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: 86 Real Questions

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IBM's Pa. debacle: State needs IBM to pay for $one hundred seventy million gadget that did not work | killexams.com Real Questions and Pass4sure dumps

Pennsylvania's effort to get $170 million in damages and fees again from IBM Corp. for a failed laptop gadget survived its first look at various remaining month. A dozen preliminary objections from IBM's long island and Harrisburg legal professionals had been denied through Dauphin County common Pleas courtroom choose Andrew H. Dowling on Nov. 21. He set target dates for discovery and depositions, with the trial set for 2020, barring added lengthen.

All that criminal artillery will battle to resolve an initial $a hundred and ten million contract, signed with excessive hopes in 2005 under Gov. Ed Rendell, that turned into presupposed to be achieved with the aid of 2010. Or 2011, or 2012, below Gov. Tom Corbett, as the deal became amended and delays, bugs, and introduced payments proliferated.

Or under no circumstances, as it worked out.

Pennsylvania had its share of previous counsel-expertise disasters in its emergency communications, welfare, and tax workplaces, amongst others. The IBM lawsuit, filed with the aid of Gov. Wolf's administration last spring, offers a window into how large-ticket information-know-how contracts can grind on for years, drinking hundreds of thousands of taxpayer dollars, devoid of enhancing public functions.

The state wants IBM to pay for breach of contract, fraudulent inducement, negligent misrepresentation, nondisclosure, and fraudulent concealment. IBM has called the case "devoid of merit." Its attorneys did not reply to calls.

The IBM gadget was speculated to address payroll deductions and unemployment compensation funds from just about 300,000 Pennsylvania employers. starting in the Nineteen Sixties, IBM and different contractors had helped the state customized-construct separate tax and compensation programs, in hopes of reducing labor prices and dashing creation.

by means of 2005, although, the state diagnosed it became saddled with an "inefficient," costly, and handiest partly computerized legacy of "more and more outdated, computing device techniques," in line with the go well with. as a substitute of modern network processing, video-like interfaces and actual-time updates, Pennsylvania nevertheless used mainframe computers, green-display terminals, and day-conclusion checklist-batching.

So the state department of Labor and trade called on tech contractors to bid on custom-building a "comprehensive, comprehensive, built-in and wholly functioning" unemployment compensation equipment, assembly 1,500 company requirements, to seamlessly exchange its "mission critical" capabilities by means of 2010.

IBM pitched difficult: according to the suit, the enterprise said its long event with Pennsylvania, its deep pool of skilled software and management skill, and "extensive working advantage and capabilities in the unemployment compensation container" would assure the job got finished appropriate and on time. In June 2006, the state employed IBM.

however "despite being paid almost $170 million," $60 million over finances, and receiving time extensions beyond the original contact, "IBM not ever delivered," in response to the state.

"IBM had no intention of staffing the challenge as described," in keeping with the lawsuit. whereas its salespeople were promising a radical job, the enterprise's Wall road-mindful administration turned into moving ahead with plans "to put off heaps of U.S. personnel in desire of outsourcing work to offshore contractors" or "more affordable foreign labor." facing a brand new generation of tech rivals, IBM "determined that its share expense obligatory to take precedence over customer delight and appropriate venture start."

as an example, in line with the complaint: IBM sent a crew of business analysts to birth the project in 2006. In 2008, with their design comprehensive however not yet carried out, the enterprise pulled them out, developing "a data hole" simply as it become time to put in writing software code and design applications.

quickly after, IBM's "everyday leads on the challenge" were moved out. (One, Robert Donaldson, in 2011 grew to become IT chief for the Pennsylvania department of profits.) Untested code piled up. IBM blew past deadlines, then "tried to vague and whitewash these information with misleading, deliberately perplexing reviews."

In 2013, with the IBM task  "45 months in the back of schedule and $60 million over funds," the state employed Carnegie Mellon's application Engineering Institute to audit the project. The college discovered "an abnormally excessive price of defects" in IBM's incomplete code. Carnegie Mellon suggested towards finishing the software "as a result of the high chance of failure." The state canceled the IBM challenge and went lower back to its aged legacy methods.

