Clinton backs Medicare negotiation, copay caps in assault on pharma pricing

On Monday, Hillary Clinton spooked biotech investors with a tweet promising to crack down on high drug prices. Shares plummeted. On Tuesday, she'll publicly unveil her pricing proposals in an Iowa speech, but until then, her campaign has offered some quick hints.

Presidential candidate Hillary Clinton

Clinton will recycle some familiar ideas to control drug spending, including three that have tried and failed in Congress before. She'd give Medicare the power to directly negotiate drug prices, rather than watering down that power by parceling out pharmacy benefits to a variety of contractors.

She'd allow drug re-importation, which would allow Americans access to medications from countries where prices are tightly controlled. And she'd nix tax breaks for direct-to-consumer advertising.

Similar proposals faltered before, but Clinton isn't alone in bringing them back up; her rival for the Democratic presidential nomination, Sen. Bernie Sanders, recently introduced a bill that includes Medicare price negotiation and drug re-importation, among other measures.

According to USA Today, Clinton's proposal also includes an idea that's working its way through several state legislatures right now: Capping copays charged by insurers. Lawmakers in California and Oregon, among others, are pushing plans to do just that, with caps on individual copays and monthly limits on out-of-pocket drug costs.

Clinton would also try to boost production of generic drugs by curtailing a brand's market exclusivity.

Sanders' bill, the Prescription Drug Affordability Act, includes a couple of other proposals; for instance, it would require drugmakers to disclose costs related to each product, including R&D investment, manufacturing and marketing. Companies would also have to disclose product-related profits, and they'd be required to detail prices charged for the same products in other countries.

Meanwhile, a not-for-profit group has set forth its own slate of ideas designed to bypass some proposals that have failed in the past. The Center for American Progress backs a comparative-effectiveness body--a "private, independent organization"--to assess the benefits of new drugs. Those assessments would be publicized on drug labels and in marketing, and they could be used to tailor Medicaid rebates according to a drug's value.

The center also recommends incentives for "reasonable prices;" for instance, drugmakers that exceed acceptable ranges could lose their patents to competitors. The center would also group PBMs and other private insurers together to give them more purchasing power; it's unclear whether the payers would welcome that idea, though, because they compete with one another for clients, and their individual negotiating prowess is a selling point.

The CAP's plan also hits up the patients' share of drug costs, by limiting cost-sharing in insurance plans and by offering information on a patients' share of individual drug costs so that they and their doctors know what they're getting into.

The industry trade group PhRMA is on record against Medicare price negotiation, re-importation, et al. Responding to Sanders' proposals earlier this month, the organization said private payers can handle the job of pressuring drugmakers on prices. It also cited generic meds and their long-term effect on drug spending.

PhRMA hasn't yet addressed Clinton's ideas, but it took aim at the CAP plan, saying that it would stifle innovation and interfere with development of new meds by setting "arbitrary caps" on prices. Plus, it would "cost countless jobs," the group said.

- see the USA Today story
- get more from the Center for American Progress

Special Reports: 10 big brands keep pumping out big bucks, with a little help from price hikes