We all want to build a healthcare system that puts the patient at the center, provides them with piece of mind, and treats them like a person, not a number. Nobody knows how to do that better than America’s community pharmacists...
As Prepared for Delivery
Thank you, Doug [Hoey] for having me here, and for the work you’ve done as a leader for community pharmacists at a critical time in the world of American healthcare.
It’s impressive to see a crowd this big at any fly-in, but it is particularly meaningful because I know the important role you each play in your communities.
You’re here not just to represent community pharmacy, but here to represent the patients you work with all across our country.
I also want to offer a special thanks to the student pharmacists who are here today. You are still a year or two away from feeling professionally obligated to come to Washington to advocate for pharmacists, so I’m encouraged to see you becoming interested in public policy early on.
I encourage you to consider public service, even for a short while: delivering healthcare policies that work for our country requires broad perspectives from every element of our healthcare system.
I’ve been aware of the important role community pharmacists play in our healthcare system throughout my career. In just the last year, as Secretary, I’ve been able to visit two community pharmacies to hear from pharmacists and their customers.
Further back, during my time in the private sector, I saw just how trusted and valued pharmacists are, often serving as the most frequent point of contact many Americans have with our health system.
When I was serving as Deputy Secretary in the 2000s and we rolled out Medicare Part D, Secretary Leavitt and I were well aware of and quite appreciative of the vital role community pharmacists played in educating seniors about the new benefit. Fifteen years later, we can say Part D has been a success.
But a changing prescription drug market has meant that high prescription drug costs are still a top concern for seniors and Americans of all ages. The experience at the pharmacy counter shapes what many Americans think about the health care system.
All of you know this well, but it is striking just how the unaffordable and unpredictable costs of drugs can be one of the most stressful aspects of healthcare.
I’ve talked to members of Congress who are driven to take prescription drug costs seriously as an issue simply because of massive bills they’ve been hit with at the pharmacy counter. You likely see this kind of sticker shock every day, and you can play a key role in making it as rare as possible for your customers.
So I’m pleased to speak with all of you, and honored to be the first HHS Secretary in recent memory to address a meeting of the NCPA.
But I’m here not just because I personally have already come to understand how valuable a role community pharmacists play in our health system. It’s also because no HHS Secretary has ever worked for a president as determined as President Trump to drive down Americans’ drug costs and improve the experience they have at the pharmacy counter.
Last May, in the Rose Garden, the President unveiled his blueprint for lowering prescription drug prices and out-of-pocket costs.
At the announcement, we were pleased to be joined by some members of NCPA—which isn’t even the only time we’ve brought community pharmacists to the White House this year.
The blueprint laid out four strategies for putting the American patient first: boosting competition, improving negotiation, creating incentives for lower list prices, and lowering out-of-pocket costs.
These can sound like abstract policy concepts. But for you, they’re part of the work you do for patients every day.
You’ve seen the savings that can be generated by competition among generic and brand drugs.
You know a great deal about what drives the skyrocketing list prices that some of your patients have to pay. You see every day how negotiation works—how it can drive down costs but, in today’s system, can still often fail to lower what patients owe out-of-pocket.
Today, I want to mention three particular initiatives that were put forth in the blueprint, and where we’ve been appreciative of the perspectives of pharmacists: ending pharmacy gag clauses, addressing DIR fees, and replacing today’s rebate system with a system of upfront discounts, delivered at the pharmacy counter.
One of the very first actions we took after the release of the blueprint was tackling pharmacy gag clauses. Within a week after the blueprint was out, CMS issued a letter to Part D plans making it clear that these practices are unacceptable in Medicare.
Then, later last year, Congress sent two pieces of legislation to President Trump’s desk that banned pharmacy gag clauses throughout our healthcare system for good.
This was a truly significant victory for transparency. One study, as many of you know, found that 23 percent of patients may be paying more in co-pays than the pharmacy is being reimbursed for the medication.
And these differences can be substantial, including for incredibly common drugs.