Pennsylvania is never the handiest state that claims IBM ripped it off. In 2010, Indiana sued IBM after canceling a state welfare-processing contract. IBM sued back. A lessen court docket instructed the state to pay IBM $52 million in 2012. Two years later an appeals courtroom reversed that ruling and stated IBM owed Indiana as a minimum $50 million. That case continues to be in court.

To prevent future utility meltdowns, state officials led by Sharon Minnich, the Deloitte Consulting and SAP veteran who heads Pennsylvania's workplace of Administration under Gov. Wolf', say they have taken steps to standardize and partly centralize state software procurement and overview contracts with extra oversight.

they have got additionally hired a brand new unemployment-compensation merits-modernization contractor, Florida-based mostly Geographic solutions Inc.,a a hundred and seventy-person, 25-yr-historical inner most enterprise with other state consumers. Geographic has agreed to update that system for $35 million, a fraction of what IBM charged. further task managers may add up to $10 million.

This time, the contractor expects to buy options already used via dozens of different states off the rack, as an alternative of constructing new ones. no matter if you credit score the state's greater management, or the utility trade's evolution towards off-the-shelf (or downloaded) commodity products within the 12 years on the grounds that the IBM deal became signed, it appears as if taxpayers can also at last be in for an IT dividend.

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How IBM Watson plays in the Fintech space | killexams.com Real Questions and Pass4sure dumps

Benzinga's Fintech focal point Podcast facets conversations with the biggest names in fintech. Subscribe to the Fintech focal point publication to get a roundup of trade news dropped at your inbox weekly, and check out upcoming programming at Benzinga events.

The Fintech focal point podcast takes a look at the burgeoning world of fintech—as per general—but through another lens. usually, when americans believe of fintech, they believe of the know-how behind it, which makes sense. however what about the specific americans behind it who convey the myriad of relocating technological elements collectively?

during this episode they chat with Tom Eck, Chief know-how Officer at IBM Watson (NYSE: IBM). What Tom does on an everyday basis is sniff out fintech startups and notice how IBM Watson can also be of provider to their operations. From payment platforms to brokerages to the rest in between, Tom appears for methods to bring a human contact to fintech, helping to build one relationship at a time.

Interview Highlights

So, let's talk about your each day workload apart from the times where you spend coding like yesterday. Is your day after day job essentially to just exit and seek organizations and figure out a way to work with them?

So, there may be basically two items I have been building at IBM. the primary one this is form of the enterprise case turned into already there, and they have been trying to find somebody to sort of lead the precise execution of it, is that this what they call the IBM Cloud for economic features. And the thought there is how can they have a concentrated providing for economic capabilities developers, right? So, they are not looking throughout the 50,000 different half numbers that they now have in their catalog, however fairly they tell them "These are the issues you should definitely be interested as a modern financial features developer."

So, they constructed out this platform on IBM Cloud with ... or not it's a collection of equipment, so or not it's your regular form of microservice starter kit, you say I want to create a brand new provider, you provide it a name, you click a button and it spits out form of the framework for a microservice. You click on yet another button it wires up a devops tool chain, that sort of factor. So, starting with those low-stage enabling tools, and by the way to me if you're no longer having an API first mentality, i might in reality like to be aware why you're not. that would be an outstanding debate over a beer or whatever like that because when you are not constructing APIs first ... in different phrases, rather than building a UI after which determining a way to attach a backend to it, you beginning by asserting "What features do I are looking to offer?"

So, if you're working the gamut right here, you might be working with companies throughout the industry, in 2019, what has you most excited? What within fintech are you most excited about?

I feel that an interesting trend it really is going to play out is the fintechs themselves being disrupted. they now have already viewed businesses like Amazon have undoubtedly shown interest in providing banking functions, which incidentally makes some of their banking clients nervous. I think massive tech stepping into economic services choices, it's coming, and that's going to disrupt absolutely the incumbent fiscal capabilities associations, however I agree with fintechs as smartly. it truly is one source.

another supply is the banks themselves. The banks now have had a pair years to sort of think about what are the fintechs doing that we're not doing, and might they reproduction a pair pages from their playbook? I suppose the banks are being compelled into identifying the way to be more agile and how to be extra client adventure pushed. I feel it truly is a big theme as well, is the banks deserve to cease pondering digital transformation in terms of how many techniques they have got changed or upgraded or consolidated. feel about it when it comes to the variety of consumer journeys that have been changed.

hearken to the complete interview with Eck.

