5 things to know about Alex Azar’s first hearing as nominee for HHS Secretary

In his first congressional hearing as the nominee for HHS Secretary, former Eli Lilly executive Alex Azar faced questions on whether he’d favor the pharmaceutical industry’s interests, why his company dramatically raised the price of insulin during his tenure and whether he’d support importation of drugs from other countries—which one Republican made a requirement for him to support Azar’s confirmation.

Introduced to the Senate health committee by former HHS Secretary and Utah Gov. Mike Leavitt as “essentially the chief operating officer” of HHS when Leavitt ran the agency, Azar began the hearing by laying out his four top priorities: 1) lowering drug prices, 2) making health insurance more affordable, 3) shifting healthcare to “paying for health and outcomes,” and 4) addressing the opioid epidemic.

“These are serious challenges which require a serious-minded sense of purpose,” Azar told the committee.

Here are five of the major topics brought up at the hearing:

1. Too friendly to pharma?

After his time at HHS, Azar spent nearly a decade at pharmaceutical Eli Lilly, rising to become head of its U.S. operations. The chairman of the committee, Sen. Lamar Alexander, R-Tennessee, opened the questioning by saying he saw Azar’s pharmaceutical experience as a plus, not a detriment, to his nomination and giving Azar the chance to head off attacks on his tenure likely to come from Democrats.

“I believe I can hit the ground running to identify solutions there,” Azar said.

He then told the ranking Democrat on the committee, Sen. Patty Murray of Washington, he wouldn’t be approaching the HHS job to serve “any industry, any past affiliations, but to serve all Americans.”

Murray, however, said there is skepticism that him leading HHS is akin to “the fox guarding the henhouse.” Sen. Elizabeth Warren, D-Massachusetts, was more pointed in her comments, saying Azar’s resume “reads like a how-to manual for profiting off government service,” having gone from an HHS job to making $3.5 million annually as an executive for a pharmaceutical company and now seeking to return to the public sector.

She questioned Azar’s move to Eli Lilly in connection with a massive settlement it made over promoting unapproved uses of the antipsychotic drug Zyprexa. The U.S. government had been investigating the allegations between 1999 and 2005—overlapping with Azar’s time as HHS general counsel. After he moved to Eli Lilly to head its lobbying and public affairs efforts, the company settled the allegations for a then-record $1.4 billion, though it had sold an estimated $30 billion worth of Zyprexa during the period it was being investigated.

Azar said he wasn't involved in the investigation or negotiating the settlement and didn’t know of the case until interviewing for the Eli Lilly position. While he called the company’s conduct “unacceptable,” he said the conduct occurred long before he worked at the company.

2. 124% insulin price hikes at Eli Lilly

Several Democrats brought up actions that did occur with Azar’s tenure at Eli Lilly, namely the sharp increase in the company’s insulin products. Between 2013 and 2017, when Azar was running Eli Lilly’s U.S. division, the price of a vial of Humalog insulin rose from $122 to $274.

Sen. Tammy Baldwin, D-Wisconsin, asked Azar why such increases were justified, he said all drug costs have gone up because of “the system,” putting part of the blame on insurance companies. When he also said list prices for drugs have to go down, Baldwin interjected by saying that “starts with the manufacturers.”

“It does, you’re correct,” Azar replied.

3. Drug patents and importation policy

When it came to discussing actions he would take to lower drug prices, Azar first agreed with committee members that drug prices “are too high.” He spoke repeatedly about changing “the system” which pharmaceutical companies use to their advantage to promote more competition from generics, such as filing multiple patents for small changes to a drug—which has blocked a generic form of insulin from being available, even though it was first used to treat diabetic patients in 1922.

“We have to fight gaming in the system of patents and exclusivity by drug companies,” Azar said.

He criticized other proposals aimed at lowering drug costs, however. Sen. Rand Paul, R-Kentucky, asked Azar about using importation of drugs from countries where prices are lower to force costs down. Azar stated he’s against “unsafe” importation of pharmaceuticals, saying past commissioners of the Food and Drug Administration (FDA) have shared those concerns, an explanation Paul didn’t buy.

“They’ve been wrong and beholden to the drug companies frankly,” Paul said. “You would have to sit there and say the European Union has unsafe drugs and it would be unsafe for American to buy drugs from the European Union or Canada or Australia. It’s just, frankly, not true.”

Paul said Azar “has some convincing” to do to make him believe Azar won’t represent “Big Pharma” as HHS chief. If Azar can’t support importation of drugs, Paul said he wouldn’t support his nomination.

In a later answer to Sen. Johnny Isakson, R-Georgia, Azar promised that if confirmed, he would deliver a report within six months of taking over at HHS offering recommendations on how to limit the “gaming” he mentioned by pharmaceutical companies.

4. Affordable Care Act, the individual mandate and cutting ACA advertising

Azar has been a critic of the ACA, saying earlier this year the law’s exchanges were “circling the drain,” supporting the Republican efforts to repeal it and saying in his opening remarks that HHS should address concerns of people “who have pushed out or left out of the insurance market by” the ACA.

He was questioned repeatedly about his stances on provisions of the law. He appeared to support the repeal of the individual mandate, which is included in the Republicans’ current tax proposal, as well as defended the Trump administration’s move to cut the advertising budget for the ACA by 90 percent in the same year it reduced the open enrollment period for the ACA exchanges from 90 to 45 days.

“My point is, if something isn't working, why are we funding it? If, for the navigator program, if some of those vendors aren't delivering, why keep funding it? That would be my perspective,” he said.

When pressed by Murray to comment on the ACA stabilization package introduced by her and committee chairman Alexander, Azar said he considers it “an important stopgap” solution to address what he sees as flaws in the ACA.

5. Value-based care, EHRs and interoperability

Sen. Michael Bennet, D-Colorado, asked Azar about what he would do to strengthen Medicare, given the threat of cuts to the program through the tax cut legislation being considered in the Senate. Azar said a transition to a “value-driven system” is part of the answer, along with cutting “mistake, waste, fraud and abuse.”

That is in contrast to his 2016 comments, when Azar worried about the transition value-based care because “we actually know in the U.S. with a competitive insurance market how to discern value.”

Electronic health records were also brought up later in the hearing. Sen. Bill Cassidy, MD, R-Louisiana, asked for his thoughts on how to make sure health IT products aren’t “an impediment” for physicians. Azar joked that his physician father may jump into answer, then added in his earlier tenure at HHS, the regulatory burden EHRs could pose was recognized but the policy moved in that direction anyway.

“Electrification of health records without interoperability is not useful. That’s just moving files to a different place, and I’m afraid we’ve done a bit of that,” he said, adding he wants to “drive towards interoperability and reducing physician burden.”

As was the case with former HHS Secretary Tom Price, MD, the health committee didn’t advance Azar’s nomination. That responsibility falls to the Senate Finance Committee, which has yet to schedule its confirmation hearing for Azar.