The study found that average co-pays for a combination of hydrocodone and acetaminophen, for instance, better known as Vicodin and other brand names, exceeded the average reimbursement for the pharmacy by 36 percent.
We’ve been loud and clear: You’ve always been able to ask your pharmacist whether you’re getting the best deal on the medication you need.
Now, thanks to this legislation and the efforts of the Trump administration, your pharmacist can now always work with you to find the answer.
We’ve given it a tag line: President Trump wants you to be able to, quote, “ask your pharmacist.”
Now, gag clauses were a real problem—but fixing them is just one piece of moving toward a much more transparent pharmaceutical marketplace.
A transparent, competitive drug pricing marketplace also means ensuring that patients’ costs are being calculated based on the most accurate, lowest possible price for their drug, and that pricing arrangements aren’t being manipulated to protect powerful interests.
Unfortunately, both issues are real concerns with the current system of direct and indirect remuneration.
We know the burdensome nature of the DIR system can be a real challenge for community pharmacies, while a lot less of a burden for pharmacies owned by the PBM itself.
This, by itself, is bad news for patients who want a competitive pharmacy marketplace and the lowest cost drugs possible.
But we’ve also heard from many of you that the DIR system isn’t being used to improve quality of services at the pharmacy—it’s just lowering the reimbursement pharmacies get, without that lower effective price being reflected in what patients pay.
That’s why, in this year’s Part D draft rule, we proposed requiring that DIR fees be accounted for at the point of sale, so that pharmacies aren’t required to pay back retroactive fees long after dispensing the medication a patient needs.
This creates a more level playing field that ultimately serves patients best.
But most important, this is about the patient’s interests.
With any price concession reflected at the point of sale, patients in Part D will now be paying based on a lower negotiated price, saving, in total, billions each year in out-of-pocket costs.
Fundamentally, addressing DIR fees is about reexamining how powerful interests have taken advantage of systems that were supposed to serve the patient. Unfortunately, the DIR situation is hardly the only place where that’s occurred.
The final area I want to talk about is today’s system of backdoor rebates for prescription drugs. What was created as a protection for arrangements that serve patients and taxpayers has become, we believe, a major driver of the ever-increasing list prices that burden far too many American patients at the pharmacy counter.
As Doug has put it, today’s rebate system is, quote, “complex, cumbersome, confusing, and most of all, covert.”
None of these are words we want to describe the healthcare system we all rely on—but they’re all pretty spot-on.
I’ll give you one particularly egregious example, which may not even surprise many of you. A couple of months ago, a drug company introduced a new generic version of a common asthma inhaler. If you want to buy this new generic without insurance, just paying cash, you can expect to pay $35 or less for a month’s supply. That’s the generic’s list price. Compare that with the list price of the brand name alternative, which is almost $60.
But when the generic hit the market, pharmacies across America got a notification from at least one large middleman that said essentially the following: We won’t cover the generic. If someone comes in with our insurance, you cannot process the generic with their insurance card. We’ll only cover the brand drug.
If you’re wondering just how covert some of these rules are, by the way, I’ll let you know how we found out about this notice.
Somebody posted about it on LinkedIn. That vaunted source of important medical news: LinkedIn!
By one estimate, a quarter of patients will pay more at the pharmacy counter by using their insurance to purchase that brand drug than they would if they just paid cash for the new generic.
As you all know, the reason the drug plan wants patients to take the brand drug is because the brand drug gives the drug plan a kickback.
That’s how broken our system is: When a new option comes onto the market, instead of pharmacies across America being told, “Hey, there’s an affordable new option, you should tell your patients about it,” the insurer tells you, “We’ll only cover the expensive incumbent option.”
I’ve told this story a few times, because it’s so shocking, and I’m always sure to make it clear: no patient would know about this unless their pharmacist tells them otherwise—and until we fix today’s rebate system.
Now, we know that replacing rebates with upfront discounts will be a significant change to today’s drug supply chain. The comment period on our proposed rebate rule ended this week, and we are going to pay close attention to all the input we receive from stakeholders, like you.