See more from Benzinga

© 2019 Benzinga.com. Benzinga doesn't provide funding counsel. All rights reserved.


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This Startup Is Creating A Real-Time Data Map Of The Global Economy. BlackRock And PayPal Are Buying It | killexams.com real questions and Pass4sure dumps

H

ow much did the federal government shutdown cost? After 35 days of deadlock, $6,354,845,148 in wages had gone unpaid to 747,573 federal employees. Every second that ticked by added $2,118 to the figure. Some staffers were furloughed; many more worked without pay. At the Department of Homeland Security, for example, some 245,405 employees were unpaid and 32,706 furloughed. At Treasury, 36,309 workers were furloughed and 82,336 worked unpaid. At the Environmental Protection Agency, 52% of its staffers worked without compensation.

Getting a handle on the magnitude of this disruption—as well as its granular details—was no small feat. A little-known New York City fintech company named Enigma tabulated the rising costs in real time on a website it threw up called Government Shutdown 2018–2019.

In order to do so, Enigma searched the Office of Management & Budget’s contingency plans for 109 federal departments. It also tapped FederalPay.org for average salaries and worker counts for 46 agencies. In all, it combed through 2,000 pages and 2 million spreadsheet rows of federal data to create the tracker. From idea to launch, the effort took three Enigma number crunchers a total of 36 hours.

The shutdown data is available free, but Enigma’s ability to rapidly make sense of multiple disconnected data ­sources, public and private, and create a customizable view of the global economy has attracted some of the world’s leading companies, from BlackRock to PayPal and Celgene, with many clients paying more than $1 million a year for fingertip access to its insights.  

Enigma is the brainchild of Hicham Oudghiri and Marc DaCosta, best friends since they met 16 years ago as undergraduates at Columbia University, where they studied philosophy. Their startup organizes information from thousands of sources around the world into a single, fully linked interface.

“People know how the internet works and how to log users and serve them cookies to suggest products on Amazon. That problem is solved. What we’re doing is building a model of the real world,” says Oudghiri, 34, speaking from Enigma’s Humboldt boardroom, named after the Enlightenment-era Prussian philosopher. His cofounder, DaCosta, 34, adds, “This isn’t just about a faster microprocessor or better statistics. Enigma is a knowledge graph of what’s going on in the economy.”

Oudghiri and DaCosta’s journey into the field of data mining began after the financial crisis of 2008. DaCosta was doing graduate work in the cultural anthropology of data at the University of California, Irvine, while Oudghiri was managing renewable-energy projects for BCME Bank in Casablanca, Morocco. Both were curious about explaining the world in light of the global disruptions going on. So they reunited and began to organize sets of publicly available data, starting with Federal Aviation Administration flight logs. They soon discovered a trove of valuable information hiding in plain sight—buried in government logs, university research publications, arcane business filings and shipping manifests. If they could collect, scrub, organize and analyze it, they thought, it might produce a near real-time rendering of the macro economy. 

In 2011, Oudghiri and DaCosta formed Enigma and went to work amalgamating public data, mostly from government ­sources like the Census Bureau, the FCC, the Federal Election Commission and the IRS, as well as import records from the U.S. Customs & Border Protection agency and building permits, and putting it together as a single source. They also became experts in uncovering complex, hard-to-find information. For instance, using Freedom of Information Act requests, Enigma taps the CBP’s Automated Manifest System to track every container ship that arrives in the U.S., including the importer and port of call. From the National Fire Incident Reporting System, Enigma retrieves the cause and location of every fire in the U.S. To cover energy, Enigma leans on oil-well data from the Railroad Commission of Texas, founded in 1891 to establish tariffs.

The firm’s breakthrough year was 2014, when Enigma raised $4.5 million from Comcast, American Express and the New York Times Co. and entered the Fintech Innovation Lab, created by Accenture and the Partnership Fund for New York City. There, embedded with banks and Wall Street giants, Oudghiri and DaCosta discovered that their data had immense utility in financial services. Its information could be connected with customer data in banks’ systems, helping them more quickly recognize fraud or businesses and individuals to underwrite. “We walked out with a battle plan,” DaCosta says of the accelerator. They quickly built a software package, complete with colorful knowledge graphs, and put specialized tools into a compliance interface they called Dossier.

