HHS Nominee Oversaw Big Drug Price Increases at Lilly

By Peter Loftus Features Dow Jones Newswires

President Donald Trump said in a tweet Monday that his nominee for secretary of Health and Human Services will be a "star" for his ability to lower drug prices, but during Alex Azar's tenure as an Eli Lilly & Co. executive prices rose dramatically for some of the company's top drugs.

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Mr. Azar, a lawyer who served as a deputy HHS secretary in the George W. Bush administration, joined the Indianapolis company in 2007 as senior vice president of corporate affairs and communications. He rose through the ranks and in 2012 was promoted to president of Lilly's U.S. pharmaceuticals unit, Lilly USA.

As head of the U.S. business, Mr. Azar oversaw sales teams for drugs including the erectile dysfunction treatment Cialis and the blood thinner Effient. He also oversaw negotiations with health insurance plans aimed at persuading them to pay for Lilly's products.

While Mr. Azar headed the U.S. business, Lilly came under criticism for raising prices for some of its drugs, including a more than doubling in the U.S. list price for Humalog insulin between 2011 and 2016.

Lilly has said it pays undisclosed rebates and offers discounts to health insurers and pharmacy-benefit managers that reduce the cost of its products, including Humalog. In 2016, Lilly said the average U.S. list price across all of its drugs rose 14%, but the average net price after rebates and discounts went up by just 2.4%. Those averages can obscure significant price boosts on individual drugs.

Moreover, a growing number of patients don't benefit from the discounts, because they have high-deductible health-insurance plans that require them to pay the full list price for drugs, or a portion of it, for at least part of the year, until they meet their deductibles. That helped drive public anger about insulin prices.

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Other insulin makers including Sanofi SA and Novo Nordisk A/S also were criticized for raising prices substantially.

An Eli Lilly spokesman said Mr. Azar "had a successful career at Lilly, and we wish him the best in his future work." Mr. Azar couldn't be reached for comment.

The attorneys general in states including Minnesota, California and Florida have requested or demanded information from Lilly about insulin pricing, Lilly disclosed in regulatory filings. Lilly has said it is cooperating with the requests.

Sanofi and Novo Nordisk also have received state attorney general inquiries about their insulin pricing, and have said they are cooperating.

Lilly's American revenue was choppy during Mr. Azar's tenure as U.S. chief because of patent expirations for top-selling drugs such as the antidepressant Cymbalta and osteoporosis drug Evista, which allowed competitors to sell cheaper generic versions. Lilly's U.S. sales declined sharply in 2014, but have risen since, helped by new drugs such as Taltz psoriasis treatment and Jardiance for diabetes.

In January 2017, shortly after David Ricks replaced John Lechleiter as Lilly's chief executive, the company said Mr. Azar was leaving Lilly to pursue other career opportunities.

Mr. Azar this year started a business, Seraphim Strategies, that provides consulting to drug companies and health insurers, according to his LinkedIn profile.

Last year, HMS Holdings Corp., which provides services to health insurers, named Mr. Azar to its board of directors. A spokeswoman couldn't immediately be reached to comment.

Write to Peter Loftus at peter.loftus@wsj.com

(END) Dow Jones Newswires

November 13, 2017 15:30 ET (20:30 GMT)