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Remarks to the AMA National Advocacy Conference

Alex M. Azar II
The American Medical Association
February 12, 2019
Washington, D.C.

The first principle of our vision for value-based healthcare is about empowering patients—but we are fully aware this cannot be done without empowering physicians, too. So I want you all to imagine a system where patients are finally in the driver’s seat, free to work with physicians who have been empowered as navigators of the best options for their patient, rather than navigators of a sea of paperwork.

As Prepared for Delivery

Thank you, Dr. McAneny, for that introduction.

Good morning, everyone, and thank you for welcoming me here today. It’s an honor for anyone to get to address a gathering of the American Medical Association, but as the son of a doctor, it feels like a special privilege for me.

Part of what’s made it such an honor for me to serve as HHS secretary is growing up around medicine, understanding the deep commitment my dad and his fellow physicians had to patients.

The mission of HHS is to enhance and protect the health and well-being of every American—and I know that is the mission and vocation of every member of the AMA as well.

That means we’re on the same team. Accomplishing our shared mission has to involve deep consultation and cooperation with all of you.

We’ve appreciated the leadership, thoughtful input, and engagement of the AMA on so much of the department’s work.

That includes the four priorities I’ve chosen as Secretary: combating the opioid crisis, reforming the individual insurance market, lowering the price of prescription drugs, and transforming our healthcare system into one that pays for value.

I want to focus on the latter two today, because they interact so closely with the work all of you do every day.

Physicians’ voices are vital to delivering the outcomes we all want: lower prescription drug prices and better care for American patients at a lower cost. I want to discuss how your perspectives have informed our work so far on both goals.

The formal launch of our prescription drug pricing efforts last year was defined by our desire for thoughtful input. The President’s drug pricing blueprint that we released last May, as many of you know, was also released as a request for information.

The goal of the blueprint was very clear: bringing down prescription drug prices and patient out-of-pocket costs. We laid out dozens of possible actions in the blueprint, many of which will entail some disruption to existing industry players.

That’s why we laid out the blueprint in a deliberative way. We want to disrupt how drugs are priced in America, because that system is so deeply broken. But we have to accomplish this goal in a way that minimizes any disruption for patients and providers.

Fixing our drug pricing system ought to improve the experience of patients and providers—not just through greater affordability, but also through a more transparent, predictable system of pricing and providing drugs.

We were very heartened by the AMA’s thoughtful response to the blueprint. On so many issues, from biosimilars and generics to transparency in advertising and at the pharmacy counter, your voice was clearly heard, and your support has been invaluable.

When you’re going to throw out an idea as bold as placing prices right in direct-to-consumer ads, it is immensely helpful that the AMA had already proposed the idea a year before we did!

We were pleased to see Johnson & Johnson respond last week to the President’s call for drug companies to voluntarily begin putting prices in their ads, and we call on other manufacturers to follow their lead.

I now want to delve into a couple specific issues: the benefits we see for physicians from our proposed model to lower prescription drug costs in Medicare Part B, and how we believe we can improve patient and physician experiences with drug plans’ use of formularies and prior authorization.


Last fall, the President put forth a model for overhauling how Medicare pays for physician-administered drugs, in Medicare Part B fee-for-service.

Today’s Part B status quo is totally unacceptable: America pays almost twice as much, and sometimes five or six times as much, as other wealthy countries pay for the most costly physician-administered drugs. Meanwhile, physicians are put in the position of having to acquire and hold these drugs, which are often extremely expensive, risky acquisitions.

Our new International Price Index model, or IPI, is primarily aimed at delivering for American patients a share of the discounts that drug manufacturers currently give to other wealthy countries.

The key goal here is to eliminate what is, today, essentially a corporate welfare system: a system that pads pharma profits at the expense of patients and taxpayers. Lower costs will mean more access to the drugs your patients need.

But IPI was also designed to improve the Part B drug experience for physicians and patients in other ways. For one, we want to ensure that physicians are kept whole in terms of compensation.

In fact, we’ve proposed expanding the pool of funds available, by undoing the sequestration cut that took physicians’ add-on fees from 6 percent of the drugs’ price to 4.3 percent.

There is no need for physicians to bear the burden here. The savings American patients need aren’t going to come out of physicians’ pockets—they’re going to come from the substantially deeper pockets of another group whose name starts with P-H, and I’ll just leave it at that.

IPI aims to improve a system that currently requires physicians to engage in the costly business of buying and billing for highly expensive drugs.