To date, Enigma has synthesized 100,000 data sets in more than 100 countries, organized intelligence on 30 million small businesses and accumulated 140 billion points of data on the U.S. population. It has mapped every molecule used by the U.S. pharmaceutical industry, as well as all trials, patent filings and adverse events. 

Braininess permeates Enigma’s headquarters in New York’s Flatiron District: Conference rooms are named after philosophers like Michel de Montaigne and Augustine. Bookshelves are filled with scholarly tomes, from coding manuals like Machine Learning for Hackers and Data Quality and Record Linkage Techniques to classics like the Dialogues of Plato, Ulysses and Rousseau’s Confessions. Covering the walls are maps and experimental artwork exploring “the intersection of data and experience.” 

But Enigma’s nerdy academic culture hasn’t stopped it from attracting corporate clients and funding from Silicon Valley and Wall Street. BlackRock, PayPal, American Express, MetLife, BB&T, Celgene, Merck and EMD Millipore have signed up. Some $130 million in capital has flowed into the firm in the past seven years from venture investors like NEA, Crosslink Capital and Glynn Capital and hedge funds like Two Sigma Ventures and Third Point Ventures. 

Forbes estimates Enigma’s valuation is $750 million, with revenues pushing $30 million annually, the company having doubled its customer base in 2018.

If a hedge fund wants to know which restaurant chains are growing the fastest, Enigma can check FCC logs for radio licenses, which are required to open drive-through windows. Insurers use Enigma for risk assessment, and pharma companies query its data-crunching machines to improve drug safety. 

Want to quickly and precisely identify the best candidates for small business loans? Instead of cold-calling storefronts or schmoozing local Chamber of Commerce officials, Enigma will synthesize property-tax filing information with state business filings and Uniform Commercial Code liens to come up with automated credit identities. Need to avoid underwriting in risky fire zones? Why not sew together data sets on emergency-call logs and building permits?

At MetLife, chief digital officer Greg Baxter is starting to use Enigma data pulled from public health systems and universities by connecting it to its own systems to detect pockets of illness or risk and to improve underwriting. And in MetLife’s $588 billion investment management arm, Baxter is using Enigma data to quantify how the quality of restaurants, parks and community event spaces affects real estate prices. “They discover data sources, they organize the data and then they find ways through machine learning of connecting the data,” Baxter says. “When you combine that external data with their internal domain data, then you start to get phenomenally predictive and insightful trends.”

Investor John Fogelsong of Glynn Capital thinks the startup could present a threat to legacy closed-system “big box” technology vendors like Oracle, IBM, SAS and SAP: “Each new data set Enigma ingests compounds the company’s ability to improve a customer’s business processes.” 

BlackRock’s recent experience is illustrative. When Frank Cooper, its newly minted chief marketing officer, was asked to shake up how the $6-trillion-in-assets firm prospects for clients, Enigma made a surprising discovery: Contrary to the traditional approach based on regional and demographic targeting, there was little correlation between a client’s location and his or her preparedness for retirement, but political engagement ranked high. “If someone is politically active and even if they are a renter, they’re much more likely to plan for retirement,” Cooper says. “It was shocking for us.” 

Not all of Enigma’s machine-learning algorithms are trained on the hot pursuit of profits. The firm has volunteered its data efforts toward studying the gender gap across 558 occupations and has already identified that some of the most egregious disparities occur in accounting, retail and sales. 

Jamel Toppin for Forbes

After a November 2014 fire killed five people in a smoke-detector-less home in New Orleans, Enigma worked with the city’s fire department and Office of Performance & Accountability to identify areas where fire safety is weakest. 

On Enigma’s public website, it offers national fire-incident data free for city planners to use, and 50 years of weather anomalies in the U.S., plus nationwide data sets on everything from cancer statistics to so-called adverse events, as defined by the FDA. In New York City, for example, an Enigma FOIA allowed it to synthesize years of rail incident and injury data reported to the Metropolitan Transportation Authority. The firm is also working with a nonprofit called Polaris to combat and prevent slavery and human trafficking. The idea is that data can not only lead to better underwriting but also improve government. Oudghiri and DaCosta call it “data for social good.” 

