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Swamp deepens as Trump names former drug industry exec to be health secretary

Alex Azar, President Trump’s pick to serve as Health and Human Services secretary, represents everything wrong with the incestuous relationship that often exists between government officials and the industries they oversee.

This is a guy who, after being active in George W. Bush’s presidential campaign, landed a plum job with the Department of Health and Human Services despite being a lawyer with no background in healthcare.

He’s a guy who, in the grand tradition of Washington revolving doors, jumped ship to become the top lobbyist for a drug company he previously regulated.

Now he’s on his way back to run the agency he used to fight, where he’ll be charged with keeping tabs on the company that, for a decade, paid his bills.

Swampy? You bet.

“This certainly simplifies the industry’s lobbying,” said John C. Coffee Jr., director of the Center on Corporate Governance at Columbia Law School. “It eliminates the middleman.”

He told me it’s hard to see how Azar’s nomination represents Trump making good on repeated pledges to crack down on the drug industry.

If anything, Coffee said, having Azar as health secretary sends a message to the pharmaceutical industry that the gravy train will keep chugging along.

“I would think the industry will see this as a message that they’ll be relatively safe from increased regulation,” he said.

Azar would replace Tom Price, who stepped down as HHS secretary in September amid questions about spending at least $400,000 in taxpayer money on private jets.

Until earlier this year, Azar, 50, was head of U.S. operations for Indianapolis-based Eli Lilly & Co., one of just three companies — with Novo Nordisk and Sanofi — controlling the roughly $30-billion global market for insulin.

The firms routinely move in lockstep, raising prices that millions of people with diabetes have no choice but to pay.

According to the investment research firm SSR Health, the price of Lilly’s insulin doubled during Azar’s tenure in the top spot — a boon for shareholders; bad news for patients.

Full disclosure: I have Type 1 diabetes and use Lilly’s Humalog insulin. So I’m not writing with my customary professional reserve. This is personal. As it is for the roughly 3 million other Americans with Type 1 diabetes.

Type 1 is the autoimmune form of the disease. The vast majority of people with diabetes have Type 2, which is commonly associated with obesity and may not require treatment with insulin.

In August, the Indianapolis Business Journal reported that the price of Lilly’s Humalog has risen more than 1,000% over the last 20 years. During that same period, the paper noted, “the price of a gallon of milk climbed 23% and the sticker [price] on a Dodge Caravan minivan rose 21%.”

Lilly launched Humalog in 1996. It cost $21 a vial, which is about a month’s supply.

After nearly three dozen price increases, a vial of Humalog now goes for about $300. There is no generic equivalent.

Lilly and other insulin makers will tell you the actual cost to patients is lower once you factor in discounts and rebates. But that just illustrates another problem with our healthcare system — the total lack of price transparency.

It’s impossible for patients to know how much drugs actually cost, or how much companies are profiting from people’s misfortune.

In May, Lilly raised the price of Humalog an additional 8%.

Stuart Schweitzer, a professor of health policy and management at UCLA, noted that Azar has made no secret of his disdain for Obamacare. The healthcare reform law, which extended coverage to about 20 million people, is “circling the drain,” Azar has said.

“I think dismantling the Affordable Care Act, not lowering drug prices, is Trump’s priority,” Schweitzer said. “As HHS secretary, Azar would be in a position to do a lot of things to sabotage the law.”

An HHS spokesman told me Azar was unavailable for interviews. But in an alumni note submitted to Yale Law School, Azar said he “entered healthcare largely by accident.”

“After law school, I clerked for Justice Antonin Scalia and then joined a D.C. law firm,” he wrote. “I went to work for my mentor Ken Starr immediately after he became the Whitewater independent counsel.”

Azar said he subsequently was “active in the Bush-Cheney campaign in 2000,” and went on to serve as HHS general counsel under Bush. He advanced to become the agency’s deputy secretary.

That means he was helping run things when the Food and Drug Administration, which falls under HHS, investigated claims that Lilly was engaging in illegal off-label sales of the psychiatric drug Zyprexa. Lilly agreed in 2009 to plead guilty and pay $1.4 billion, including a criminal fine of $515 million.

That wasn’t a win for Azar, though. It was a loss. He’d switched sides two years earlier to become Lilly’s chief lobbyist.

Azar became head of Lilly’s U.S. operations in 2012. Two years later, a federal jury slapped Lilly and the Japanese drug company Takeda Pharmaceuticals with $9 billion in punitive damages for conspiring about a decade earlier to hide the cancer risks of a diabetes medicine called Actos.

The damages subsequently were slashed to $36.8 million, which a U.S. District Court judge said was still “large enough to accomplish the jury’s clear aim: to send a message to the defendants that their wrongdoing must stop.”

Now Azar is set to change uniforms once again, jumping back to HHS to watch for other acts of wrongdoing among drug companies.

As if all this wasn’t stinky enough, it looks very much like he’s returning to public service because of a career setback in the private sector. Azar exited Lilly at the beginning of the year after what appeared to be a bruising management reshuffle that left him out in the cold.

Molly McCully, a Lilly spokeswoman, told me Azar departed the company “to pursue other career opportunities” — typically code for “here’s your hat, bub.” The company’s new chief executive, David Ricks, issued a brief statement after the reshuffle wishing Azar well “in this next chapter of his professional life."

Within weeks of going solo, Azar established a consulting firm called Seraphim Strategies, which his LinkedIn page said could help healthcare companies with “marketing, pricing, reimbursement, access and distribution, as well as federal and state healthcare policy.”

Now Trump wants him in charge of the entire healthcare system. Azar “will be a star for better healthcare and lower drug prices!” the president tweeted.

All evidence to the contrary notwithstanding.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

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