US presidential candidate Hillary Clinton details plan to tackle "outrageous" price gouging

Democratic presidential candidate Hillary Clinton detailed plans Tuesday to address what she called "outrageous" price gouging in the specialty prescription drug market in the US. "It is time to deal with skyrocketing out-of-pocket costs and runaway prescription drug prices," Clinton remarked.

Clinton's announcement came after Turing Pharmaceuticals faced criticism Monday for raising the price of Daraprim (pyrimethamine), whose US marketing rights it recently acquired from Impax Laboratories, to $750 a tablet from $13.50 previously. The drug, which was first approved by the FDA in 1953, is indicated for the treatment of toxoplasmosis in combination with the antibiotic sulfadiazine, and is also used to treat malaria (for related analysis, read Spotlight On: Shkreli's Turing risks ceding ground in public policy debate on drug pricing).

Under Clinton's proposals, Medicare would be allowed to negotiate drug prices, especially for high-cost medicines with limited competition, while Americans would also be permitted to import drugs from abroad. In addition, the plan calls for the end of tax breaks on consumer advertising, and instead would require pharmaceutical companies that receive federal funds to invest a minimum amount on R&D. Another of Clinton's initiatives would see the government study the effectiveness of drugs in an attempt to introduce value-based pricing of medicines.

Clinton also proposed introducing a limit of $250 a month, or $3000 a year, on what insurers can charge consumers with chronic or serious health conditions in out-of-pocket costs. "We will start by capping how much you have to pay out-of-pocket for prescription drugs each month and we're going to hold drug companies accountable as we work to drive down prices," Clinton commented. She also urged greater encouragement for the production of generic drugs, while cutting the sales exclusivity for biotechnology drugs to seven years down from 12 years.

Commenting on the proposals, Allergan CEO Brent Saunders said "all of our intelligence says that it is going to be very hard for [her], or any other candidate, to really have a profound impact on drug pricing." However, Saunders cautioned "we have to take this very seriously because it creates a lot of pressure on the system." The executive noted that Allergan does occasionally introduce single-digit price increases, but in relation to Turing's recent action, "I think we have to separate the one-off kind of situations with what really happens," adding "keep in mind, we need to have good pricing to create innovation."

However, Sanford Bernstein analyst Ronny Gal suggested that if Clinton becomes US president, then drug prices will likely take a hit. "The entire argument that the government will begin to behave [as controller of prescription prices] is something the drug industry has been fighting tooth and nail," Gal said. The analyst suggested "if that actually becomes a policy and looks like it's coming to a chance of passing, you'll see drug company valuations cut 20 percent across the board." Meanwhile, analyst Steve Brozak of WBB Securities said the reaction to Turing's move will force drugmakers to defend themselves "against the coming onslaught." He added "I don't think Turing has a defense...as long as this is debated, nothing good for the biotech industry and biotech investors can happen."

For related analysis, see FirstWord Lists: Framing the US drug pricing debate – the key flashpoints.

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