Is Enigma vulnerable to the kind of data-usage scandals that have plagued Facebook? 

“I think the behavior from the internet companies has been suspicious if not malicious, creating a picture of your behavior that is probably above and beyond what you would consent to,” Oudghiri says, arguing that Enigma’s work with financial services firms strikes a more mutually beneficial covenant. 

“Your data is a means to understand if you are a legitimate person,” he says. “From a privacy standpoint, you enter those relationships knowingly and explicitly. The need for sharing data arises from a pretty good place.”

This story appears in the February 28, 2019 issue of Forbes. Subscribe


How to effectively work with multiple cloud providers | killexams.com real questions and Pass4sure dumps

Businesses have multiple cloud providers from which to choose. Amazon Web Services is the 800-pound gorilla, but...

Microsoft Azure offers an increasingly competitive set of services. The Google Cloud Platform is attractive to those with big data and processing needs that can use Google's infrastructure. IBM and Rackspace offer alternatives to the big three.

Businesses may not want to be tied too closely to a single cloud provider. Specialized services available in one cloud aren't always available in another. In other cases, various departments within an organization may have developed services on different platforms, requiring centralized cloud management teams to support environments hosted by multiple providers.

There are strategies and techniques for working with multiple cloud providers in ways that take advantage of the benefits while limiting duplication of effort and other extra work. To sort through this, we'll examine the core services: compute and workload management, storage services, data management and security.

Next, we'll consider how the concept of infrastructure as code is a key enabler of multicloud management. Container services are described as a common layer of abstraction across clouds that will help further ease the burden of managing applications across multiple clouds.

Compute and workload management services

Compute and workload management services include orchestration, cluster management and configuration tools.

For starters, virtual machines (VM) are the building blocks of any compute service. Infrastructure as a service cloud vendors offer a variety of VMs, and it's important to understand their differences. The specifications of a given VM will include an OS, processing power, memory and features for network optimization. Microsoft, Google and Amazon Web Services (AWS) also offer specialized clusters designed for big data and analytics workloads supporting, for example, Hadoop and Apache Spark.

There are strategies and techniques for working with multiple cloud providers in ways that take advantage of the benefits while limiting duplication of effort and other extra work.

Container services are also becoming increasingly important. Containerization is well suited to deploying microservices, and, in many cases, can be more efficient than running individual VMs for each application. Containers offer lightweight virtualization on a Linux foundation and can be used with standard tools, such as Docker. As for cluster management, Apache Mesos and Docker Swarm are tools worth considering. Mesos lends itself to job scheduling, as Marathon and Chronos are both supported. And Mesos supports the Docker Swarm API, so you can run Swarm in Mesos if need be.

Also falling under the umbrella of compute and management services is orchestration. Orchestration features allow system admins to define infrastructure as code and automate code deployment.

Orchestration is particularly important for organizations that require scaling or that run across multiple clouds. For multicloud use, configuration and orchestration tools, such as Chef and Puppet, are important. Vendor-specific tools, such as AWS CloudFormation, may also be options.

When deciding between first- and third-party tools, keep in mind the tradeoffs. Third-party tools offer more cross-cloud flexibility and allow for moving workloads across clouds. On the other hand, a vendor's own tools will be purpose-built to work within the given vendor's cloud.

Storage services

Moving workloads across multiple clouds is challenging if you need to coordinate them between clouds or run scripts designed to use one cloud's API on a competing cloud's platform. Storage, however, poses a different kind of problem. While all of the major cloud vendors offer object storage services, it is important to understand the more subtle differences between options. To optimize costs and performance, you may want to choose object storage based on the duration for which the data will be stored, durability requirements, latency in saving and retrieving data and proximity to compute resources.

For example, AWS offers Simple Storage Service (S3) for object and elastic block storage for file system storage on VMs. S3 object storage comes in at a lower cost, but has a higher latency and is not suitable for a file system. Google, on the other hand, offers near-line storage at a low cost that's suitable for file systems. Be aware that near-line storage has a higher latency. If you are looking for archival storage, it may make sense to choose a single cloud provider to keep storage management to a minimum. If redundancy is important, though, you may want to consider archiving on multiple clouds.

