Big Pharma braces for 2016 assault

The healthcare industry is under fire from the leading Democratic candidates for president. 

The assault, coming in the form of both rhetoric and policy proposals, is putting the industry on edge, even as a Republican-led Congress stands in the way of most of their proposals.

{mosads}Hillary Clinton and Sen. Bernie Sanders (I-Vt.) each support allowing Medicare to negotiate down drug prices and permitting imports of cheaper drugs from Canada, measures that are strongly opposed by pharmaceutical companies.

Clinton, in addition, wants to force drug companies to direct a portion of revenue into research, as opposed to profit or marketing.

The former secretary of State is also taking the fight to insurance companies, urging expanded government authority to block large premium increases and strong enforcement of anti-trust laws, at a time when four of the country’s largest insurers are seeking to merge.

Sanders goes even further, calling for a national, government-run health insurance system that would overturn insurance companies’ entire business model.

The two candidates are not mincing words as they press their ambitious proposals. Clinton has accused drug companies of price gouging and said they “just bet on the fact that desperate people will find some way to pay.”

Insurance companies “need to be put on notice that they have to help people afford the medical care they need, not make it increasingly expensive and difficult to access,” she said.

Clinton has a long history of clashing with insurance companies. She led a health reform effort as first lady in the 1990s, only to see insurers help kill it with the famous “Harry and Louise” ads featuring a fictional couple discussing their concerns over the kitchen table.

For his part, Sanders has gone so far as to call the pharmaceutical industry “a health hazard for the American people.”

The onslaught comes at a particularly bad time for the pharmaceutical industry, which has faced a wave of negative publicity thanks chiefly to Martin Shkreli, the hedge fund manager who raised the price of a drug to treat a life-threatening infection from $13.50 to $750 overnight. 

Clinton seized on the example as she rolled out her drug plan, singlehandedly causing a drop in pharmaceutical stocks late last month after she tweeted about it and pledged to fight back. 

Much of the rest of the pharmaceutical industry was frustrated with the attention on Shkreli, with the industry’s top trade group, the Pharmaceutical Researchers and Manufacturers of America (PhRMA), distancing itself from him. 

“Turing Pharmaceutical is not a member of PhRMA and we do not embrace either their recent actions or the conduct of their CEO,” the trade group said after the story broke. 

Seeking to combat the recent attacks and bad press, the pharmaceutical industry will likely push back subtly on the negative narrative with floor speeches from allies in Congress and op-eds touting the life-saving benefits of their drugs, according to one lobbyist following the issue.

Campaign contributions are also an important factor. According to the Center for Responsive Politics, pharmaceutical companies have given $3.2 million so far in the 2016 election cycle, 68 percent of it to Republicans. 

For the industry, the real threat is not action from the current GOP-controlled Congress, but rather the relentless hits to its reputation and the uncertainty that could come with a Democratic president and Senate in 2017, according to the lobbyist.

Clare Krusing, spokeswoman for the insurer trade group America’s Health Insurance Plans, derided the return to “rhetoric from five years ago,” a reference to the heated speeches about insurers from the proponents of ObamaCare’s passage. 

She said insurers are pushing to control costs through measures such as more transparency around drug pricing and encouraging competition. 

The Department of Health and Human Services (HHS) says prescription drug spending grew 12.6 percent last year, the highest growth since 2002. A Kaiser Family Foundation poll in August found that 24 percent of the public had not filled a prescription in the past year because of cost. 

But PhRMA argues that “Secretary Clinton’s proposal would turn back the clock on medical innovation.” It points out as well that HHS projects drug spending growth over the next decade to remain in line with health spending growth overall. 

Elizabeth Carpenter, vice president at Avalere Health, a consulting firm, said the fight is more about shaping public opinion than it is about immediate changes to law. 

“During the political campaign season, we see a number of proposals put forward that may have little chance of becoming law; however, elections are a good bellwether for policy issues that resonate with the American people,” she said. 

She also said the prominence of the issue makes it more likely to be raised on Capitol Hill. 

Rep. Elijah Cummings (Md.), the top Democrat on the House Oversight Committee, has long denounced the high prices of prescription drugs. Cummings said in an interview that the committee’s chairman, Rep. Jason Chaffetz (R-Utah), has told him he will agree to hold one hearing on drug prices, specifically for generic drugs. 

Generics are lower-cost versions of drugs, but their prices have been rising recently as well. 

“He has said that he will give us one hearing, and hopefully that will be soon, but this is something that I’m going to fight until I die,” Cummings said.

Aside from that hearing, though, it is unlikely that major action on legislative proposals will come through Congress this term, and even as president, Clinton or Sanders would need to get lawmakers on board. 

The difficulty of convincing some Republicans to back some of the Democratic candidates’ proposals was underscored Tuesday by Senate Finance Committee Chairman Orrin Hatch’s response to Clinton’s plan to let Medicare negotiate drug prices.

“Oh, give me a break,” the Utah Republican exclaimed when asked about the proposal.

Hatch emphasized the need to give drug companies long exclusivity periods, when they do not face competition from generic drugs and can recoup their investment in research and development. Clinton proposes to lower the exclusivity period for certain products. 

“We’re dominating the world,” Hatch said. “The reason we do is we allow enough time to recoup the cost of reaching these drugs, and you know for every one we reach there’s been a thousand misses.”

Tags Bernie Sanders Hillary Clinton Jason Chaffetz Orrin Hatch
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