The drug executive President Donald Trump has picked to lead the Department Health and Human Servicesisn’t likely to shy away from the topic of sky-high medication prices -- but it may beinsurers and drug plans that feel the heat as much as his former industry.

Trump’s pick, former Eli Lilly & Co. executive Alex Azar hastalked about drug prices during interviews, speeches and panelappearances before leaving Lilly in January and in the monthsafter. His remarks have paralleled a common industry argument, thatit’s other parts of the pharmaceutical supply chain that bear alarge share of the blame for U.S. outrage over drug costs.

“Why did things erupt? They erupted because we have seen acomplete and fundamental restructuring of health insurance in theUnited States over the last three to five years,” Azar said at a conference in Mayhosted by a medical software company.

Trump has made the cost of drugs a major part of his message.Saying that drugmakers are “getting away with murder,” he hassuggested using the government’s buying power to restrain prices.He’s also said other countries -- which in general pay less forbrand-name medicines than the U.S. -- should pay more.

The choice of Azar will likely set up a vigorous discussionabout the issue when his nomination eventually comes before theSenate.

“It is not the pick you would expect from someone who is goingaround calling the pharmaceutical industry a bunch of murderers,”Walid Gellad, who heads the Center for Pharmaceutical Policy andPrescribing at the University of Pittsburgh, said in a phoneinterview, referring to Trump’s comment about the industry.

Azar didn’t respond to a request for comment on Monday.

Little action

Trump’s deeds haven’t matched his rhetoric. The administrationhas taken few actions that directly impact brand-name drug costs.Azar, likewise, has in the past opposed government intervention ondrug prices.

“When the government gets involved it is more likely than not tocreate perverse incentives and unintended consequences than whenthe market players can work together to figure that out,” Azar saidat a drug costs panel hosted a year ago by the Manhattan Institute,a free-market think tank.

Amid the U.S. debate over costs, the drug industry hasconsistently pointed a finger at health insurers and pharmacybenefit mangers, the companies that negotiate drug coverage onbehalf of health insurers and employers. The plans, also known asPBMs, make agreements with drugmakers to cover certain treatments,working to lower overall costs for their clients.

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Those discounts are often passed along in the form of rebates toinsurers or benefit managers. The result has been rising listprices, and rebates that rise in turn. While many patients don’tfeel the effect, those that have to buy drugs out of pocket can besurprised.

Payment system

“We’re trying to usher in a golden age of medicines with apayment system that is in its golden years,” Azar said at theManhattan Institute event. “That system needs to be retired andreplaced. The only way to do that is for every private health careinstitution, drug companies, insurers, employers, PBMs, hospitals,to work together to create a better way to pay for medicines.”

The Washington lobby group for drugmakers, PharmaceuticalResearch and Manufacturers of America, has made insurers andpharmacy benefit managers its target for blame, saying rebates havedriven the complex pricing system and increasing costs forsome.

“High rebates are things that both the pharmacy benefit managersand the insurance companies like because they get a big check atthe end of the day,” Lori Reilly, executive vice president ofpolicy research at PhRMA, said at a Senate hearing last month.

Mark Merritt, the CEO of the Pharmaceutical Care ManagementAssociation, which represents prescription plans, said he wasn’tconcerned that Azar would target his group’s members as part of adrug pricing push with similar positions to PhRMA.

“Serious policy makers like Alex see through that,” Merrittsaid. He also said he expected Azar will want to show that he canseparate himself from his professional background in the drugindustry and “focus on public policy where he’s known as a fair andhonest broker.”

The complex web of companies that sit between a drug’smanufacturer and a patient’s medicine cabinet may already be in themidst of change. Amazon.com Inc. has reportedly looked at the drugsector, and CVS Health Corp. and Aetna Inc. are said to be in talksabout a deal that would house an insurer, drug plan and pharmacyunder a single company.

Other approaches

Instead of direct price controls, so far the administration hasfavored moves such as those Food and Drug AdministrationCommissioner Scott Gottlieb has taken at the agency to increasecompetition from low-cost generic drugs.

Azar hasn’t been an absolutist. After leaving Lilly in January,he said it was his preference for industry members to work togetherto solve the issue, but if the government ends up taking action,“then so be it.”

Azar’s view has been echoed by some lawmakers, like RepublicanSenator Lamar Alexander of Tennessee, who heads the Senate’sHealth, Education, Labor and Pensions Committee.

“Where the money goes in prescription drugs is more complicated.I have yet to figure out exactly where it goes,” Alexander said ata hearing on drug costs.

He could face a tougher reception from the other side of theaisle, where Democrats likely to use Azar’s nomination as a proxyfight over the Trump administration’s efforts to dismantleObamacare, and to talk about drug prices.

“The last thing we need is to put a pharmaceutical executive incharge of the Department of Health and Human Services,” saidSenator Bernie Sanders of Vermont, an Independent who caucuses withthe Democrats.

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