Proximity to computing is another key consideration. In general, data should be as near to computation resources as possible. This will increase performance and, as a result, cut costs. Additionally, copying data out of a cloud will often incur egress charges, so it may make sense to keep compute jobs in the same cloud that generates the data.

Data management

Data management entails using relational and non-relational -- also known as NoSQL -- database offerings for managing structured and semi-structured data. To manage data, there are two options: use a database as a service (DBaaS) or manage your own database. When deciding, you'll want to consider how you will store data, the physical location of the data, what level of latency this entails and the environment's durability. Additionally, be aware of the costs involved if you move the data in the event the vendor or storage method doesn't work out.

Using a DBaaS tightly couples database operations to a single vendor, although this isn't necessarily a bad thing. One option is AWS' DynamoDB, which is well suited for key value and document data stores. It offers low latency and configurable consistency with virtually no database administration overhead. It does, however, employ a proprietary database that's unavailable from other vendors. Using proprietary database tools such as DynamoDB can stretch operations staff thin if you need proprietary services with multiple clouds.

When using multiple cloud providers, your best option is most likely to manage your own databases. While this sounds like a costly chore, orchestration tools can help. These tools make managing your own data store more effective across clouds if you script configurations for databases. An advantage of using multiple cloud providers is that you can store backups across clouds, thus enabling a multivendor, cloud-based disaster recovery strategy.

Regardless of which data management method is chosen, always keep data governance in mind. Where the data is stored can affect how it needs to be treated and secured. Safe Harbor is gone, so consider using another regulation, such as HIPAA, as a guideline, and plan for data storage strategies based on geography.

The abstraction and security questions

Vendor-specific tools can lock you out of some of cloud computing's flexibility. Still, there are ways to get around this issue and decouple your resources from vendor-specific platforms. Certain tactics will hide implementation details of specific cloud vendors. For example, you could use thin layers of abstraction for common functions, such as object store.

This would entail using a cross-cloud API such as Apache Libcloud. Libcloud is an open source Python API that enables users to interact with a variety of cloud providers. The API is supported by AWS Elastic Cloud Compute and S3 instances, as well as Google Compute Engine and Rackspace. Supported Python versions include 2.5, 2.6, 2.7, PyPy and Python 3.

Use specialized services, such as AWS Lambda, sparingly. Consider implementing functions you would run in Lambda in Docker containers instead. Containers are commonly available across clouds.

If you plan to decouple from a single vendor, it is recommended you run your own services. This is particularly true for databases. However, always take cost into consideration; a DBaaS may end up saving you money in the long run.

Security becomes more challenging when using multiple cloud providers because you have to implement multiple versions of the same controls across clouds. For example, instead of implementing multiple directories, implement one directory and make it available via federation to multiple clouds. Use a common infrastructure, such as LDAP or Active Directory, as much as possible. As for enforcing policies across clouds, third-party services and tools are indispensable.

For complex identity management tasks, consider third-party services such as Ping Identity. Ping Identity offers a number of tools that are spread across platforms, such as multifactor authentication and user identity management.

For security log management, a strong third-party option is Loggly, which uses open source protocols, and so is compatible with multiple cloud providers. The tool reads and consolidates a number of text-based log types, including Ruby, Java, Python, PHP and MySQL, among others. Alert Logic offers a full suite of security tools with its Cloud Defender product. Cloud Defender collects security data, enables security data analytics and can perform threat analysis.

Managing infrastructure as code

When it comes to making effective use of multiple clouds, managing infrastructure as code is a good place to start. Software developers have created sophisticated techniques and tools for managing multiple versions of frequently changing code. These tools and practices can be used to manage infrastructure when using declarative specifications. Follow practices that require any resource deployed to the cloud to be done in a scripted manner. If all goes well, system admins should not be manually adding and removing resources or changing configurations; this should be done through scripts that are deployed using either third-party or proprietary tools.

This mentality stretches beyond code deployment. Admins can take advantage of third-party services to make better use of multiple clouds. A cloud service brokerage, which serves as an intermediary between a cloud provider and the user, is one such service worth considering. Another option is cloud aggregation tools for integration between clouds to facilitate workload management and cost management tools.

There are no hard and fast rules for working with multiple cloud providers, but there are practices that will limit the duplication of work, difficult migrations and security vulnerabilities.


