Taking the drug pricing platform to Washington
Name: Hillary Clinton
Title: Presidential candidate
September 21, 2015, was not one of biotech's best days. Biotech stocks crumbled a bit and nerves were tested by renewed chatter about a market bubble as investors digested the idea that drug pricing might emerge as an election year issue--all due to the swelling controversy over Martin Shkreli's move to jack the price of Daraprim by 5,000% and Hillary Clinton's reaction to it.
Shkreli, in classic Shkreli fashion, went on to mock Clinton. And the rest is market history, as biopharma was uncomfortably moved into the mainstream of U.S. presidential politics.
Clinton's now-infamous tweet dumped ample fuel onto a fire that had already been burning for some time in Washington. Rep. Elijah Cummings and Sen. Bernie Sanders started investigating persistent drug shortages and price hikes on generic drugs in the fall of 2014, and they'd already introduced legislation designed to keep a lid on Medicaid price increases. But the Shkreli scandal prompted a new round of probes, subpoenas and hearings, with Cummings leading the way in the House, and Sens. Claire McCaskill and Susan Collins jumping into the fray. A group of House lawmakers announced a drug pricing task force, promising "meaningful action" on drug prices, and Sanders rolled out his own slate of proposals.
Without the presidential-campaign spotlight, however, the congressional hearings and legislative proposals might have remained everyday business. Dogged by Sanders' insistence on ushering in a single-party payer system--Medicare for all--that would have the right to negotiate drug prices, Clinton responded with a muscular stance of her own: requiring Medicare to negotiate what it currently covers and then force biopharma companies to detail the costs, including R&D and manufacturing, associated with drugs. And the campaign-level conversation kept the lawmakers' work on center stage, with all eyes--and all media--covering the drug-price hearings in the House Committee on Oversight and Government Reform, where Shkreli smirked and pleaded the Fifth, and Valeant's ($VRX) interim CEO Howard Schiller defended his company, blamed Medicare policies and promised to go easy on future price hikes.
Donald Trump would go on to become an unlikely advocate for price negotiations as well. And now Trump and Clinton are becoming the heavy favorites for winning their party's nomination, setting up the even less likely scenario of a Democrat and a Republican sharing a similar reform platform on drug prices.
The pharma industry in times of peril like this typically likes to repeat for the umpteenth time that drug prices aren't what ails the system, accounting for less than 10 cents on every healthcare dollar. But this is the kind of election-year issue that has traction with the public, swaying voters to back a sea change in the way drugs are priced.
The implications for the industry are enormous. In an election year in which old assumptions are being toppled like bowling pins, Hillary Clinton has played a big role in changing the tenor of the public debate over drug pricing, channeling the anger of voters while directing it to legislative changes that could have a profound effect on all players, big and small.
So far the U.S. has largely ignored the way governments around the world have forced drug companies to run a regulatory gamut before settling on a price and market access. Many in the industry are betting that won't change; some are trying to get in front of the issue by striking new "value-based pricing" deals with payers that mimic arrangements made in other countries.
In any case, until the promised "real action" comes to pass, Cummings and other congressional reps hope that public scrutiny itself will put a chilling effect on biopharma's pricing behavior. "The research has shown, first of all, that whenever [Congress] shine a light on prescription-drug companies with regard to price hikes automatically they have a tendency to slow down the rate of price hikes. Once that light goes off, then they regroup and move toward raising them even more.
"I think the key here is for us to keep a light on this problem. I'm going to spend a lot of time a lot of effort to make sure that happens."
-- Tracy Staton (email | Twitter)
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