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Hillary Clinton's Plan to Reduce Unjustified Drug Prices Hikes Hits Pharma Stocks

September 2, 2016 8:32 AM

Hllary Clinton's released her plan to address unjustified price hikes on long-available drugs, which is impacting the market. iShares Nasdaq Biotechnology (NYSE: IBB) is down 0.3%. Mylan (NYSE: MYL), which has been hit hard outrage over its EpiPen prices, is flat.

Below is the plan, per analysts at Evercore ISI:

Hillary’s Plan to Respond to Unjustified Price Hikes for Long­Available Drugs

Today, Hillary Clinton is offering a plan to protect Americans from unjustified price hikes in lifesaving treatments that have long been on the market. Over the last year, we’ve seen far too many examples of drug companies raising prices excessively for treatments that have been available for years – from Turing raising the price of pyrimethamine for AIDS patients by over 5,000 percent, to Mylan raising the price of the EpiPen by more than 400 percent. This is not an isolated problem: Between 2008 and 2015, drug makers increased the prices of almost 400 generic drugs by over 1,000 percent. Many of these companies are an example of a troubling trend—manufacturers that do not even develop the drug themselves, but acquire it and raise the price.

Our pharmaceutical and biotech industries are an incredible source of American innovation and revolutionary treatments for debilitating diseases. But it’s wrong when drug companies put profits ahead of patients, with unjustified price increases not for new innovations, but for long­available and generic treatments – and we need rules of the road so fair competition keeps them in check. That’s why, over the course of this year, Hillary Clinton has called out drug companies for outrageous and unjustified pricing practices.

Hillary believes we need to move beyond talking about these price hikes to acting to address them. Today she is calling for action to protect consumers from unjustified prescription drug price increases by companies that are marketing long­standing, life­saving treatments and face little or no competition. Her plan will establish dedicated consumer oversight at our public health and competition agencies. They will determine an unjustified, outlier price increase based on specific criteria including: 1) the trajectory of the price increase; 2) the cost of production; and 3) the relative value to patients, among other factors that pose a threat to public health.

Should an excessive, outlier price increase be determined for a long­standing treatment, Hillary’s plan would make new enforcement tools available, including:

In combination with her broader, previously announced prescription drug plan – which addresses the costs facing consumers from both long­standing and patented drugs – these new tools to address price spikes for treatments available for many years will lower the burden of prescription drug costs for all Americans.

Hillary Clinton’s Plan to Immediately Respond to Outlier, Unjustified Drug Price Increases:

Today, Hillary is offering an aggressive, immediate response plan to provide relief from unjustified drug price spikes for treatments, like EpiPens or pyrimethamine, that have long been on the market, where there has been little or no innovation or additional research and development. In combination with her broader agenda to lower prescription drug costs, which she is reiterating today, these strong new tools will ensure Americans can afford prescription drugs, and make sure that drug companies get ahead through innovation and research, rather than unjustified price increases. ​

Dedicated oversight to protect consumers. Hillary’s plan will ensure consumers have dedicated oversight and protection with new, aggressive enforcement tools to take on unjustified, outlier price increases. Hillary will convene representatives of Federal agencies charged with ensuring health and safety, as well as fair competition, to create a dedicated group charged with protecting consumers from outlier price increases. They would work closely with and be advised by patient advocates, independent non­government experts on drug pricing and comparative effectiveness, and state and local regulators to investigate and respond to situations like the recent price increases in EpiPens and pyrimethamine.

Strong new enforcement measures to respond when there are unjustified, outlier price ​ increases that threaten public health. This group dedicated to consumer protection would establish criteria for determining an unjustified price increase for a long­available treatment – which would enable a forceful response with the new set of enforcement measures outlined below. The group would investigate and consider enforcement in situations involving a life­saving or critically needed treatment that has long been available; with no meaningful change or improvement in the product (such as when a new acquirer rapidly raises the price); where there is limited or no competition among manufacturers of the treatment; and where there is an unjustified, outlier price increase. An unjustified price increase would be determined by a review of criteria including: 1) the trajectory and scope of the increase in price; 2) changes in the cost of production; and 3) the treatment’s relative value to patients, among other factors that give rise to threatening public health. After a careful investigation and review of the evidence, this group would have an aggressive new set of enforcement tools to respond if it determined that a drug experienced an unjustified price increase. These measures will offer carrots and sticks: they will immediately expand availability of treatments during a price spike, and potentially respond to and deter unjustified price increases with penalties including fines ­ which would be used to fund increased competition and access:

In combination, these measures will immediately protect Americans from unjustified and excessive price increases from drugs long on the market.

Hillary Clinton’s Broader Plan to Lower Prescription Drug Costs for All Americans

In addition to these immediate protections, today, Hillary is reaffirming her commitment to her broader plan to lower drug prices for all Americans, introduced last year in September, by holding drug companies accountable, letting Medicare negotiate prices, capping monthly drug costs, and ensuring drug companies invest in research and innovation rather than marketing.

Lower costs for Americans by limiting out­of­pocket spending, increasing competition, and demanding value for their purchases:

Encourage innovation and new treatments from drug companies ­ rather than marketing and unjustified prices:

Leverage America’s negotiating power as a backstop:


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