President Trump’s pick to lead the Department of Health and Human Services faced pointed questions Wednesday about his former employer’s history with marketing anti-psychotic drugs to nursing home operators.
Alex Azar, most recently a top executive at pharmaceutical giant Eli Lilly and Company (NYSE: LLY), pushed back against criticism of his former company’s history with the off-label promotion of olanzapine. The drug, which Lilly markets under the brand name Zyprexa, is approved as a treatment for bipolar disorder and schizophrenia.
“The conduct that occurred there was unacceptable, and there is not a leader at Lilly that would say differently,” Azar said during testimony before the Senate Committee on Health, Education, Labor and Pensions. “It was a massive learning and transformational experience for the company.”
The nominee was responding to questions from Sen. Elizabeth Warren, a Massachusetts Democrat, over Zyprexa. Back in 2009, the Indianapolis-based firm pled guilty and forked over $1.4 billion in cash to settle allegations that it had actively promoted the drug for a variety of non-approved uses in nursing homes — including behavioral symptoms, dementia, depression and sleep issues.
“The word for that is fraud, and it cost the government and taxpayers billions of dollars,” Warren said when questioning Azar about Lilly’s behavior.
The $1.4 billion deal with the Department of Justice included a $550 million criminal fine — at the time the largest of its kind for a health care case, as well as the heftiest fine ever levied by the federal government against a single company in any industry. Lilly also agreed to pay up to $800 million as part of a civil settlement with the federal government and multiple states related to Medicaid and Tricare claims.
Azar, who served as deputy HHS secretary under George W. Bush from 2005 to 2007, responded by emphasizing that he didn’t work at Lilly during the time that the company engaged in the off-label marketing, which the government said stretched from September 1999 to the end of 2005. He joined Lilly in 2007 as its global head of corporate affairs, and assumed the presidency of subsidiary Lilly USA in 2012.
When pressed by Warren over whether he thought the record fine was an adequate resolution to the Zyprexa case, Azar demurred.
“It was certainly the largest ever,” he said, later adding: “Senator, what was important about that is that it changed behaviors.”
Cutting anti-psychotic use in nursing homes has been a major initiative for the Centers for Medicare & Medicaid Services (CMS) in recent years. Back in 2011, when anti-psychotic use in long-term care sat at 23.9% of residents, CMS set a goal of reducing usage of the drugs by 30% by the end of 2016.
Providers exceeded that challenge, with use dropping to 15.7% by the first quarter of 2017; that’s a dip of 34.1%.
Block grant fight
The two also sparred over whether Azar supported the idea of converting Medicaid to a block-grant program, which had been a key part of the Congressional Republicans’ attempt to repeal and replace the Affordable Care Act over the summer.
“I have actually said before that looking at block granting, and empowering states to be fiscal stewards, can be an effective approach,” Azar said.
Warren pushed him to provide a yes or no answer on the issue, but Azar would only say he would consider block granting as just one option of many.
“I support it as a concept to look at,” he said. “One needs to look at block granting as an abstract.”
Trump nominated Azar to replace former HHS head Tom Price, who resigned in September amid questions over his use of taxpayer-funded private jet travel. Azar’s nod received a positive reception from industry leaders, including American Health Care Association president Mark Parkinson and LeadingAge CEO Katie Smith Sloan.
Written by Alex Spanko