PCSK9 therapies, manufacturers have been able to come up with “workarounds” but that is harder to do in other classes, O’Brien said. “I think everyone is being very truthful when they describe their view of how the system works.”


O’Brien has been a proponent of innovative outcomes-based contracts, whether the agreements are based on a subscription model or long-term installment payments. He says the top priority for the administration is to remove barriers to those agreements.


“Our goal has been to first understand where do our rules get in the way? Is there a three-year runout on something that would prevent a five-year payment? Are there particular paragraphs or subparagraphs in our price reporting regulations that don’t contemplate some of the things the private sector wants to do today? I think goal one is to figure out how can we get out of the way.”


HHS has made good on issuing a majority of blueprint proposals in some form, a fact that has been a point of pride within the administration. O’Brien has had a hand in many of them and his influence will likely increase in his new role.


“We have ticked off now almost every single item that we had in our administrative power to do there,” Azar said at an Axios event on healthcare costs Dec. 12. “There are a couple more proposals in the works.”…