Hillary’s History on Rx Price Controls

October 12, 2015

Hillary Clinton has been a part of the healthcare debate since the early 90's. Tom Norton analyzes her career of positions on drug price control and what it could mean for her candidacy.

As I was preparing to write this article, I asked a friend about what he thought of the topic. He responded, “Is this really necessary? I mean, don’t we already know all about Hillary and drug price controls?”

It’s a fair question, but as I thought about the 22 years that Senator Clinton has circled around the issue of controlling the price of American pharmaceuticals, I decided it might be a valuable historical exercise to figure out when and how she arrived at her current position on the matter.

This is especially true if she eventually succeeds in becoming President of the United States in 2016.

Little Rock, Arkansas 1975 – 1992

So let’s begin with Clinton’s 17 year residence in the state of Arkansas. Reviewing what little public policy information we have on the state’s former First Lady during that period, we find that she was active in welfare causes, legal activities, public education issues, and also served as chair of the Arkansas Rural Health Committee from 1979-80, as well as the Board of the Arkansas Children’s Hospital.

What’s clear is that many of these resume points were honorific, with none having to do specifically with the public policy issue of health care reform in Arkansas, much less the nation. Also, there is no mention that I can find indicating that Clinton had a concern for drug pricing during this period.

Washington, D.C. 1993

With this in mind, it is curious that shortly after Bill Clinton became President, he surprised many by announcing on January 25, 1993, that Hillary Clinton would serve as Chair of the President’s Task Force on Health Care Reform. Soon Mrs. Clinton, as the nation’s newly anointed health guru, quickly began issuing discussion papers on dozens of health care policy questions, including the matter of Rx price controls.

That fall when HR 3600, The Health Security Act of 1993, was introduced in Congress, a section that drew the immediate interest of the U.S. pharmaceutical industry was Title I, Section 1572, entitled “The Advisory Council on Breakthrough Drugs”. Here we find for the first time, Hillary Clinton’s view on the issue of prescription drug price controls. As it has turned out, this was the beginning of an outlook she has continually maintained -- and expanded -- over the last 22 years of her political career.

Looking over Section 1572, one aspect clearly stood out: Drug “cost” was defined as the driving issue for the entry of an FDA approved drug to market:

“The Council shall make a determination regarding the reasonableness of launch prices of a breakthrough drug. Such a determination shall be based on--

(A)   Prices of other drugs in the same therapeutic class;

(B)   Cost information supplied by the manufacturer;

(C)   Prices of the drug in countries specified in section 802(b)(4)(A) of the Federal Food, Drug, and Cosmetic Act;

(D)   Projected prescription volume, economies of scale, product stability, special manufacturing requirements and research costs;

(E)    Cost effectiveness relative to the cost of alternative course of treatment options, including non-pharmacological medical interventions; and

(F) Improvements in quality of life offered by the new product, including ability to return to work, ability to perform activities of daily living, freedom from attached medical devices, and other appropriate measurements of quality of life improvements.”

Having spent a lot time in Washington during the 1993 health care reform debate representing a pharmaceutical firm, I think it would be fair to say that the executive leadership of my company, and the entire Rx industry for that matter, were shocked when Section1572 appeared. The industry had never seen anything like it. It was the first time that Rx prescription products were to be judged as fit for market based primarily on “cost”, rather than “safety and effectiveness”.

As it turned out, by 1994, the Health Care Security Act had collapsed due to various political developments, not the least of which was a TV commercial known as “Harry and Louise”. However, Hillary Clinton had gotten a sense of the public’s view on the issue of drug pricing and it was something the politician would not forget.

Washington, D.C. 2008

During her presidential campaign in 2008, Clinton returned to her 1993 health care reform themes and presented these as key elements of her campaign. Front and center was a health care proposal that called for federal price control of all the Rx’s available under the new Medicare Part D pharmaceutical benefit.

Clinton’s outlook was completely contrary to the Bush Administration’s 2003 position that mandated the pricing for the Part D drug program would be established by the free market, utilizing what they called the “non-interference” clause (http://goo.gl/w5yWZr). Clinton, however, pledged she would rescind the “non-interference” clause if elected and “save Americans millions in lower drug costs” via government price control of Medicare Part D.

