Presidential Candidates & Rx Policy

Feb 02, 2016

As the nation heads towards its first presidential primaries of the 2016 election, it’s important for American pharmaceutical executives to take a few minutes to consider where the leading presidential candidates stand on U.S. Rx policy.

Digging through the myriad of public statements on the drug industry, we find everything from the directly overt…to the artfully hedged solutions to “what the nation should do about the drug business.”

And considering the ongoing array of unprecedented, broad attacks on prescription drug firms, many of which have been caused by the industry’s own activities, what Rx policies are the presidential candidates presenting in 2016?

Hillary Clinton

Let’s begin with 2016’s “most overt” Rx industry policy – Hillary Clinton’s. 

Secretary Clinton over the last year has released a series of increasingly detailed plans designed to restrain and contain the American drug industry. As noted earlier in this publication, this is nothing new.  Since 1993, Clinton’s attack on the U.S. pharmaceutical business has been concise, persistent, and ever expanding.

Recent additions to earlier Clinton Rx proposals include:

  • “Holding the pharmaceutical industry accountable” by “denying tax breaks for direct-to-consumer advertising and demanding that drug companies invest in R&D -- in exchange for taxpayer support”
  • She also recently added a plan that will, “cap monthly and annual out-of-pocket costs for prescription drugs”
  • And, most significantly, has suggested “Increased competition for specialty drugs including new “biologic” drugs”, i.e., expanding rules for U.S. generic “biosimilars”.

Taken in total, it’s clear Secretary Clinton if elected would be no “friend” of the American pharmaceutical industry. But then why would she be? The Rx business has openly opposed almost all of her Rx policies since 1993.

Bernie Sanders

Senator Sanders’ position on the U.S. drug industry, if not as expansive as Secretary Clinton’s, is also quite pronounced. Much of his approach is clearly tied to his self-identification as a “Democratic Socialist”.

For example, Senator Sander’s has repeatedly stated that, “Access to health care is a human right” and that includes full “access to safe and affordable prescription drugs”. Go to any western European socialist democracy and you’ll hear much the same thing.

Sanders’ primary lever in achieving his goals re: the Rx industry is doing away with the prescription drug “non-interference policy” in the Medicare Part D drug program. He would accomplish this by forcing Medicare to negotiate directly with the industry for “better prices” (Note: Sec. Clinton also has supported this notion for years). 

Should Sanders succeed in creating this policy, it would, of course, reverse the epic deal that the Rx industry made with President Obama in 2009 to not rescind the 2003 non-interference clause in exchange for the industry’s support of Obamacare.  

Sen. Sanders also wants to return to the “Canadian Generic Wars” of 2003 – 2005.  Apparently forgetting that the FDA openly opposed the idea on the grounds of safety back then, Sen. Sanders advocates for, “Allowing individuals, pharmacists, and wholesalers to import prescription drugs from licensed Canadian pharmacies”.

Overall, his solutions for U.S. drug industry are not as deep as Secretary Clinton’s, but do include many elements.

  • Early “closing” of the Medicare Part D “doughnut hole” for senior Rx’s
  • Eliminating “pay-for-delay” deals between industry and generic drug makers
  • Requiring Rx pricing and cost “transparency” -- “that reports not only the price information charged to federal payers, such as Medicare, but also the price, profit, and sales information from other countries in which a drug is sold.”

2016 Republican Surprises

It can be argued that neither Secretary Clinton’s and Senator Sanders’ positions on the American drug industry are surprising given both of their long histories opposing the business. What is quite surprising is what’s been going on over on the Republican side of the contest. Traditionally supportive of the Rx industry, many Republican candidates have clearly changed their tune on the drug business during this election cycle.

Donald Trump

The leader of this Republican change on Rx policy is the current front runner, Donald Trump. It began on September 23rd of last year, when Trump, commenting on the controversial price increases that had been instituted by Turing Pharmaceuticals said of the drug maker’s policies, “… I thought it was a disgusting thing…. I thought it was a disgrace."

Concerning as this observation might be to the Rx industry, a quick look at Trump’s presidential campaign website reveals no formal statement regarding drug pricing, or any other concern about the American drug industry.

