WASHINGTON/NEW YORK (Reuters) - Hillary Clinton said on Friday that if elected to the White House she would create an oversight panel to protect U.S. consumers from large price hikes on long-available, lifesaving drugs and to import alternative treatments if necessary, adding to her pledges to rein in overall drug prices.
Clinton, the Democratic presidential candidate, would seek to give the panel an “aggressive new set of enforcement tools,” including the ability to levy fines and impose penalties on manufacturers when there has been an “unjustified, outlier price increase” on a long-available or generic drug, her campaign said.
“Over the past year, we’ve seen far too many examples of drug companies raising prices excessively for long-standing, life-saving treatments with little or no new innovation or R&D,” Clinton said in a statement.
If Clinton defeats Republican rival Donald Trump in the Nov. 8 election, she would need the support of the U.S. Congress to implement key measures of her proposal, which follows a broader plan to rein in drug prices that she announced a year ago.
Even though her latest plan would likely affect a small number of companies, it could be difficult to get Republican lawmakers on board, Morningstar analyst Damien Conover said, adding that a “Republican Congress would push back hard on this.”
Clinton’s campaign cited Turing Pharmaceuticals LLC’s raising the price of its AIDS drug Daraprim (pyrimethamine) and Mylan NV’s repeated steep price increases on EpiPen for severe allergy sufferers as “troubling” examples of price hikes that have attracted bipartisan congressional scrutiny.
Conover said Clinton’s plan to address unjustified price hikes is less of a concern to the drug industry than her pledge last year to reduce drug prices overall.
Drugmakers have said that lowering or limiting drug prices would hamper their ability to invest in research and lead to fewer new therapies.
The ARCA Pharmaceutical Index of large U.S. and European drugmakers rose 0.30 percent on Friday, in line with gains for the broad stock market. Shares of Mylan fell 4.6 percent to $40.00 on the Nasdaq.
The Nasdaq biotech index slipped 0.40 percent. The decline was slight compared to the more than 4.7 percent drop in the index seen on Sept. 21, 2015, when Clinton blasted “price gouging” in the specialty drug market on Twitter, responding to reports that Turing had acquired Daraprim, an older antibiotic, and then hiked its price by 5,000 percent.
Soon afterward, Clinton presented a general plan to lower prescription drug costs, including allowing Medicare to negotiate drug prices and demand higher rebates for prescription drugs.
Her plan would also include caps on monthly and annual out-of-pocket costs for patients with chronic or serious health conditions. It aims to prohibit manufacturers from paying generic drugmakers to delay launching their cheaper products, and would eliminate corporate writeoffs for direct-to-consumer pharmaceutical advertising.
Dr. Peter Bach, the director of a nonpartisan health policy research group at New York’s Memorial Sloan Kettering Cancer Center, said Clinton’s announcement on Friday was a “flag” for drug manufacturers that her administration would notice and respond to steep price hikes.
“It’s a response to the broader industry phenomenon of generating added profits by raising the price of drugs for which there is no competition,” Bach said, saying the campaign was focusing on a “sub-category” of manufacturers that had not invested heavily in developing a drug.
Bach said he was contacted by the Clinton campaign about his work on drug pricing but had not advised the campaign in a formal capacity.
The oversight panel would be made up of representatives from existing public health and consumer protection agencies who convene to examine the scope of a drug price increase, the manufacturer’s production cost and the treatment’s relative value to patients and public health, Clinton’s campaign said.
Terry Haines, head of political analysis for Evercore ISI, said Clinton’s proposed panel had little hope of getting through Congress.
But Clinton, if elected, might be able to achieve price reform via changes to Medicare’s prescription drug benefit, known as Medicare Part D, if she works with Congress to reform the Affordable Care Act, popularly known as Obamacare, Haines said.
In that event, Haines said shares of pharmaceutical and biotech companies could come “under sustained headline risk in 2017 as ACA reforms are discussed.”
In cases where a price hike determined to be unjustified is accompanied by insufficient market competition, Clinton’s administration would intervene to purchase alternative drugs from comparably regulated markets or assist manufacturers in bringing the product to market in the United States.
Dr. Aaron Kesselheim, an associate professor at Harvard Medical School, called it a “bold idea” to get the federal government “involved in helping stabilizing some of these generic drug markets.”
Until recently, there was a lengthy wait for generic drug approval by the U.S. Food and Drug Administration. Although the wait time has shortened, there is often not enough consistent demand for manufacturers to enter the U.S. market, Kesselheim said.
“Having the government get involved as a long-term purchaser of these products creates a stockpile to stabilize the market,” he said.
Kesselheim has testified before Congress about high-cost generic and long-available drugs and spoke to Clinton’s campaign about his research as it developed its proposals.
Reporting by Amanda Becker in Washington; and Ransdell Pierson in New York; Editing by Jonathan Oatis and Leslie Adler