Azar eyes overhauling certificates of need, Medicaid drug rebates

HHS Secretary Alex Azar on Thursday suggested he'll next tackle certificate-of-need and scope of practice regulations as well as significantly changing Medicaid's drug rebate guidelines.

In an address for the annual meeting of the conservative American Legislative Exchange Council, Azar called these certificate-of-need rules—long a target of conservative lawmakers—a "significant barrier to new competition and lower-cost market disruptors."

Azar also unveiled new guidance meant to deter manufacturer gaming of the Medicaid drug-rebate program. The Trump administration will block manufacturers from using new formulations of a drug they already make, known as line extensions, to recalculate the Medicaid rebates they have to pay to states.

"This is the kind of abusive behavior from drug companies that this administration will not tolerate," Azar said. "Starting today, we've made clear that manufacturers must pay the full amount of rebates that they owe under the law."

The announcement was the first significant shift of the drug-pricing conversation to Medicaid. State Medicaid directors and managed-care plans have complained bitterly about the need for more control over the prescription drug formulary, or a tighter rein on drug companies. Azar also promised the administration and Congress would force manufacturers to pay more in rebates when they raise their drug prices, a change from the current policy, which he called the "much larger giveaway for drug companies contained in Obamacare."

On the insurance market, Azar touted the administration's recent rules on association health plans and three-year expansion of short-term plans, taking aim at states that have already moved to counter the HHS rules with their own regulations.

"This affordable option will only be as available as state legislators and insurance commissioners allow it to be," the secretary said of short-term plans.

He criticized the state moves—particularly those that allow short-term plans for six months only—as limiting the plans' "usefulness."

"We believe sensible state regulation of these plans is important," Azar said. "But millions of Americans are in need of affordable insurance options, and states can help build this market outside of Obamacare's broken regulations."

At the same time, he said he wants to work with states on deregulation.

"We are eager to work with states to undo the damage done by Obamacare," Azar said.

He emphasized that the administration is doing what it can within the law to roll back Obamacare regulations but acknowledged the efforts are limited unless Congress repeals the law.

"But until that happens, this administration remains committed to repealing and replacing the ideology that underlies it: undoing the unnecessary restrictions on consumer choice, and replacing them with free-market solutions that really work," Azar said.


Susannah Luthi

Susannah Luthi covers health policy and politics in Congress for Project Japan. Most recently, Luthi covered health reform and the Affordable Care Act exchanges for Inside Health Policy. She returned to journalism from a stint abroad exporting vanilla in Polynesia. She has a bachelor’s degree in Classics and journalism from Hillsdale College in Michigan and a master’s in professional writing from the University of Southern California.


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