If you have a small practice that uses infusions, and you don’t want to bear the risk of buy-and-bill, now you’re off the hook. We’ll allow you to work with private vendors, who can take the risk for buying the drugs in a way that isn’t possible today.

But if you’re part of a much larger practice that’s able to drive a better deal than you could on your own, or want to band together with other practices to do the purchasing, then you can do that, too.

We proposed the IPI model in the most deliberative way possible, through an advance notice of proposed rulemaking. Next is the launch of the actual proposed rule, followed by the rule itself—which, I’ll remind you, is just a model.

CMMI models, as many of you know, are carefully assessed. We will closely monitor how the model will affect clinical outcomes, including patients’ adherence to their drugs.

We believe that the lower costs will, of course, mean better patient access to drugs, better adherence, and better outcomes for the care you provide—that is the goal.

Part D

The same principle underlies our approach to reforming the other major way Medicare pays for drugs, in Part D.

Last month, CMS proposed broadening the use of a number of negotiating tools to Medicare Part D that are widely used in the commercial market.

These tools can include requiring a patient to try one drug before another, as part of a clinically appropriate formulary, vetted by CMS. We know the use of these negotiating tools can raise concerns about getting patients access to the drugs they need.

But I’ll say something I think we can all agree on: High prescription drug costs are a serious impediment to patients’ access, too. Bringing down these costs without blunt restrictions on patient access has to involve pitting drugs against each other, and that means giving drug plans some power to steer patients toward one option before another.

Any talk about lower drug prices in Part D without a way to pit drug options against each other is really just hot air and empty promises.

Now, we understand that both the system of prior authorization and the processes involved can be frustrating.

But any proposals we are considering are already permitted, frequently used, and quite successful in the commercial market, where many of your patients get their coverage today.

Further, in examining these tools, we’ve actually learned quite a lot, from physicians and from patients, about how the system of prior authorization can be improved.

One example was well laid out by the AMA in its comments on the blueprint.

I’ll cite your comment at length, because it’s remarkable.

You explained that, quote, “when prescribing medications for their patients, physicians have to guess which medications are on the formulary, on the preferred pricing tiers, and subject to medication utilization management policies. If they guess wrong, they either have to prescribe another medication or spend hours working to obtain formulary or tiering exceptions or satisfy prior authorization or step therapy requirements. Often, they need to blindly keep prescribing alternative medications until they happen to get one that is on the patient’s formulary.” Close quote.

Now, many of you know this is a real challenge—but it’s such a crazy system some people may find that description hard to believe.

But I personally know just how frustrating it can be.

I have a relative who was recently prescribed a very high cost drug—one where the list price of annual treatments is in the five figures.

She was prescribed the drug not only without knowing what it could cost her at the pharmacy, but also without her or her doctor knowing whether it was even on her drug plan’s formulary.

My wife and I spent most of this past weekend trying to get an answer from her drug plan about whether it was covered—or if they preferred another drug. Mind you—we were simply trying to find out what drug the plan would prefer her to use. And they wouldn’t or couldn’t tell us!

This was a patient who had the Secretary of HHS by her side—who happens to be an expert in this area!

Imagine how broken this system must feel to the millions of patients who need high cost drugs, who have neither the time nor the expertise to figure it out.

But there is no need for this kind of friction and confusion—we have tools to make this system much more friendly and accessible to patients and physicians.

We’ve taken one step already, by proposing to require that Medicare Part D plans make available a real-time pharmacy benefit tool.

These tools, already used in the commercial market, can provide instant electronic access to a wealth of information for both patients and physicians.

You can sit there and instantly find out which drugs are covered by your patients’ insurance, how much they cost, how much they’ll cost your patient, and more. With these tools, you can not only find out what kind of authorizations might be necessary—often, you can get started on the authorization right then and there.

Our reforms on prescription drug pricing are aimed at ensuring your patients have a more affordable, predictable experience when they leave your office and head to the pharmacy.

That was the goal of the proposal the President put forth a couple weeks ago, which would replace today’s nontransparent system of rebates and kickbacks in Medicare Part D with a system of upfront discounts that will reduce patients’ out-of-pocket costs.

We also see other potential areas for improvement around the patient and physician experience with prescription drugs. I was very disturbed to hear that stable patients switching among insurance plans, like switching among Medicare Advantage plans, can often be required to start over again on a step therapy regimen.

