Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Industries traditionally don't get to pick nominees to fill a president's cabinet. But the Trump administration sometimes does it for them. 

Former Eli Lilly & Co. executive Alex Azar is a Health and Human Services (HHS) Secretary nominee that drugmakers and health insurers can firmly support. 

Jumpy
Rhetorical and political volatility from the Trump administration has made for a very jumpy year for biopharma and ACA-exposed insurer stocks
Source: Bloomberg

Azar is already in the upper echelon of Trump appointees in terms of experience; he spent most of the Bush administration as general counsel and then Deputy Secretary of HHS. That bodes well for the general function of the agency. 

Azar's career since the HHS bodes well for the pharma industry. He spent nearly a decade at Lilly, eventually rising to run its U.S. business. President Donald Trump tweeted on Monday that Azar "will be a star for lower drug prices!" But while Azar was at Lilly, the company significantly raised prices on its medicines. He seems unlikely to push his former industry to take the opposite tack. 

On the Rise
Prices for Eli Lilly's medicines rose substantially in the U.S. while Alex Azar ran the business
Source: Bloomberg

If Azar does go after drug prices, then he may focus on other actors, such as pharmacy benefit managers, that pharma likes to blame for rising costs. Or he may encourage the FDA's bid to lower prices via competition. This may not be good for every pharma company, but it's a far cry from the HHS's stance under prior management. During the Obama administration, for example, the department tried to make it less profitable to sell expensive medicines to Medicare beneficiaries. Azar was on the executive committee of a lobbying group vigorously opposed to that effort.  

Azar's appointment may be a boon for Obamacare-focused health insurers, as well.

While Azar has been a critic of the Affordable Care Act and a proponent of repeal, he doesn't seem as zealous about it as former HHS Secretary Tom Price. Azar told Bloomberg TV in June that the ACA gives HHS a lot of latitude to "make it work a little better." In contrast, when Price had opportunities to make the law function better, he didn't always take them. Some of the agency's more-obvious acts of sabotage -- including sluggish responses to state requests for greater flexibility -- may change. 

Early ACA enrollment figures for 2018 have been robust in spite of the efforts of Price's HHS; any departmental shift toward supporting, rather than undermining, the law can only help. 

At a minimum, insurers and pharma firms may soon get an experienced secretary familiar with how the HHS works. But they can hope for something more: a much-needed friend in the Trump administration. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net