On Tuesday, Hillary Clinton announced her proposal for lowering the cost of prescription drugs at a public forum in Des Moines, Iowa. Ahead of the announcement, Clinton had tweeted a link to The New York Times's investigation of Daraprim—a drug acquired by the startup Turing Pharmaceuticals (whose CEO is best described as bombastic) that saw an overnight price increase of 5,000 percent.
Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on. -H https://t.co/9Z0Aw7aI6h— Hillary Clinton (@HillaryClinton) September 21, 2015
Clinton’s outrage was echoed across the Internet, with Turing now saying they’re going to roll back the price. (It’s also speculated that Clinton spooked investors, who dropped biotech stocks after her tweet.)
As my colleague Julie Beck reported, Daraprim is only one example of prescription drugs whose prices skyrocket. As Republican presidential candidates campaign on repealing the Affordable Care Act, Clinton and her fellow Democratic candidate Bernie Sanders have been laying out plans to take on health-care affordability. One prong in those plans is to take on pharmaceutical companies—Americans continue to pay some of the highest prices in the world for prescription drugs.
“It is time to deal with skyrocketing out of pocket costs and runaway prescription drug prices that are going up last year by 12 percent. I mean, it’s disgraceful," said Clinton in Little Rock, Arkansas on Monday. And on Tuesday night, Clinton had more strong comments on the matter: “It has gotten to the point where people are being asked to pay not just hundreds but thousands of dollars for a single pill...That is not the way the market is supposed to work. That is bad actors making a fortune off of people’s misfortune.”
According to the OECD, the U.S. leads the world in pharmaceutical spending: On average, the Americans spend $1,000 per person per year—about 40 percent more than the next highest spender, Canada. As Rafi Mohammed, an economist who consults on pricing issues, writes in the Harvard Business Review:
There’s no mystery why prescription drug prices are higher in the U.S.: virtually every country regulates prices and the U.S. doesn’t. In fact, Congress has explicitly prohibited Medicare from negotiating drug prices with pharmaceutical companies. (Close to 40 million people in the U.S. have this prescription drug benefit). Prices in Norway, the fourth wealthiest country in the world (U.S. is number 6), for instance, are amongst the lowest in Western Europe. The bottom line: most countries play hardball on drug prices, while the U.S. pays retail. As a result, consumers in the U.S. are stuck footing most of the bill for developing new drugs, even as consumers throughout the developed world reap the benefits.
On Tuesday morning, the Clinton campaign detailed her proposal, and, intentionally or not, it reflected some of Mohammed’s recommendations. The main points include requiring health insurers to limit out-of-pocket costs for prescription drugs at $250, allowing Medicare to negotiate drug prices, and letting Americans buy drugs from Canada and Europe, where prices are much lower.
These fixes may appear common-sensical, but Clinton should be aware what she’s up against: According to a recent Kaiser Health Tracking poll, 73 percent of Americans see prescriptive drugs as unreasonably high—but only 53 percent believed that more regulation is the answer. The pharmaceutical industry has long argued that price controls would stifle innovation for new drugs.