However, on the evening of January 25th, while campaigning in Farmington, N.H. Trump blew the lid off Republican Rx policy by suggesting that “that Medicare could save $300 billion a year by getting discounts as the biggest buyer of prescription drugs”. He concluded, “We don't do it (save billions in Medicare). Why? Because of the drug companies.”

The Rx industry and stock market are still trying to absorb the full meaning of that statement from the campaign’s leading Republican.

Marco Rubio

Another example of Republican presidential candidates going directly after Rx pricing is Marco Rubio.  On October 19th, during a campaign event in New Hampshire, Rubio said:

  • Some pharmaceutical companies are engaging in pure profiteering and that high Rx prices threaten to bankrupt our system.
  • “You ask yourself, how is this possible? There are less prescriptions being written for that drug and yet you’re making more money on it than you ever have.
  • “The answer is they’re raising the prices dramatically, and the reason they’re raising the price dramatically is because they can…The market will bear it”.

Interestingly, soon after Rubio’s statement, his staff backtracked…“Marco was obviously talking about specific companies who are gouging consumers. America’s pharmaceutical industry saves countless lives, but it is no secret that there are some bad actors who put profits ahead of patients.”

Once again, a close examination of this Republican’s website reveals a lot of official Rubio concern over Obamacare, but none expressed over the issue of drug pricing.

Ted Cruz

Another leading Republican candidate, Senator Ted Cruz, has avoided discussion drug price issue, both in public statements and on his website. However, he has posted extensive thinking on Obamacare and the “War on Drugs”.

The Others

Among the other Republican candidates, there has also been the occasional outburst on drug pricing. 

For instance, during the CNBC Republican debate on October 28th of last year, candidate Chris Christie went on record calling for the aggressive prosecution of Rx “price-gougers”…but scoffed at aggressive Democrat Rx pricing proposals:

“Does anybody out there really think that giving Washington, D.C. the opportunity to run the pharmaceutical industry is a good idea?”

Later, in Columbia, S.C., on Nov. 19thJohn Kasich skirted around the “high cost of drugs” during a campaign stop. At one point in the conversation, Kasich suggested to a minister in the crowd who had asked about Rx pricing that he should be “talking to the industry about the price of drugs”.

Why the Change on Rx pricing by 2016 Republicans?

Aside from the egregious pricing episodes involving such companies as Turing, Valeant, etc., and the damning torrents of negative publicity that have resulted from those moments, what else is causing the Republicans to rethink their 2016 position on the American Rx industry? 

Among many developments, probably the most intriguing influencer of 2016 Republican opinion that I have come across is an extensive study on the issue of drug pricing published by the Kaiser Family Foundation, in August 20, 2015.

The key findings of that study were:

  • Most Americans (72%) say the cost of Rx drugs are unreasonable

And how to change that situation?

  • Require the drug companies to release information to the public on how they set prices (86%)          
  • Allow Medicare to negotiate for lower drug prices (83%)

Undoubtedly, the most stunning graphic in the study (Table #1) presents a clear lay out of Democrat v. Republican positions on Rx matters.

The most eye opening is the following:

On the critical question of allowing the government to negotiate for Medicare drug prices, 93% of Democrats favor this action -- and fully 74% of Republicans support this idea, too!

Frankly, if you accept the validity of this survey, there appears to be a substantial change in “Republican opinion” of the American pharmaceutical industry and this study may in part explain why many Republican presidential candidates are moderating their positions on the Rx industry.

Summary

So, with Martin Shkreli and his colleague from Valeant scheduled to be “questioned” by Congress on February 4th, and many Presidential candidates, both Democrat & Republican, calling for “something to be done” about Rx pricing, the next few months could shape up to be rather interesting for U.S. pharmaceutical policy.

If you’re keeping a scorecard, if elected, it’s obvious that Democrats Clinton or Sanders would likely administer the “stronger medicine” to correct the alleged ills of the Rx business. However, given the mood of the country in 2016, it’s possible that several leading Republican candidates, if elected, could also dole out some bracing “remedies” to control the costs of Rx drugs.

Exactly how all of this will play out is, of course, is hard to determine at this point. Suffice it say, it would be the foolish industry observer who might suggest that this 2016 election is “just going to be another presidential contest”…because for the U.S. pharmaceutical industry, that is highly unlikely.

Tom Norton, NHD Smart Communications of Illinois, Inc.   

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