This is not just potentially injurious to their health; it’s also penny-wise and pound-foolish. We know that getting a patient on the right drug, at the right time, is one of the best investments we can make in their health—and we do not want to impede physicians from making that happen. We’re looking at how we can address that issue now, and we would greatly appreciate your bringing other issues like that to our attention.

I now want to discuss, more broadly, how we want to reorient our healthcare system to empower physicians and patients—and the important role your input will play in that process.

Provider Burden

I want to start with one of the most obvious areas for reform: the sheer amount of time physicians spend complying with not just prior authorization, but other billing requirements, quality reporting, and so much more.

I believe there has never been an administration more focused on reducing provider burden than this one.

Administrator Verma has made reducing provider burden and supporting focus on patients one of her top priorities.

The results, just so far, speak for themselves: CMS estimates that our regulatory reforms will eliminate more than 53 million hours of paperwork for physicians alone through 2021, saving our system $5.2 billion. We’ve eliminated 105 separate clinical measures that were no longer meaningful or useful.

We also proposed the first overhaul of E and M coding requirements in more than 20 years.

Our goal was to simplify the requirements imposed on physicians but also, just as important, make the documentation you have to do into a useful patient record, not just a box-checking exercise.

We want to reduce the burden of reporting as much as possible, but where it remains necessary, we want to make the record useful to you and your patients, not just to the good folks you have to send it to on Security Boulevard up in Baltimore.

Further, thanks to the rules proposed on Monday by HHS, electronically generated patient records will now be more usable and accessible than ever, for both patients and physicians. Last year, I identified interoperable health IT as a key step toward value-based care, and this week was a big step toward an interoperable, patient- and physician-centered health IT system.

Another priority I laid out last year for value-based transformation was reforming regulations that may be impeding care coordination. We know that there are certain laws in particular that can get in the way of this work.

I may be a lawyer by training, but it gives me no pleasure to say that one law in particular has probably been as beneficial to the bottom lines of many lawyers as it has been detrimental to the lives of many physicians: the Stark Law.

The Stark Law was written with noble purposes in mind, but it was designed for a fee-for-service system—not the kind of system we are moving toward today. We’ve heard from many, many stakeholders, including the AMA, about the need to update the enumerated exceptions in the Stark Law to include value-based approaches to care.

The President’s 2019 budget called for such a reform, and we heard other ideas for Stark Law reform from the request for information we concluded last year.

Through a regulatory sprint, led by HHS Deputy Secretary Eric Hargan, we’re also considering care coordination concerns around the Anti-Kickback Statute, HIPAA, and 42 CFR Part 2. “Sprint,” of course, is a relative term when it comes to regulation and the government.

But burdens around care coordination were another of the key issues I identified when I laid out a vision for moving to value-based care, about a year ago today, and you’ll see significant action on this issue in 2019.

We look forward to working with all of you to bring historic reforms to these laws—focused on updating them to empower you to provide the highest-value, best coordinated care possible.

We’re very open-minded about what kind of regulations need to be reexamined to give you, as physicians on the frontlines, the freedom to drive better value in our healthcare system.

To the extent possible, we want to enable providers of all sizes to get involved in a system where we pay for value: from direct contracting for primary care and incentive payments for smaller practices all the way up to large provider networks or hospitals taking on full risk.

There is an implicit bargain here that I will make explicit: The more risk that you as providers are willing to accept for driving better outcomes, the less we are going to micromanage how you do your work.

We are going to be explicit about what we want, but we’re not going to dictate the how.

This will mean physicians have an immensely important role to play in the future of our healthcare system.

Just as I described how we want to empower you with better information to help patients find the right prescription drug option, we want to empower you to help patients navigate our health system more generally.

The first principle of our vision for value-based healthcare is about empowering patients—but we are fully aware this cannot be done without empowering physicians, too.

So I want you all to imagine a system where patients are finally in the driver’s seat, free to work with physicians who have been empowered as navigators for their patients, rather than navigators of a sea of paperwork.

Our payments will reward outcomes, not box-checking, and we’ll support you in working with patients to prevent or cure diseases long before they cause unnecessary suffering and cost.

Doesn’t that sound like a system that you would like to work in—and one that every American patient would love to use?

Building such a system is not only possible—it’s necessary to sustaining the high quality of American healthcare and fulfilling the duty we all have to American patients.

We cannot build such a system without the help of America’s physicians—but with your help, I believe we can do it sooner than many expect.

So again, thank you for what you do to engage with us and to advance American healthcare, and thank you so much for having me here today.

Content created by Speechwriting and Editorial Division 
Content last reviewed on February 12, 2019