We’ve already taken steps to ease any transition. Last Friday, we announced a new measure to ensure that we can implement the rebate rule, if finalized, without excessive disruption to the pricing of Medicare Part D plans.
Using demonstration authority within the Medicare program, we will be offering Part D plans more certainty in formulating their bids over the next two years, allowing us to go forward with the implementation of a rule without unnecessary risk of premium hikes.
We’re taking these steps because we know the benefits of a change will be huge, and I want to highlight briefly just how important we believe the rebate rule to be. If finalized, the changes we’ve proposed will be the most important changes to the way prescription drugs are priced and paid for at the pharmacy counter, ever.
Each step we’re taking as part of the President’s blueprint, from improving negotiation to creating more transparency around pricing and promoting generic competition, is important on its own and in concert with one another.
But none of our efforts will be as useful as they can be if we leave alone today’s system of backdoor rebates.
Too many patients with the highest drug costs will not get the peace of mind and lower costs they deserve unless we replace today’s system of backdoor kickbacks with one in which discounts are delivered to the people that our regulations are intended to protect: American patients.
Any approach to drug pricing that does not tackle the issue of rebates—whether through our proposed approach or otherwise—will simply not get list prices down.
Anyone who stands for rebates, stands for ever-higher list prices, and against transparency and lower patient out-of-pocket costs at the pharmacy. It’s that simple.
In fact, we already know just how important it is to deliver the value of rebates as upfront discounts, because a few payers have tried it out. As many of you know, last year, United Healthcare announced that they would be passing on the value of their rebates directly, at the pharmacy counter, for patients who are on fully insured United plans. They’ve now had about a year to assess the policy, and the results are remarkable. According to their estimates, patients are saving $130 per eligible prescription.
Maybe most important of all, they’ve seen noticeable increases in adherence, between 4 and 16 percent.
The success of these new policies is such that United recently announced they will refuse to write new self-insured policies that don’t fully pass on rebates at the pharmacy counter.
I suspect there is almost no room in America where the kind of victory we’ve seen with these policies would be celebrated more than this one: You all know better than anyone that lower drug costs means better adherence, and better adherence means better health.
That brings me to the broader point that I want to close on, about the role we envision for pharmacists in our healthcare system.
Many patients may never have stopped to consider just how much growth there has already been in the role played by pharmacists.
It was only a decade ago that all 50 states and the District of Columbia finally allowed pharmacists to seek certification to give flu shots.
Today, we think of the pharmacy as a completely typical place to receive a flu shot. Nearly 30 percent of all adult flu shots are administered in pharmacies, and pharmacists often provide other types of immunizations as well.
A broader role for pharmacists is important not just because it can mean more convenient, lower cost care for American patients. It also represents a positive trend in our healthcare system, of thinking more expansively about what kinds of care can be provided by all kinds of health professionals.
Last fall, the Trump administration put out a report on choice and competition in American healthcare, which highlighted a number of policies, from the federal government on down to the local level, that impede the supply of high-quality, low-cost healthcare.
This includes restrictions that prevent health professionals, including pharmacists, from practicing to the top of their license.
We’re supportive of states examining their restrictions on scope of practice, and thinking hard about how to ensure Americans have the best access they can to the healthcare they need.
There’s no better place to start than by asking more of the most accessible healthcare professionals in America: our community pharmacists.
Supporting a broader range of providers is an essential part of another priority I’ve laid down as Secretary, besides prescription drug pricing: moving to a system that pays for health and outcomes rather than sickness and procedures, in part by putting patients in control as consumers.
In order for patients to truly be in control, they need to be empowered with information, and they need partners to help them navigate the healthcare system.
I recognize that is a role that America’s pharmacists, especially our community pharmacists, already play every day.
So, in closing, I want to invite you to work with us not just on delivering Americans more affordable access to medicines, but, more generally, easier access to better care at a lower cost.
We all want to build a healthcare system that puts the patient at the center, provides them with piece of mind, and treats them like a person, not a number.
Nobody knows how to do that better than America’s community pharmacists, so we look forward to working with you to build the system American patients deserve. Thank you so much for having me here today.