Hillary Clinton Fixes Sights on Ripe Target: Prescription Drug Prices
Following up on her tweet last week against “price-gouging” by Turing Pharmaceuticals that sent biotech stocks plummeting, the Democratic front-runner released a hard-hitting television ad on Monday suggesting that CEO Martin Shkreli decided to lower prices after she went after him. In between, she unveiled a proposal to cap out-of-pocket drug expenses, offer tax credits to help families deal with soaring costs, force drug manufacturers to invest more on research and development, and oblige companies to invest in the production of generics.
The response from industry has been, to say the least, unenthusiastic.
“Secretary Clinton’s proposal would turn back the clock on medical innovation and halt progress against the diseases that patients fear most,” John Castellani, president and CEO of the Pharmaceutical Research and Manufacturers of America, wrote in a statement last week.
During a Facebook Q&A on Monday, however, Clinton doubled down on her proposals.
“My plan actually encourages more investment in innovation and research, not less,” Clinton wrote. “So that should be a win-win for businesses and consumers. Biotech companies working on life-saving breakthroughs won't have anything to fear from my plan. But if you're price gouging American families and jacking up costs for no good reason, I'm going to hold you accountable.”
Targeting rising drug costs has become an important part of Clinton's presidential campaign, even as she continues to defend the Affordable Care Act, offering her a populist issue to keep pace with Sanders's pursuit of the liberal vote.
Given that a Gallup poll released on Sept. 14 showed that the percentage of Americans with a positive view of the pharmaceutical industry stands at 35 percent, down from 40 percent from the year before, Big Pharma appears to represent a safe target for Clinton. Overall, the U.S. spent $374 billion on drugs in 2014, according to IMS Health, up 13 percent from the previous year.
“Pocketbook issues related to health care are a topic that resonates with a lot of Americans,” said Mollyann Brodie, executive director, public opinion and survey research, at the Kaiser Family Foundation. “So things that include the cost of prescription drugs—health care costs—are certainly a topic that any of the candidates may end up taking on because it will resonate with the American public.”
Republican candidate Donald Trump followed Clinton's lead, blasting Shkreli for raising the price of the life-saving medication Daraprim by over 5,000 percent.
“He looks like a spoiled brat to me,” Trump said at a campaign event in South Carolina last week. “He's a hedge fund guy. I thought it was disgusting what he did.”
Citing public pressure, Shkreli says Turing will lower the price of Daraprim.
While Clinton has also singled out hedge fund managers over carried interest loopholes that result in them “paying a lower tax rate” than “nurses and truck drivers,” the issue of prescription drug costs is, by some measures, more immediate.
“We’ve certainly seen, in the last few months of our polling, that Americans are worried over drug costs. It’s something that bothers them—it’s part of their health care bill that they see,” Brodie said.
Still, Americans remain divided on Obamacare. An August Gallup survey found that 5o percent of Americans disapprove of the health care law, while 44 percent approve. Clinton appears to be betting that resistance to Obamacare is largely driven by rising costs. In response to a Facebook question on Monday about how she would curb the high cost of health insurance, Clinton again emphasized that she would continue to try to improve the law if elected president.
“I agree with you that too many Americans—who had good health insurance before ACA and still have it—are now facing higher and higher out of pocket costs,” Clinton responded. “My plan will cap out of pocket prescription drug costs at $250/month to help people with chronic diseases and serious illnesses. I will also provide a tax credit of up to $5,000 for families with high out-of-pocket costs that aren’t covered by their insurance plans.”
Going after pharmaceutical companies is a calculated risk by Clinton, who has steered clear of other corporate targets pursued by Sanders, including breaking up the big banks and restoring Glass-Steagall financial regulations on those institutions. At a July speech in New York, she did sound a cautious note over “gig economy” companies like Uber that, she said, raised “hard questions about workplace protections and what a good job will look like in the future.”
“Half of Americans take prescription drugs on a regular basis and when they go to the pharmacy they see the prices on those drugs, even if the amount that they pay is much less—even if their copay is much less, they see what the charges are,” Brodie said. “So it’s one aspect of health care that regularly interacts with the household budget and pocketbook issues.” The bottom line, Brodie adds, is that “the American public is worried about the cost of prescription drugs. They think the pharmaceutical companies make too much profit.”
—Emily Greenhouse contributed reporting.
(Correction: An earlier version of this story misstated Turing Pharmaceuticals CEO Martin Shkreli's first name.)