Medical Devices and Prescription Drug Policy

Eli Lilly CEO denounces plan to consider drug imports

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Executives at Eli Lilly, one of the nation’s largest pharmaceutical companies, are denouncing the Trump administration’s proposal to consider ways to import prescription drugs from other countries.

During the company’s second quarter earnings call Tuesday, executives said the idea of importing drugs from abroad, even in narrow circumstances, is concerning.

“We think that’s the wrong road to go down,” Lilly’s chairman and CEO David Ricks said.

The Department of Health and Human Services (HHS) announced last week it is forming a working group to examine how the U.S. could import pharmaceuticals from abroad as a way to combat massive price hikes for drugs that are produced by one manufacturer and aren’t protected by patents or exclusivities.

HHS Secretary Alex Azar used to run Lilly’s U.S. division.

Azar’s argument is that importing drugs could increase competition and discourage manufacturers from implementing drastic price hikes just to make a profit.

Most notably, a company once owned by infamous “pharma bro” Martin Shkreli increased the price of the anti-malaria drug Daraprim by more than 5,000 percent in 2015, even though the drug had been around for more than 60 years.

Ricks said he believes in improving access to prescription drugs and keeping prices affordable. But he said importing drugs would not solve the problem, calling for regulatory reforms instead.

“This is really a regulatory failure from our perspective,” Ricks said. “We agree it should be solved, [it’s] the method we disagree with.”

The administration has already released a blueprint to lower drug prices, and officials are looking to draw recommendations from the industry.

Ricks said he’s taking a wait-and-see approach with the blueprint as a whole, but he is open to changing the Medicare drug rebate structure.

Under the Medicare prescription drug program, drug companies negotiate rebates with middlemen like insurers or pharmacy benefit managers (PBMs).

Azar has said he thinks rebates give an incentive for higher drug prices, since both the PBM and drug company get a cut. A proposal that would remove certain legal protections around rebates is currently under review by the White House Office of Management and Budget.  

Ricks said he is planning for a policy change.

“We are shifting too much of the cost via list pricing directly to consumers,” he said. “If consumer pricing came down [it] would improve volume and medication adherence for patients.”

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