In the wake of the uproar about drug pricing, Hillary Clinton unveiled on Tuesday, a plan to address the rising cost of prescription drugs. The plan will focus on ending “excessive” profits, lowering out-of-pocket costs, encouraging greater competition from generics and biologics and leveraging Medicare to negotiate drug prices.
To curb profits, the plan will end write-offs for direct to consumer advertising and shift that money to making the R&D tax credit permanent. In addition, the plan would require the Food and Drug Administration (FDA) to create a “mandatory…pre-clearance procedure for these ads funded through user-fees paid for by pharmaceutical manufacturers[.]” This section of the plan also includes one of the more controversial elements – mandatory R&D spending. The plan would “require pharmaceutical companies that benefit from federal support to invest a sufficient amount of their revenue in R&D, and if they do not meet targets, boost their investment or pay rebates to support basic research.” This requirement would be coupled with a convening of “business leaders, experts on drug pricing, and consumer advocates to set new parameters for federal support in order to ensure” drug companies are investing sufficient revenue in research.
The plan proposes to lower out-of-pocket costs by requiring “health insurance plans to place a monthly limit of $250 on covered out-of-pocket prescription drug costs for individuals to provide financial relief for patients with chronic or serious health conditions[.]”
On the matter of competition, the plan proposes to “clear out the FDA generic backlog” and reduce the exclusivity period for biologics to seven from 12 years. The plan would also eliminate “pay for delay” arrangements. Another element in the competition component is to allow for importation. Specifically, the plan would allow American patients to “import drugs for personal use from foreign nations whose safety standards are a strong as those in the United States.” The FDA and “other regulatory agencies” would be charged with creating safety standards.
The last element of the plan would focus on using Medicare to lower drug prices. The plan would require drug companies to provide Medicare rebates that are equal to those provided under Medicaid. The plan would also allow Medicare to bargain for drug and biologic prices.
The plan comes on the heels of articles on Turing Pharmaceutical’s significant price increase for its drug Daraprim, congressional inquiries and national polls that suggest drug prices are the number one healthcare concern for many Americans. Not surprisingly, the pharmaceutical and insurer industries pushed back on the Clinton plan.
The fate of this plan is uncertain but it builds on the growing number of political and policy constituencies calling for action on drug pricing. We will be monitoring this discussion and its outcomes closely.