Prescription discounts channeled to patients in Trump plan | killexams.com real questions and Pass4sure dumps

WASHINGTON (AP) — The Trump administration's top health official asked Congress on Friday to pass its new prescription drug discount plan and provide it to all patients, not just those covered by government programs like Medicare.

The plan would take now-hidden rebates among industry players like drug companies and insurers and channel them directly to consumers when they go to pay for their medications.

Patients with high drug copays stand to benefit from the proposal, while people who take no prescription drugs, or who rely on generics mainly, would probably pay somewhat more, since premiums are expected to rise.

A day after unveiling the plan as a proposed regulation, Health and Human Services Secretary Alex Azar raised the stakes by calling on Congress to make it law and broaden it to include people covered by employer health insurance, not just Medicare and Medicaid beneficiaries.

"Congress has an opportunity to follow through on their calls for transparency ... by passing their proposal into law immediately and extending it into the commercial drug market," Azar said in a speech at the Bipartisan Policy Center think tank.

Ahead of next week's State of the Union speech, President Donald Trump is under political pressure to show results for his promise to slash prescription drug costs. Data show that prices for brand-name drugs have continued to rise, though at a somewhat slower pace. Polls show consumers across the political spectrum want government action.

Democrats say the administration's plan doesn't go far enough because it still leaves drug companies free to set high list prices. They say drug pricing is like a black box, and it's impossible to tell if prices reflect actual costs or if companies are charging what they think the market will bear.

House Speaker Nancy Pelosi, D-Calif., says she's also worried that the plan would raise premiums. HHS acknowledges Medicare prescription premiums would go up $3 to $5 a month.

Nonetheless, the administration's proposal appears to be in the mix as Congress gears up to craft legislation addressing prescription drug costs. Friday evening, the Republican chairman of the Senate Health, Education, Labor and Pensions Committee, expressed his support. Rebates "ought to lower costs to patients, and this is a good first step towards that goal," Sen. Lamar Alexander, R-Tenn., said in a statement.

The complex plan would work by doing away with an exemption from federal anti-kickback rules that currently allows drugmakers, insurers and middlemen called pharmacy benefit managers to negotiate rebates among themselves.

Drug companies pay rebates to make sure their medications are covered by insurance plans that are the intermediaries between them and patients. HHS says hidden rebates can amount to up to 30 percent of a drug's list price. Insurers say they use the money from rebates to hold down premiums for all consumers.

Under the plan, the current anti-kickback exemption for industry rebates would be replaced with a new one for discounts offered directly to consumers.

Azar said the idea would reshape the drug pricing system, shifting it away from hidden rebates to upfront discounts, creating pressure on drugmakers to keep prices down. The proposal was co-authored with the HHS inspector general's office.

Experts say it will take time to sort out all the potential consequences.

Peter Bach, director of the Center for Health Policy and Outcomes at New York's Memorial Sloan Kettering Cancer Center, said the current system of rebates harms patients who take costly drugs with high copays.

Think people with cancer, patients with intractable illnesses such as multiple sclerosis or rheumatoid arthritis, and those who take brand-name medicines with no generic competition. Patients' cost sharing is often based on list prices, not the cost of the drug after rebates.

"Simply put, those on no medications at all will just see their premiums go up and see no savings because they don't take any medicine," said Bach. "Those on generics only may be essentially in this category (as well).

"But those on expensive medications ... they will see savings in total," he added. More than half a million people filled at least $50,000 in prescriptions in 2014, according to an Express Scripts report.

Insurers and pharmacy benefit managers like Express Scripts and CVS oppose the administration plan, saying it will undercut their ability to bargain with drugmakers for lower prices.

Drugmakers have applauded the administration's action.

Consumers are worried about prices for brand-name drugs, particularly new medications that promise breakthrough results. Generics account for nearly 90 percent of prescriptions filled, but brand-name drugs account for more than 70 percent of the spending.

Azar contends that under the current system everybody but the patient benefits from high prices. A high list price makes room for bigger negotiated rebates for insurers and middlemen. And drugmakers then merely build that expectation into their prices.

Before joining the Trump administration, Azar was a top executive for drugmaker Eli Lilly. That led to criticism that he would be an industry pawn. But the drugmakers vehemently disagree with some of his other ideas, including an experiment using lower international drug prices to cut some Medicare costs.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



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