Using EpiPen's widely reviled 400 percent price hike as a rallying cry, Hillary Clinton is on the drug-pricing warpath again.
On Friday she proposed creating a federal task force to monitor drug prices; penalize companies that make sharp, unjustified hikes; and seek alternatives to overpriced treatments.
Fighting price increases, particularly on drugs their owners didn't develop, has populist appeal. And Clinton's plan may even work; it certainly threatens the profits of companies whose model is in part focused on acquiring old drugs and raising their prices, such as Valeant and Mylan. Their shares fell as much as 3.7 and 4.9 percent, respectively, on Friday. Endo, another specialty pharma company, was down as much as 5 percent.
But her plan may not have much impact on the nation's overall drug-spending growth. That is mostly concentrated in high-priced new medicines -- which Clinton's plan is less likely to touch.
Clinton's task force might be ideal for something like the heart drug Isuprel, the price of which Valeant jacked up massively after buying it from Marathon Pharmaceuticals. A watchdog could fine Valeant, help get another competitor on the market, or both. And who would complain? It's an old drug Valeant had nothing to do with researching.
But this theoretical task force is specifically targeted at older medicines, those "that have long been on the market." That means it probably wouldn't affect something like Gilead's hepatitis cures, which launched in 2013 and 2014. They were priced high from the start and helped drive the 13.1 percent increase in U.S. prescription drug spending in 2014, the biggest one-year jump in a decade.
Nor would it seem to affect a cancer drug such as Xalkori, which launched in 2011. Pfizer has increased that drug's price by more than 25 percent since then -- which is far gentler than, say, Valeant's typical increases.
And Xalkori is a patented new medicine Pfizer helped develop, making it less politically palatable to fight its price increases. Bringing in competition for such a drug could discourage companies from spending billions researching novel drugs. And extending the panel's power to such drugs would amount to widespread price control, likely making it a political no-go.
Assuming it could get past Congress and the politically powerful pharma lobby, Clinton's plan could be an excellent start in dealing with egregious, outlier price hikes.
But truly reining in pharma's pricing problems -- including opacity, a bevy of middlemen, and prices set at drugmakers' whim, often regardless of value -- will take stronger medicine. Clinton has previously announced plans that take partial aim at these issues, but they face an even bigger uphill climb than this newer, more narrow effort.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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