Ultimately, of course, Clinton lost that 2008 Democratic presidential primary campaign to Barack Obama, who, as President went on to pass the nation’s first universal health care law in 2010. Among the key aspects of the Obamacare law was President Obama’s decision not to rescind the “non-interference clause” in the pricing of Medicare Part D drugs, which is the way it stands today.

Brooklyn, New York 2015

So, this brings us to the presidential campaign of 2016 and once again, Hillary Clinton is a candidate. Although her campaign has experienced various ups and downs, one issue that once more has gained national traction for Clinton is her stated desire to control the pricing of prescription drugs.

In the current 2016 political campaign, we can see that Clinton has resurrected and enhanced her previous drug price control positions from both her 1993 and 2008 efforts. Applying these earlier Rx price control experiences, she has found resonance with large swaths of the American voting public who are outraged by a series of pricing disasters that the U.S. pharmaceutical industry has visited on itself. Clinton, following each unbelievable Rx pricing revelation, has adroitly taken advantage of these developments and made drug pricing one of the top concerns of her campaign. And why wouldn’t she?  She has decades of experience with this issue.

And to that point, two weeks ago, on September 22nd Clinton released her latest, broader approach to controlling the “spiraling costs of prescription drugs in this nation.” This included:

(A)     Stop direct-to-consumer drug company advertising subsidies, and reinvest funds in research.

(B)     Require drug companies that benefit from taxpayers’ support to invest in research, not marketing or profits.

(C)     Cap monthly and annual out-of-pocket costs for prescription drugs to save patients with chronic or serious health conditions hundreds or thousands of dollars.

(D)    Increase competition for prescription drugs, including specialty drugs, to drive down prices and give consumers more choices by clearing out the FDA generic backlog and increasing competition for the new biologic Rx’s.

(E)     Prohibit “pay for delay” arrangements that keep generic competition off the market.

(F)     Allow Americans to import drugs from abroad – with careful protections for safety and quality.

(G)    Ensure American consumers are getting value for their drugs using the results of private-sector analysis to hold the drug companies accountable.

(H)    Demand higher rebates for prescription drugs in Medicare.

(I)      Allow Medicare to negotiate drug and biologic prices.

Summary

So from a historic standpoint, what have learned about Hillary Clinton and Rx price controls?

First, Clinton’s outlook on the issue of Rx price controls has been evolutionary, ranging from her days in Arkansas when it was of no apparent concern to her -- to the inflamed “get-the-drug-guys” environment of the 2016 Presidential campaign. Obviously, Clinton’s 20 plus years of reviewing and thinking about Rx price controls probably makes her the best informed candidate on drug price controls now running for President.

Secondly, PhRMA and several Rx leaders recently dismissed the prospect of the creation of drug price controls in the near future as something that is “not favored by the American public”. This rather dismissive attitude, based on the recent PhRMA poll, walks right into the middle of Clinton’s political sweet spot on the issue of drug price controls. In one of the upcoming debates, look for Clinton, the seasoned Rx price control warrior, to discredit and completely dismantle PhRMA and that PhRMA-sponsored poll.

And finally, is it possible the Rx price control issue is something that may have become “personal” for Hillary Clinton? Consider these historical points: What industry fought her tooth and nail during the 1993 Health Care bill? What industry in 2008 dodged the Clinton-supported price control of Medicare Part D drugs by awkwardly allying with President Obama -- who ultimately decided against government control of Part D? And today, what industry is openly dismissing the prospect of drug price controls even as that industry’s rather outlandish pricing practices are being embarrassingly exposed to an enraged public?

Right. It’s the American pharmaceutical industry. And is it possible, should Clinton be elected, that she will forget all of this history? No, it’s not. That’s not how Hillary Clinton operates.

Public policy, as we know, is written by the winners. In the case of a successful Hillary Clinton campaign for the Presidency in 2016, I would bet a lot that among the first public policy actions of a new Hillary Clinton Administration will be a series of very tough price controls that heavily impact the American pharmaceutical industry.

Tom Norton, NHD Smart Communications of Illinois, Inc.