Clinton Reveals Drug Pricing Plan

Hillary Clinton unveiled a new plan on Sept. 22 during a community forum in Des Moines, Iowa to tackle high drug prices. The plan reveal was a follow-up to a tweet from the presidential candidate a day prior, on Sept. 21, 2015, which said that price gouging “in the specialty drug market is outrageous.” According to a story by USA Today, Clinton’s plan would require drug companies to re-invest a portion of advertising revenue into R&D, restrict pharma from delaying generic-drug market entrants (via pay-to-delay agreements), cap out-of-pocket drug expenses to $250 per month, allow Americans to import drugs from abroad, reduce the exclusivity period for biologics from 12 years to 7 years, and allow Medicare to negotiate drug prices.

"The provisions of the Clinton plan have been proposed many times in the past, and have always been rebuffed on a bipartisan basis because of the widely recognized fact that they are simply bad ideas for patients," said Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood, in a press release. "We believe that fewer medicines would be produced and patient access to those medicines would be limited if the government set prices and became involved in private sector research and development."

Out-of-pockets caps
Obamacare already caps out-of-pocket expenses for patients, but these caps-$6350 for individuals and $12,700 for families per year-can quickly be met in the first few months of a year, and there are currently no per-month limits. At a limit of $250 per month per individual, the yearly cap would be $3000 a year, which is close to the cost of one month’s supply for many specialty medications. A video clip of Clinton that appeared on MSNBC on Sept. 22, 2015, captured her saying that under her plan, Americans “won’t pay more than $250 per month for covered drugs.” What’s important here is the emphasis on covered drugs; if insurers narrow their formularies in response to the out-of-pocket caps, it is unclear if these caps would be valid. If certain drugs are not “covered” (or are only partially covered) by an insurance company, a patient could theoretically pay much more than $250 a month, especially in the case of specialty medications.

Exclusivity changes
Clinton proposed a shortening of the exclusivity period for biologic drugs from 12 years to 7 years, a change that had previously been mentioned-albeit indirectly-via budget documents from the Obama administration. Opponents of this proposed change say that reducing the marketing exclusivity period for biologics would have a negative affect on innovation and would weaken the US’ competitive edge in the pharma industry.

Supply chain considerations
A hugely problematic part of Clinton’s proposal could come from the effective monitoring of drugs-both for quality and safety-if importation of medications from other countries were allowed. Sanders expressed on “All In with Chris Hayes” on MSNBC on Sept. 22, 2015 that pharma has a monopoly on distribution channels via the use of controlled distribution, wherein companies restrict access to medications via a change in where a drug is available. Controlled distribution is usually a strategy employed as a measure to mitigate risk and/or for the purpose of pharmacovigilance; however, some pharma companies have been accused of using controlled distribution as a method to prevent generic-drug manufacturers from obtaining enough product to use for bioequivalence studies.

More than a few of the proposed suggestions are troublesome for industry experts, who say that successful legislation of drug pricing, either by Clinton or by Senator Bernie Sanders (I, VT), will prove to be challenging, if not impossible. “Even if a Democratic president is assumed, a 2017 Congress almost certainly would not approve drug pricing regulation legislation,” wrote Terry Haines, managing director and head of political analysis at Evercore ISI, in a note to investors. “In 2017 the House very likely remains Republican, and the best (and by no means likely or certain today) case for Democrats is a small Senate majority. . . I find almost no chance that any drug pricing regulation will happen even in the chance that Mrs. Clinton or another Democrat is president in 2017.”

Sources: USA Today, MSNBC, BIO