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.

After shaking the pharmaceutical industry earlier this year with a tweet, Hillary Clinton is back on the drug-price warpath.

She has previously focused on companies that price-gouge old, off-patent drugs, but her comments at a New Hampshire town hall on Tuesday should worry conventional drug makers as well. Clinton criticized a system in which a miraculous cure for Hepatitis C (HCV) can be cheap in Egypt but unaffordable in some U.S. states. The market reaction has been muted, especially compared to the swoon Clinton induced back in September. The Nasdaq Biotech Index, which fell 4.4 percent on the day of Clinton's fateful tweet, was down less than 1 percent on Wednesday. That reaction may turn out to be too mild.

The Recovery Continues
Hillary Clinton's latest drug pricing comments weren't quite as potent as a September tweet.
Source: Bloomberg

Clinton did not call out Gilead Pharmaceuticals by name, but the company was the implicit target of her remarks. It has been widely criticized for how it priced HCV blockbusters Sovalid and Harvoni, most recently in a congressional investigation. The list price for a course of Sovaldi is $84,000, around $1,000 a pill. Gilead sells the drugs at a huge discount in Egypt, with strict restrictions on exports aimed at keeping prices high everywhere else.

In the U.S., states and insurers can only afford the drug for a fraction of people that have the disease. Many payers restrict patients from getting the drug unless they have severe liver scarring. In India, in contrast, Gilead has licensed 11 companies to make the drug, and they are competing aggressively on price and to screen and treat as many people as possible.  

Gilead's shares were down just 1.16 percent on Wednesday. They're up 7.73 percent this year and 464 percent since the company bought Pharmasset, from which it obtained Sovaldi, now a $10-billion-a-year franchise.

"A company came up with a great, lifesaving, curative drug that we had something to do with, and they're willing to sell it at a really cheap price nearly anywhere else but here," Clinton said. "We can't let that go on.” (The "we had something to do with" part of Clinton's quote presumably refers to the fact that the NIH helped fund research leading to the drug's discovery.)

Clinton's declaration that this pricing disparity can't go on, while predictably populist given the circumstances, is potentially loaded. Right now, her plan to curb drug prices includes lower caps on out-of-pocket costs, programs to import drugs from abroad, and enabling Medicare to negotiate with drugmakers. Getting prices on drugs like Sovaldi level with the rest of the world would require all of that and possibly more, up to price controls of one kind or another. This would bring Clinton closer to her position in the 1990s, when she pushed for cost to be a part of FDA decisions on approving drugs. 

Clinton's comments could revive a fear that spooked investors in the fall -- that she would campaign partly on drug pricing and, if elected, make a priority of policies the industry has been fighting for years.

Congress has long beaten back such proposals. But there is a growing wave of public outrage at drug pricing. American consumers are mostly insulated from drug costs -- only $44.8 billion of the nearly $300 billion spent on prescription drugs in the U.S. in 2014 was paid out of pocket -- but that spending is on the rise.

Getting Spendy
U.S. prescription drug spending rose sharply last year.
Source: CMS

Price-gougers like Martin Shkreli make easier targets than Gilead, which actually discovers new medicines and brings them to market. But the fact that Clinton is looking at cracking some harder nuts should be a concern for the whole industry.

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

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Max Nisen in New York at

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